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Hyperconverged kit is SO HOT right now. $140m sound about right, Nutanix?

Watch out, cash burn is increasing

Photo of a stack of $100 bills

The hyperconverged system iron is so hot that there will never be a better time to strike. Nutanix's backers have done just that, handing the company another $140m of E-round funding just seven months after its VC backers gave it $101m.

Virty storage giant VMware's validation of the hypercvonverged server/storage/networking scale-out system business by way of its EVO: RAIL offering means more customers than ever before are aware of the possibilities of data centre simplification through using such boxes.

Nutanix' funding history:

  • $13.3m A-round in July 2010,
  • $25.3m B-round in August 2011,
  • $33m C-round in August 2012,
  • $101m D-round in January 2014,
  • $140m E-round in August 2014.

Total funding is now at $312.6m and the latest round assumes a $2bn valuation. The company achieved a $200m a year revenue run rate earlier this month, meaning a $50m revenue quarter, and its Dell OEM deal has yet to start shipments of the XC Web-scale converged appliance. It should do so in the fourth quarter.

Chris says

With Dell being a VMware EVO: RAIL partner, Nutanix cannot rely on its undivided attention and needs to develop its channel beyond Red Rock. Nutanix says the cash "will be used to invest in sales, research and development, customer support and marketing".

We have a feeling the rate of cash burn is going to be impressive.

Co-founding CEO Dheeraj Pandey spoke of a major market opportunity: "The convergence of servers, storage and networking in the data centre has created one of the largest business opportunities in enterprise technology, and Nutanix is at the epicentre of this transformation. We ... are confident in capitalising on the enormous opportunity that lies ahead of us."

As well as the deal to expand Nutanix's channel, Michael Dell's company also signed distribution agreements with Arrow and Avnet since 1 July. We think it is gunning for a $500m run rate and may then look for an IPO to give its backers the reward they crave for their investment. The big ask exit valuation could then be in excess of $5bn.

To do it Nutanix has to sustain and possibly accelerate its growth and shrug off any cramping of its growth by VMware's EVO: RAIL or by kit from fellow upstart competitor Simplivity. ®

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