Backup startup Rewind raises $65M in Series B funding
Rewind closed a $65 million funding round led by Insight Partners. The investment will be used to grow employee headcount and expand the backup platform to cover more SaaS applications.
Data protection for SaaS applications is underserved, and Rewind is looking to turn its modest windfall toward fixing that. The cloud data backup startup closed a $65 million Series B funding round today.
Rewind, founded in 2015 and based in Orleans, Ont., focuses on protecting SaaS applications, competing with companies such as Spanning and OwnBackup. However, Rewind doesn't have data protection offerings for Office 365, Salesforce or Google Workspace (formerly G Suite), the three most widely used SaaS applications. Instead, it protects less-popular SaaS applications that are still business-critical, such as Shopify, QuickBooks Online and GitHub.
SaaS application backup is an under-addressed market, especially since most vendors only focus on the "big three," said Rewind co-founder and CEO Mike Potter. Businesses can lose valuable data or time when their online storefront or software development environment goes down, or if they accidentally delete something on those platforms. For customers that rely on these SaaS applications, third-party tools for generating backup copies and restoring data are just as important as they are for Office 365 and Salesforce, Potter said.
Rewind hasn't historically attracted the largest investors, as it's not the "sexiest" product, Potter said. However, every SaaS platform Rewind supports continues to grow, and the fact that well-known venture capital firm Insight Partners led Rewind's Series B funding round shows the newly recognized importance of SaaS data protection, he added.
Mike PotterCEO, Rewind
"I think we've proven that backup for SaaS is needed across all industries," Potter said. "It's very much needed, but it's not the most exciting software."
Nevertheless, Rewind has clearly caught the attention of Insight Partners, whose portfolio consists of several well-known data protection vendors, including OwnBackup, Unitrends and Acronis. The VC also invested $500 million in Veeam in January 2019 and then bought the data protection vendor in January 2020 at a $5 billion valuation.
Bessemer Venture Partners, FundFire, Inovia Capital, Ridge Ventures, ScaleUp Ventures and Union Ventures also participated in Rewind's latest funding round.
The new money will be used to hire more staff and expand Rewind's platform coverage, Potter said. ZenDesk support will be ready before the end of this year, and work has already started for other SaaS applications, including GitLab, Bitbucket and HubSpot. There are also plans to extend Rewind's Shopify capabilities beyond backup and copying, according to Potter.
Rewind currently has about 105 employees; its goal is to employ 150 by the end of this year and 300 by the end of 2022, Potter said.
Rewind closed a $15 million Series A in January, and part of the proceeds was used to acquire BackHub, a GitHub backup repository, in February. Although he is actively looking at potential companies to buy, Potter said the Series B wasn't raised specifically with acquisitions in mind.
Native backup isn't good enough
There is a clear market need for SaaS data protection, so it's no surprise Rewind has drawn investor attention, said Christophe Bertrand, a senior analyst at Enterprise Strategy Group (ESG), a division of TechTarget. For customers, there is a disconnect between what a vendor's tools can and can't do. Far too many rely solely on SaaS providers' native tools to protect their data, even though third-party vendors have historically proven to be more reliable, he added.
An ESG survey published in May found that out of the 381 IT professionals polled, 74% said they rely solely on Office 365's native recovery capabilities; 81% said they've tried recovering their Office 365 data with native functions, but only 15% said they could recover 100% of it this way.
"As the SaaS disconnect continues to increase, it's not surprising Rewind would get investments. Venture capitalists are getting their early stake in the ground, placing bets on vendors in the next wave," Bertrand said.
Although the ESG survey suggested a lack of customer understanding of SaaS platforms and what SaaS providers are responsible for safeguarding, that's only part of the problem, said Vinny Choinski, an ESG senior validation analyst. On the product side, not every SaaS offering has a comprehensive set of APIs.
A strong set of APIs would allow customers and vendors to perform operations on the data themselves, and this could grow into its own ecosystem of products if the SaaS platform is popular enough, Choinski said. No SaaS platform should be expected to build a strong data backup and recovery system itself if that isn't its core function.
"ZenDesk is focused on a ticketing service, not data protection. You don't want to have to develop every piece of the puzzle," Choinski said.
Johnny Yu covers enterprise data protection news for TechTarget's Storage sites SearchDataBackup and SearchDisasterRecovery. Before joining TechTarget in June 2018, he wrote for USA Today's consumer product review site Reviewed.com.