Chances are you see a story about cloud storage, and you yawn and move on, but Wasabi, a startup from the folks who brought you Carbonite backup, might make you pause. That’s because they claim to have found a cheaper, faster way to store data, and apparently investors like what they are seeing, forking over $68 million for a Series B investment.
Yes, that’s a hefty amount for an early round, but with founders who have multiple successful exits, investors might have seen a lower risk than you might think. The company didn’t go with your usual Sand Hill Road suspects here, instead opting for an unconventional set of industry veterans and family offices along with Forestay Capital, Swiss entrepreneur, Ernesto Bertarelli’s technology fund.
Much like Packet, a startup that scored $25 million the other day, they are hoping to take on cloud giants by finding a seam in the market they can exploit. While Packet was looking at customized compute, Wasabi is concentrating squarely on storage, an area they understand well from their Carbonite days.
CEO David Friend reports they are offering a terabyte of storage for just $5 a month, and says they are growing 30-40 percent month over month, since they launched in May 2017. In fact, he says they already have 3500 customers.
They took their time building their own custom storage solution, which he claims is faster and more efficient than any out there, allowing them to undercut Amazon S3 storage prices. Amazon is charging .023 cents per gigabyte for up to 50 terabytes. That works out to $23 a terabyte, substantially more than Wasabi’s asking price.
It begs the question though, how they can afford to keep scaling such a solution. For starters, they use co-location facilities like Digital Realty and Equinix for their storage solution instead of building out their own data centers. Friend says as they scale, they won’t be using their investment capital to add more capacity. Instead, they will be borrowing from banks in an apartment building kind of model, where you build the building, rent out the apartments and break even after a certain amount of time. He says, Wasabi can continue to grow this way.
They are going after fat data targets like media and entertainment and genomics, where they believe companies looking for the best price possible will bypass the big three — Amazon, Google and Microsoft — to build a more cost-effective storage solution.
The road is littered with failed cloud storage plays, but these folks have an experienced team and plenty of money behind them. Time will tell if they can buck the odds and take on the world’s biggest cloud companies by competing on price and performance, or if they can continue to keep prices this low as they grow and must add increasing capacity without the benefit of being webscale.