HYCU Receives Series A Funding of $87.5 Million

Today HYCU, Inc. announced an initial venture capital funding of $87.5 million led by Bain Capital Ventures. This Series A round comes almost three years after the company was founded and with an established base of 2,000 customers in 75 countries. What happens next for this data protection company?

HYCU was founded as an independent entity out of the Comtrade Group and rebranded as HYCU, Inc. in April 2018. The initial development of HYCU data protection software focused on Nutanix and providing backup for HCI. Over time, HYCU, Inc. has extended the HYCU platform to include protection for VMware, Google Cloud, Azure, SAP and most recently, SaaS applications in the Microsoft Office suite.

We’ve closely followed the HYCU story over the last three years and worked with the company in explaining some of the evolving nuances of data protection. Backup and the broader requirements of disaster recovery have changed significantly with the transition towards the public cloud. As a result, the implementation of data protection has required application to both the old and new worlds of computing.

Diverse Worlds

Why is this important? First, we have to remember that businesses do not transform their IT operations quickly. VMware, for example, was an “overnight success” that took ten years to be widely adopted. The containerisation movement, spearheaded by Docker, has moved on to Kubernetes. Despite many companies claiming to be heavily adopting containerisation, the reality is that the vast majority of applications today still run as traditional virtual machines. With widespread diversity, data protection companies can’t afford not to support the most widely used application platforms.

The second point to understand is that data protection is a long game and evolving to be even longer. Application backups have to be retained for months or years, depending on regulatory requirements and the industry vertical. Backup silos evolve into de-facto archives. This bifurcation may not seem logical, but it’s a fact of life that long-term backups are cheaper than building application-specific archiving. IT organisations don’t want multiple point solutions in play, all of which need different skills and support, so changing backup provider is a significant undertaking.

Backups are evolving into active archives, with some vendors heavily promoting the ability to perform analytics and other asynchronous tasks on large volumes of archive data (limited though this approach may be). Backup data is now also used for seeding test/development environments in a much more systematic and automated way than ever before.

Single Pain (sic) of Glass

With such a great diversity of application deployment models in the Enterprise, it’s crucial to be able to get a handle on data and the efficacy of data protection software. When backups are spread across many point solutions, with multiple interfaces and data protection frameworks, the job of understanding whether backups have been successfully captured can be a challenging task.

The increased adoption of the hybrid cloud model also risks the introduction of more complexity for backup. Imagine wanting to exploit a new cloud or SaaS offering only to find there’s no joined-up backup solution, for example.

HYCU

What makes HYCU stand out from other solutions in the market?

A regular cadence of new features and functionality. A list of new products and features is shown on a timeline towards the end of this post.
Consistent look and feel. The process, framework and visualisation of the platform is the same across all implementations of the HYCU software.
Adaptation to platform-specific requirements. This may seem like an unusual characteristic, but one example is retaining the ability to run backup on-premises with a local copy, where this configuration offers the customer greater operational flexibility.

Looking at our data-centric architecture discussion, HYCU addresses the issues of data mobility, of centralising on a single vendor (the opportunistic value) and of standardisation to reduce technical debt and dependencies. Data is at the centre of the model, as it should be. The specifics of how the software is implemented on each platform then becomes less important.

Series A

One other aspect that could make this investment truly interesting is the order in which the first VC investment occurred, compared to acquiring fee-paying customers. HYCU already quotes 2,000 customers across 75 countries. Compare this to today’s announcement from Cohesity with 2,300 customers (1,500 this time last year). Although the customer count doesn’t equate to revenue, remember that Cohesity has received Series E funding and a total of $660 million since November 2013 – a 7.5x multiple compared to HYCU for roughly the same number of customers.

There’s also a second aspect to consider here. Bain Capital Ventures already invests in Rubrik, another unicorn data protection company with $553 million in total investments. Why bet on two horses in the race, if you’re sure only one of them can win? Is there another strategy at play?

The Architect’s View™

I’m on record with the view that there seems to be little in the way of substance to the claims of some backup companies to offer high-value data analytics and discovery. These capabilities seem to be of limited value in a market that still runs most applications in virtual machines. As IT organisations move to the adoption of hybrid cloud, their needs will focus on solid, reliable and ubiquitous data protection. Data analytics will be served better elsewhere or be more valuable at a later time. HYCU continues to deliver solid data protection features and, as a result, is one backup solutions vendor we will continue to recommend. I expect we will see further expansion of support for HYCU across those areas that aren’t currently supported. Containers and AWS are two, plus deeper integration to the existing public cloud relationships.

Diverse Worlds

Single Pain (sic) of Glass

HYCU

Series A

The Architect’s View™

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