Boston startup Turbonomic has a new batch of money and a well-connected new ally to help it keep pace in the fast-growing cloud enterprise market.
Turbonomic announced on Monday that it had raised $50 million in financing from General Atlantic, with operating partner Gary Reiner joining the board. The investment values Turbonomic at more than $800 million, according to a source with knowledge of the deal.
For Turbonomic, which offers a solution to help manage applications in a hybrid cloud environment, bringing Reiner onto its board represents something of a coup. The former chief information officer of GE’s other board seats include Citigroup, Hewlett Packard Enterprise, Box and AppDynamics, expected to go public later this week.
Turbonomic says it manages 2.9 million workloads today across more than 1,600 customers. The company’s “hybrid cloud” solution tracks the applications used by a customer back to where they are stored, whether it’s in a dedicated data center or server set-up on-site or on one of the leading cloud vendors like Amazon Web Services, Google or Microsoft. Turbonomic decides which applications, and how much of them, should be running on the resources available.
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The ability to analyze performance in that way automatically that most impressed Reiner, who says no other company he’d looked at could do the same in real-time. “The performance goes up and it dramatically reduces the services needed in the data center,” Reiner says. “It allows companies to really move workloads to the public cloud.”
Turbonomic, which rebranded from VMTurbo in August, wasn’t actively looking to raise money when it received the interest from General Atlantic, says chairman Bill Veghte. After previously raising money from investors including Bain Capital Ventures, Highland Capital and Iconiq, Turbonomic still had much of its previous $50 million raise in the bank, Veghte says. The new funding will allow the company more flexibility to determine if it wants to prioritize profitability or growth. Turbonomic also plans to invest a substantial amount of the money back into research and development.
When it rebranded from VMTurbo, Turbonomic had claimed 24 consecutive quarters of “record growth.” In 2015, that translated to $44.6 million in revenue and growth of 78%, according to a source with knowledge of Turbonomic’s financials. Turbonomic is expected to post similar or slightly lower growth for 2016.
Venture capitalist Ben Nye, a Midas List member, took over as CEO in 2013 after leading Bain’s investment in the company. Founder Shmuel Kliger is currently president and in charge of product. “He’s a rare beast in that he can be both a great investor and a great CEO,” says his new board member Reiner.
Turbonomic is General Atlantic’s second bet in the world of data center and application management after AppDynamics. Because it helps companies move more of their workloads to the cloud and can also make it easier to store applications in virtual “containers,” a technology popularized by Docker, Reiner says Turbonomic is “on the right side of history.”
While part of Turbonomic’s value to customers today is that it can help customers also manage those workloads they keep on their own servers, Reiner argues that the company would do just as well in a future dominated by the public cloud players led by Amazon. “Large companies don’t want to be over-dependent on any one supplier,” Reiner says. Instead, a company like Turbonomic can help a company break up its applications into specific workloads that it could store separately, wherever made the most business sense. Adds the investor: “It gives you a least-cost router.”
Date: January 23, 2017