Automatic Internet-based backup services—the first form of “cloud computing” to hit the mainstream market—have been making news lately. Last Wednesday, the Mozy division of Hopkinton, MA-based EMC (NYSE: [[ticker:EMC]]) announced that its software will power an online backup service available to buyers of Thinkpad SL notebook computers, the newest line of business laptops from Lenovo. Not to be outdone, Boston-based Carbonite is expected to announce soon that it has formed an even broader partnership with the Chinese computer maker: All Lenovo IdeaPad and IdeaCentre computers—the company’s lines of home and home-office laptops and desktops, respectively—will now come with Carbonite’s online backup software pre-installed.
If IdeaPad and IdeaCentre owners give Carbonite an e-mail address and password, they’ll get 30 days of free backup service on Carbonite’s servers, after which they can elect to continue the service at $49.95 per year. The arrangement is a coup that could bring Carbonite tens of thousands of new users at a time when the competition for customers of online backup services is all about exposure, branding, and name recognition.
At the same time, Carbonite is about to announce formally that it has closed a $20 million financing round, the third since the company’s founding in 2005. (It raised $2.5 million in Series A funding in February, 2006, and completed a $15 million Series B round in May, 2007.) Carbonite co-founder and CEO David Friend, a veteran of the Boston technology scene with five previous startups to his name, calls the new financing round “a real achievement for the company,” given the general sense of caution prevailing in investment markets. All of the company’s existing investors—including Menlo Ventures, 3i Group, and CommonAngels—came back for the latest round, but it also included a new institutional investor, Performance Equity of Stamford, CT.
For the Series C round, “We were looking for somebody with their feet more in Wall Street than in Sand Hill Road, to show that we have a working business model,” Friend says. “This is no longer venture capital that we’re raising—it’s expansion capital, and the people who gave us term sheets did so because they looked at Carbonite and saw that we have a marketing engine where we can put a dollar in the top, turn the crank, and get four or five dollars out the bottom over the next two or three years.”
Whether online backup services really turn into that kind of money machine—and who ends up with the profits—will depend to a large extent on how quickly consumer awareness of the technology spreads and which company can get its name in front of computer users first.
Most computer users are aware of the possibility of losing the data on their local hard drives, whether through theft, hardware failure, or some other disaster. And most make at least desultory efforts to back up crucial business or personal data, often on DVD-RW discs or on a second, external hard drive. But relatively few people so far are aware of services like those from Carbonite and Mozy, which copy the data on PC hard drives to far-away data centers over broadband Internet connections. These backups occur automatically whenever there is new data to be duplicated. In the event that local data is lost, it can be restored by
