Panzura Acquired by VC Firm Profile Capital

To drive cloud technology uptake

This is a Press Release edited by StorageNewsletter.com on May 12, 2020 at 2:31 pm

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Panzura, Inc. has been acquired by venture capital firm Profile Capital Management LLC, an investment management firm renowned for strategic growth investments in the IT sector.

Terms of the deal were not disclosed.

Coming off a record 2Q ending in April of over 50% revenue growth, it will leverage financial resources and business networks provided by Profile, to accelerate market and international expansion, as enterprises demand flexibility and security for their remote workforces.

It has been capitalizing on data management trends for the fast evolving ‘new normal’ of working from home, and is recognized as a Leader and Outperformer, in the GigaOm Radar for File-Based Cloud Storage.¹ The global enterprise data management market is expected to grow from $77.9 billion this year to $122.9 billion by 2025, at a CAGR of 9.5%.²

Benjamin Chereskin, president and founder, Profile Capital Management, has invested in the company for long-term returns. “Now’s the time to invest in cloud storage, and Panzura – with its stellar technologies specifically engineered for cloud agility and the flexibility enterprises mandate – is the right company to invest in for rapid growth. We are convinced that Panzura’s market trajectory will accelerate as businesses adjust to the new normal of remote working.”

Panzura’s patented technology delivers real-time cloud-based file operations, including file locking to prevent overwriting or versioning, accelerating collaboration between remote workers, regardless of location. This allows organizations to share data globally, with security, in real time.

Its military-grade security support for public, private and ‘dark’ clouds and immutable data architecture keeps cloud-based data secured and inherently secure from cyber-attacks. Built-in active archive, enterprise-grade backup and DR maximize enterprise up-time and replace services typically provided by a third party, resulting in operational efficiencies and savings.

As part of the acquisition, Rich Weber, formerly chief product officer, will become president of Panzura and Jason Luehrs has been promoted to CFO. Jill Stelfox, serial entrepreneur and previously co-CEO of mid-market catalyst firm EDGY, will join the organization as executive chairman and CEO. Former executives Patrick Harr and Steve Morgan have left the company to pursue their next cloud ventures.

Weber said: “Being acquired by Profile Capital is exciting for Panzura, our customers, and employees. The sudden acceleration in the trajectory of enterprise remote working trajectory, from ‘nice to have’ to ‘essential’, is driving global IT investments in real-time collaboration with virtual teams, business continuity, and data security, all of which we excel in. Our record growth indicates that enterprises need tools like Panzura Freedom global cloud filer and Vizion.ai data analytics to support a more aggressive and pervasive use of cloud technologies, and I am looking forward to working with Ben and Jill to bring Panzura’s growth to the next level.”

Stelfox said: “Panzura is making a profound impact on global enterprises, providing the cloud-first infrastructure that ensures business can continue as usual when people cannot, or do not, come into the office. I’m honored to lead a great team and powerful partner network to scale the company to new heights.”

Harr, former CEO, said: “I am very proud of what the company and team achieved in delivering the number one multi-cloud file and analytics service with the industry’s highest net promoter score of 88 while migrating from a perpetual to a SaaS subscription model. And, coming off a record quarter and closing the sale of the company, I am confident Profile and the entire team will continue to accelerate Panzura’s growth and prospects.”

¹ GigaOm Radar for File-Based Cloud Storage v 1.0 – Key Criteria for Evaluating File-Based Cloud Storage, March 27, 2020
² Enterprise Data Market By Component, MarketsAndMarkets, 2020

Comments

The miracle is over, it's a bit provocating but the reality speaks for itself.

According to the press release above, Panzura has just been acquired by Profile Capital Management, LLC, founded in 2009, based in Chicago, and led by Benjamin D. Chereskin.

And effects are immediately visible with departures of Patrick Harr, former CEO, and Steve Morgan, former CFO. The new CFO is Jason Luehrs promoted to this position and Rich Weber, former CPO, becomes president. We also don't find any CMO on the leadership page. The new CEO and chairman is Jill Stelfox, unknown in the storage industry, but she has worked with Chereskin for years. When people say private equity can be positive, we're still looking where it could be the case here or if it's too early to say ... The beauty of private equity is that it hides reality.

So what happened? it is an exit generated by the impossibility to raise a new round? Is it a board divergence? Or just a wish from VCs to end the game and accelerate a return after 12 years of presence for some of them. And with only $90 million raised in these 12 years, you reach a danger zone if your business is erratic. Panzura confirms the situation some other similar companies reach. And publishing a press release Friday afternoon is at least a surprise or at worst an indicator of a sort of panic.

Founded in 2008 under the name Pixel8 by Randy Chou, historical CEO and John Taylor, still CTO, Panzura raised 5 VC rounds from a small group of investors, almost always the same. On LinkedIn, we found 158 people to give an idea to the reader of the salary mass and effect on cash ...

Total of $90 million invested in Panzura includes:

Date	Series	Amount raised*	Investors (underlined VC is the lead investor)
9/2008	A	6	Chevron Technology Venture, Matrix Partners
12/2010	B	12	Khosla Ventures, Matrix Partners, Chevron Technology Venture
6/2012	C	15	Opus Capital, Khosla Ventures, Matrix Partners, Chevron Technology Venture
6/2013	D	25	Meritech Capital Partners, Opus Capital, Khosla Ventures, Matrix Partners, SanDisk
1/2017	E	32	Matrix Partners, Meritech Capital Partners, Opus Capital, Chevron Technology Venture, Western Digital

* in $ million

We all remember the Network File Virtualization (NFV) and Network File Management (NFM), not to confuse with NFV for SDN, started mid 2000's with companies like Attune Systems, formerly Z-Force (IP acquired by Acopia), AutoVirt (in bankruptcy), NeoPath (acquired by Cisco), NuView (acquired by Brocade), Avere Systems (acqured by Microsoft), Acopia Networks (acquired by F5 Networks) or Rainfinity (acquired by EMC). These vendors offered the NAS/file server unification with different data services around this file virtualization access.

