Today HPE announced it is acquiring SimpliVity for $650M. This is an awesome outcome for a company that was started in our offices almost eight years ago with only a founder and a PowerPoint.
At the time, people wondered why we backed the founder, Doron Kempel. After all, he wanted to do something with a hardware component in it and sell it to enterprises; at the time, “hardware” was a four-letter word and consumer was all the rage.
When I met Doron in 2009, he told me how virtualization will ultimately drive the conversion of Compute, Storage, and Networking, and about the need to come up with an architecture that fully utilizes this new possibility. Doron spent several years at EMC where he grew a new storage business from zero to several hundreds of millions of dollars in revenue; he also co-founded Diligent, a storage startup, and sold it successfully to IBM. Beyond his industry insights, we also saw a relentless, driven, and unwavering entrepreneur that would stop at nothing to bring his vision to life. So we decided to buck the consumer-only trend, and committed to invest in SimpliVity’s seed round alongside Doron.
Nothing is easy in startup life: the early years were challenging for SimpliVity; the task to build a great convergence system turned out to be much tougher than we initially thought; money was tight and there was a need for round extensions. Doron showed tremendous leadership, and put his money where his mouth was by co-investing alongside the VCs in each of the early stage rounds. There was no ambiguity about his commitment to see SimpliVity through.
Prior to the Series B round, I had asked my partner, Bruce Sachs, to step in and replace me as the CRV board member; before venture, Bruce successfully ran two enterprise hardware companies, and I felt his knowledge and experience would be invaluable. This is something we do at CRV. When we invest in you, we commit to put the resources of the full partnership behind you and to draw help and wisdom from the best people we have regardless of who leads the investment. So Bruce took the CRV board seat and in my opinion, helped SimpliVity immensely in recruiting candidates to join the company, in advice and wisdom, and in fundraising.
In 2012, enterprise investing was back in fashion, and a successful Series B was followed by a big Series C, and then a Series D round in early 2015, which valued the company at over $1bn making it a “Unicorn.” One thing about those system-level enterprise investments: a “lean-startup” is a bit of a myth; at least when it comes to sales and marketing and to scaling the business. There are no two ways about it. It takes a lot of capital to compete and win in those markets. SimpliVity raised a lot of money because it needed to. At the time, the valuation was in line for a business that was selling a revolutionary product into a huge addressable market.
The business has not weakened since its Unicorn round in early 2015, in fact it has grown significantly. But the financial market environment has changed significantly, including public market valuations, and so have the prices large public companies pay for assets like SimpliVity.
Thank you, Doron, for seeing your vision through and for choosing CRV as your early partner in this journey. Thank you to the hundreds of dedicated SimpliVity employees for your hard work and commitment.
-Izhar, on behalf of all the CRV partnership.
