Five years after launching its first product, HYCU Inc. landed a second major funding round Thursday with plans to further expand its data protection.
The series B round of $53 million for HYCU funding, which arrives despite a tech market funding slowdown, will help the multi-cloud backup and recovery provider add jobs and a new platform. The funding follows an $87.5 million series A round that HYCU secured last year.
The Boston-based company spun off from the Comtrade Group in March 2018. The company had released its data protection for Nutanix hyper-converged infrastructure the year before.
HYCU started out with a focus on hyper-converged backup, but that wasn't the long-term plan.
"I think one of the things that we did right from when we founded the company was we looked at the history of data protection," said HYCU CEO Simon Taylor. "And we said, 'Veritas was great for Unix, Commvault was great for Windows, Veeam was great for VMware. What are people going to do in a multi-cloud world?'"
HYCU started with Nutanix because it allowed for the largest commercial impact in a relatively new market, Taylor said. The company added backup for Google Cloud in 2018 and has also launched protection for AWS, Azure, VMware, Office 365 and Kubernetes. The flagship HYCU Protégé product provides multi-cloud data protection and migration.
The company competes with a variety of data protection providers, including longstanding vendors Veritas, Commvault and Veeam; newer appliance-makers Rubrik and Cohesity; and cloud-focused companies such as Druva and Clumio. In addition, multi-cloud data protection vendor Calamu, founded in 2020, landed $16.5 million in funding earlier this year.
HYCU's growth strategy
HYCU has done a good job of continuing to focus on deep optimization for its existing capabilities and features of the source environment, said Krista Macomber, senior analyst at Evaluator Group. Bringing the data protection to other infrastructure, such as AWS, was a key differentiator.
"The addition of Protégé was important because it addresses IT's need to be able to centrally manage data protection and mobility across the various environments under protection," Macomber said.
However, it can be difficult for a newer player to enter the data protection market, even when it involves new workloads, she said.
"One thing that adds to this challenge for HYCU is that the application-consistent approach requires some time to develop," Macomber said. "I think they are proving their maturity -- definitely no longer a Nutanix-only solution -- but this does take some time."
Simon TaylorCEO, HYCU Inc.
HYCU had been privately funded since its inception, but made a change in the middle of the pandemic.
"We realized that we needed to put gas in the tank," Taylor said. "It was to expand our business and our commercial presence worldwide."
HYCU is planning to unveil a new data protection platform in the next couple of months. Taylor declined to provide many technical specifics on the platform, but said that the HYCU funding will help bring it to market and improve brand awareness.
"If you think of our new SaaS platform as a house, Protégé will always be the foundation," Taylor said. "The extensible architecture of HYCU Protégé is something that has led us to be able to create this exciting next step in the data protection evolution."
The new platform will help with management and eliminate data silos -- the increasing number of sources where organizations keep their data, Taylor said.
HYCU used its last funding round to add jobs and enhance its product line as well. The company was not actively looking for more funding this time; Acrew Capital, which led the latest HYCU funding round, reached out to the company with a hope to increase its investment, according to Taylor.
"That's a great call [to receive]," Taylor said. "I think that in conjunction with what we're seeing in the market today -- we're seeing a lot of tech companies sadly make layoffs -- you're seeing a very, very changing dynamic."
Bain Capital Ventures, which participated in the series A round as well, followed with an increased investment. Atlassian Ventures and Cisco Investments also participated.
HYCU seeks large customer, employee increases
HYCU claims to have about 3,200 customers. Its current growth trajectory gets it to 10,000 customers by the end of 2024, according to Taylor.
"The multi-tenant nature of our products really does allow service providers to onboard hundreds of customers at a time," Taylor said.
Tripling the number of customers in two and a half years is a lofty goal, but the expanded range of data sources to protect, plus the additional HYCU funding for marketing, will help, according to Evaluator Group's Macomber.
"[HYCU should continue] to build this platform that is sort of plug and play, in terms of offering data protection services that are specifically designed for the environment they are protecting, and at the same time provides a centralized umbrella management platform," Macomber said.
Over the last year, HYCU has added 165 employees, bringing its total to 300. HYCU plans to add 100 employees in the next year, including a chief financial officer.
An initial public offering is likely for HYCU, and the company is "well on the way" to going public, according to Taylor.
"We have to find the right time for it," Taylor said. "I want to see what this economy does, and I want to see how damaged everybody's going to look at the end of this thing. We're in a really fortunate position because data protection is relatively recession-proof."