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Veeam leads funding round for SaaS backup provider Alcion

Analysts say that while both Alcion and Veeam offer Microsoft 365 backup, there is enough difference in the products and enough need in the data protection market.

Recently out-of-stealth Alcion secured a $21 million funding round led by the fellow backup vendor that acquired its founders' last startup.

Veeam Software supplied an unspecified amount of the series A round for Alcion, which provides AI-driven backup with a focus on security. In 2020, Veeam acquired Kubernetes backup and recovery provider Kasten, which was founded by Niraj Tolia and Vaibhav Kamra, who are now the CEO and CTO of Alcion, respectively.

Alcion's Microsoft 365 backup product is now generally available after being in public preview since May, when the company came out of stealth. It was in private preview from January to May. The product is currently aimed at SMBs.

The funding supports the general availability and go-to-market expansion of Alcion's backup-as-a-service platform for Microsoft 365 and the future protection of other SaaS services. Specifically, Alcion seeks to expand to enterprises and MSPs. Alcion also expects to make additional hires with the funding and hopes to get to about 30 employees by the end of the year, up from 22, Tolia said.

Veeam makes 'financial investment'

Veeam occasionally makes investments, including one in 2019 with data protection company Cobalt Iron. The amount of that investment was also not released.

Tolia acknowledged that it's early to raise funding, but said there's a lot of trust between Veeam and Alcion. He noted the Kasten acquisition and his work with Veeam's leadership team before he started Alcion.

When we saw we had the same broader markets but a different approach, that's how the relationship came together.
Niraj ToliaCEO and co-founder, Alcion

"When we saw we had the same broader markets but a different approach, that's how the relationship came together," Tolia said. "It is a pure financial investment from their side. So there's no IP sharing."

Tolia said he is open to exploring a partnership with Veeam, which also offers a Microsoft 365 backup product. When asked if Alcion is open to an acquisition by Veeam, he said the company's focus is on an independent path, growth, product enhancements and customer value.

"While all startups always explore avenues for collaboration and strategic growth, our primary aim at this point is to focus on the actions that best serve our customers and tackle the growing cyberthreat problems they are exposed to," Tolia said.

Krista Macomber, an analyst at Futurum Group, said it's her understanding that there are no plans for an acquisition.

"I think we have to operate under that assumption, at least for now, and it's still early days," Macomber said. "We'll see where the product and company go in terms of development."

Macomber said she thinks the investment will help support the development of the technology. Alcion's AI-supported backup and recovery takes aim at evolving cyber attacks including ransomware.

Christophe Bertrand, an analyst at TechTarget's Enterprise Strategy Group, said Alcion has a different approach to the market from Veeam's. Alcion offers a ransomware-focused SaaS product that uses AI. Veeam provides a backup and recovery platform for a variety of workloads, including cloud, SaaS, physical and container.

"I don't expect there will be much overlap," Bertrand said. "Go-to-market focus is different enough that I don't know that it would have any impact or much impact on Veeam's own 365 backup. Most organizations will buy Veeam because they do it and a bunch of other workloads."

Veeam declined an interview for this article, but CTO Danny Allan said in a press release that helping customers fight cyber attacks such as ransomware will take an industrywide effort.

"Veeam is committed to championing and fostering new cybersecurity innovation and our investment in Alcion is part of that commitment," Allan stated.

Other backup vendors have made security moves recently. Last month, Rubrik acquired Laminar Security, which provides cybersecurity tools. In 2022, Commvault bought TrapX, a cyberdeception company.

Bertrand said it might appear confusing at first that Veeam is investing in a company that also offers Microsoft 365 backup.

"But to me, the real fundamental is this is another signal that the vendors in this market are looking very closely at the convergence of multiple markets, driven by the epidemic of ransomware," Bertrand said.

Alcion product continues to evolve

In addition to Veeam, the series A round featured participation from all prior investors. Alcion launched with $8 million in seed funding.

Tolia did not provide a specific customer count, but he said the number of Alcion customers has increased by more than 700% since May. Alcion claims to manage 1 petabyte of logical backup.

Alcion's approach to security uses threat detection, intelligent backup scheduling, encryption and delete protection. The company has updated its product frequently since May. Its features now include immutable backups, malware alerts and notifications in the app and through email, a compliance score to evaluate configuration and backup health, and data protection insights and recommendations based on activity.

Niraj Tolia, CEO and co-founder, AlcionNiraj Tolia

"We believe that given the increased cyberthreat climate customers find themselves in, we need to rethink how data protection works,” Tolia said. "We do ransomware detection at the file level, not just at the backup level."

Customers have asked for additional protection, mostly around other parts of the Microsoft ecosystem, such as Dynamics, Tolia said. In addition, Alcion is looking at other SaaS services it could protect, likely in 2024.

Tolia declined to name specifics, but Salesforce and Google Workspace are two of the most common SaaS applications that need protection. Veeam, for example, has a Salesforce backup product.

"Right now, our focus is on the 365 ecosystem," Tolia said.

Macomber said she thinks protecting other SaaS applications is more of a long-term goal.

"I imagine they're going to need to get their feet underneath them and get some proof points, especially where this is a newer approach to data protection," Macomber said.

Tolia said Alcion is not profitable yet, but he doesn't envision the need to seek more funding in the near future.

"It's about making sure Alcion does great over the next 12 months," Tolia said. "We are very fortunate that we have a lot of runway at this point."

Paul Crocetti is an executive editor at TechTarget Editorial. Since 2015, he has worked on TechTarget's Storage, Data Backup and Disaster Recovery sites.

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