More Funding for Hyper-Converged Upstart Pivot3 

Hyper-converged infrastructure specialist Pivot3 announced a $45 million funding round on Tuesday (Feb. 24). It said proceeds from the equity and bank-funding round will be used to expand its sales and marketing efforts as demand increases for its infrastructure products.

"The new funding is aimed at accelerating Pivot3’s growth and extends the company’s technological competitive advantage," the Austin-based company said in a statement announcing the funding.

New investor Argonaut Private Equity joined S3 Ventures, InterWest Partners, Mesirow Financial Private Equity and the Wilson Sonsini Goodrich & Rosati investment fund in the latest equity round. Pivot3 said Steve Mitchell, managing director of Argonaut Private Equity, would join its board of directors.

Among other things, the equity and cash infusion will be used to update Pivot3's hyper-converged infrastructure to support additional IT workloads as customers' expand the range of applications running on its platform. Founded in 2003, Pivot3 has focused on developing a scale-out architecture to deliver large-scale, high-bandwidth storage based on commercial hardware and its virtualization and other proprietary software.

Along with extending its virtual desktop capabilities, Pivot3 also said the funds would be invested in data backup and disaster recovery products as well as virtualization and storage products like its virtual security server.

The funding boost comes as hyper-converged systems are entering the mainstream. In the emerging approach, a server cluster is designed to run virtualized server workloads and a virtualized storage area network simultaneously on the same iron.

"The pervasive need to address unmanageable IT complexity while providing lower cost and improved service on a global scale has created an environment for explosive growth in the [hyper-converged infrastructure] market," Ron Nash, chairman and CEO of Pivot3, asserted in a statement announcing the close of the funding round.

The company cited a recent analysis that pegged the hyper-converged infrastructure sector as a $17.8 billion global market. The hyper-converged market is heating up as larger players like Hewlett-Packard have zeroed in with well-timed acquisitions as a means of competing with Pivot3 and other hyper-converged infrastructure upstarts. They include Gridstore, Maxta, Nutanix, Scale Computing, Simplivity and others. (Earlier reports that HP was pursuing Simplivity proved false.)

Along with acquisitions and partnerships such as Dell's collaboration with Nutanix and VMware's hyper-converged infrastructure entry, EVO:RAIL, the upstarts have been steadily upgrading their offerings. For example, Nutanix rolled out an all-flash system for server-storage hybrids in October.

The VC community has shown increasing interest in the hyper-converged market over the last year. Last January, for example, investor poured a whopping $101 million into Nutanix in a fourth round of funding.

Prior to the close of its latest funding round, Pivot3 had raised $139.8 million in 13 previous funding rounds, according to the investment tracker CrunchBase.