Datacenter startup Nutanix raises $101m with eye on IPO

New round of investment will help finance commercial expansion and boost analytics development at converged infrastructure specialist Nutanix.
Written by Toby Wolpe, Contributor
Nutanix CEO Dheeraj Pandey: storage fabric that begins at the server. Image: Nutanix

Nutanix says the $101m funding anounced this week will enable the converged compute-storage company to step up R&D and expand sales and support worldwide, paving the way for an eventual IPO.

Describing the series D investment as the largest ever single round in the converged infrastructure market, Nutanix CEO Dheeraj Pandey said it marks the next phase in the development of the San Jose, California-headquartered startup.

"The big focus for this next 12 months is really to cross the Ts and dot the Is as we prepare ourselves for a bigger goal," Pandey said.

"Although we don't have a timeline, we are absolutely working towards building a company of lasting value and liquidity. An event like an IPO is a very natural course from where we are today to where we'll be in the next 12 to 15 months."

The $101m financing, co-led by Riverwood Capital and SAP Ventures, with Morgan Stanley Expansion Capital and Greenspring Associates joining existing investors Lightspeed Venture Partners, Khosla Ventures and Battery Ventures, takes the total now raised by Nutanix to $172.2m.

Last November, converged infrastructure startup SimpliVity, which sells the OmniCube datacentre appliance, announced $58m in series C funding.

Virtualizing the Enterprise: An overview

Nutanix's Virtual Computing Platform, which consolidates the server and storage tiers into a single integrated appliance, took its lead from the model adopted by the web-scale infrastructures of companies such as Google and Facebook, according to Pandey.

"What we saw in the past seven or eight years from the consumer cloud and infrastructure cloud companies, is they never used the storage appliance," he said.

"They brought storage to the compute tier and they made it into a scaleout architecture where you could throw in yet another commodity x86 server and build a massively-parallel datacentre environment from that."

That approach replaced hub-and-spoke architectures with peer-to-peer ones, with compute and storage in every x86 server.

"It's extremely homogeneous and it can be built into tens of thousands of machines without crossing your fingers on whether it will scale. So we looked at what these web-scale properties had done and we said, 'How do we bring it to the masses?'," Pandey said.

"Obviously they had written their applications from scratch and they didn't have to worry about legacy. Our challenge was we had to bomb-proof web-scale infrastructure and we had to integrate it with legacy apps and existing stacks — VMware, Microsoft and open-source OpenStack and things like that."

Pandey said the key ingredient was to appear seamless to datacentre managers and staff.

"We said, 'Nothing must change'. The VMware administrator, the Microsoft administrator — they don't have to think about, 'Is this so different that I have to change my workflows and my day-to-day operations?'. None of that changes," he said.

Nutanix has built a storage fabric that begins at the server, which is scaleout and software-defined, according to Pandey. But building the tools and analytics software is a key part of the product.

"If you bring datacentre services, which used to run as special-purpose boxes, into software and run them on the same hypervisors that are running the rest of your compute stuff, you need to be able to share the hardware intelligently. You need to be able to understand performance issues and things like that," he said.

"Storage must become an invisible resource. You don't need to have storage expertise to manage datacentres. All you should focus on is the application. Once you bring storage into the server, you now have a global view of what's going on."

Pandey stressed the importance of the company's investment in analytics, and developing the relationship with the channel through which it exclusively sells its technology.

"We are spending just as much on R&D. The company has really invested heavily in building this web-scale infrastructure and bringing it to the enterprise. A big part of that is also analytics," he said.

Pandey puts the potential addressable market for Nutanix at more than $50bn. Its customers include eBay, McKesson, LA Fitness, Metro Group, Maersk, Liberty Global, Toyota and Hyundai Hysco.

International sales now account for 33 percent of business and it is selling products in more than 30 countries, according to Nutanix.

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