Then we got some cloud storage gateway vendors and some of the above players added a cloud path to extend local storage but also functions to tier, replicate, distribute data across sites. We can mention here Cirtas Systems (in bankruptcy), StorSimple (acquired. by Microsoft) or TwinStrata (acquired by EMC) and later Maginatics also acquired by EMC. Even AWS has started to offer its own storage gateway offering.

2008 was a hot year as several founders identified a new need and CTera Networks, Panzura and Avere were founded that year, Nasuni in 2009 and Morro Data more recently in 2013. In France, a small player tried to enter this segment but failed miserably, its name was Nuage Labs. Nirvanix offered also this cloud access capability but disappeared, its assets were later acquired by Oracle.

Some other directions appeared with WAFS and WAN acceleration and optimization and we remember players such Riverbed, Silver Peak, Actona (acquired by Cisco), FineGround (acquired also by Cisco), Tacit Networks (acquired by Packeteer), Packeteer (acquired by Bluecoat), Cacheflow (acquired by Bluecoat), Peribit (acquired by Juniper), Redline (also acquired by Juniper), to name a few, that today resonate as SD-WAN with again new vendors with many of these having cloud extension.

In 2000, Storigen Systems has tried a central data repository with edge filers but it was probably too early. Following an OEM agreement with EMC as a Centera gateway named Centera Application Gateway (CAG), EMC decided to acquire the company in 2003. WebFS appeared around 2000 as well but disappeared rapidly.

There are also two other pioneers, Acirro with its Accumula product and Scale Eight, both acquired by Intel in 2003. Of course AFS, OpenAFS, Transarc, DCE/DFS and Coda are all good examples of different experiments and iterations in such desire to glue remote offices with same access and data.

Auristor, formerly, Your File System, has developed also an global file namespace and location independence approach to offer an interesting but confidential product. A few years later, in 2008 for Panzura and CTera, later for BridgeStor and Morro Data built different models of global fi le service able to offer distributed data to ROBO with a reference to central value based on caching techniques. Even NetApp acquired recently Talon Storage for that to complement their block product.

Some vendors can be seen as cloud storage gateway as they offer cloud tiering, HSM, archiving in addition to their local capabilities: Point Software and Systems, Seven10, NTP, Grau Data, Komprise, Hammerspace, QStar, InfiniteIO, StrongBox Data or Data Dynamics.

Many users also used some client software that locally "mounts" a cloud storage space, often a S3 bucket, as a local drive, volume or file system. We used and continue to use Gladinet, Cyberduck, Xdrive (dead), Cloudberry Lab, SMEstorage, Egnyte, ownCloud, TeamDrive, Oodrive or CTera and we eventually choose for some of us cloud based storage like Google Drive, Office 365, Dropbox or Box, etc. There are also players like Datomia (in trouble), LucidLink, ObjectiveFS or JuiceFS.

What we live today is an explosion of file services connected to the cloud, pretty rich for some of them, SMB or enterprise class, that finally converge in term of use cases, data services and file storage capabilities. Today, many products offers ROBO file access combined with local access, copy/replication or tiering to S3, on-prem or off-prem, a few global file service, enterprise file sync and share and more recently ransomware protection.

IBM picked Panzura following the stop of its partnership with Compuverde due to the acquisition by Pure Storage. At least announcement dates confirm the sequence. IBM promotes Panzura on a dedicated page but IBM is just listed as a cloud partner and not as a reseller neither as a technology partner on the Panzura partner page. Presented as a strategic partnership one year ago and as a key NAS solution for IBM, IBM needs some serious NAS offering, we didn't see much promotion about it and we have serious doubt on its market adoption. And at the end of the day, it is not IBM who acquires Panzura. To be realistic, with Red Hat now, a lot of things can be packaged and iterated from the Linux champion catalog and we expect so.

Beyond its classic Panzura Freedom, historically named Quicksilver, the company has launched in 2018 Vizion.AI as a SaaS analytics service for Panzura, NAS and file server as soon as NFS and SMB are exposed. The analytics for files service is priced at $0.05/GB/month and the the Elasticsearch has a segmentation with 5 prices. These services were not able to help finally Panzura.

Over the years, competition has changed with new players, new needs but also due to new use cases introduced by Panzura. Dozens vendors compete against Panzura for a very small features or globally. But for global file service, one of the holy grail of file storage, only a few players really compete against Panzura among them CTera Networks and Nasuni very present, and Morro Data more confidential. This significant number also explains why the market is tough for such players even started a long time ago, seen as reference, and we won't be surprised to see more failures in the coming months.

This acquisition represents the 10th since January 1, 2020:

Panzura acquired by Profile Capital Management (PE) (5/8)
CloudJumper acquired by NetApp (4/29)
Mellanox acquired by Nvidia (4/27)
Keynexus acquired by StorMagic (4/7)
ActiveScale from Western Digital acquired by Quantum (3/17)
ContainerShip acquired by Hitachi Vantara (3/10)
Talon Storage acquired by NetApp (3/9)
Termaxia acquired by Frontiir (3/6)
SwiftStack acquired by Nvidia (3/5)
Veeam acquired. by Insight Partners (PE) (3/2)

Read also:
Panzura: 164% Growth in Customers’ Global Data Capacity in 2019
Accelerating demand for real-time collaboration among distributed teams and fast path to data in multi- and hybrid-cloud environments
March 16, 2020 | Press Release
Start-Up’s Profile: Panzura
Cloud storage as tier one [with our comments]
May 31, 2010 | Press Release