It wasn’t the monthly bank statement that made Nasuni, a Boston-based cloud storage technology startup, run out and raise $25 million in venture funding.
The company had yet to burn through even half of the $38 million it raised in September 2017 in a venture round led by Goldman Sachs. So, why did Nasuni recently raise more money?
CEO Paul Flanagan tells Xconomy that investors were calling up Nasuni asking if the business needed cash. The venture capitalists had spotted the widespread enterprise movement to the cloud from legacy data storage and sharing systems.
“We contemplated three alternatives,” Flanagan says. “One, not raising any more capital and getting the company to profitability with the money we had. Two, raising additional capital a year from now. And three, raising additional financing now. In the end, we concluded that taking additional financing now allows us to be more aggressive with this opportunity.”
The decision led to today’s announcement that Nasuni got a $25 million investment led by Telstra Ventures, the investing arm of Australian telecom Telstra. Goldman Sachs, Sigma Prime Ventures, North Bridge Venture Partners, and Flybridge Capital Partners joined in the cash infusion that the company says will help it accelerate its go-to-market strategy. The cash puts Nasuni’s total venture funding raised at $145 million since its founding in 2008.
Nasuni says the boost follows a record 2018 for the company, which recorded a 52 percent increase in software subscription sales. (The company declined to share exact figures.) It says its employee count has grown 85 percent in the past two years, and it’s looking into opening a new office space west of Boston to boost its engineering team by 50 percent within the next 12 months. The company recently opened an office in Durham, NC.
The company’s cloud-based file management product offers network file storage, backup, archiving, remote office services, and disaster recovery capabilities.
Back in 2016, Nasuni said cash-flow breakeven was within reach, but the company was investing more in the business instead. Executives said at the time that the goal was shifted to 2018.
How’d they do? Flanagan says the company remains on the same side of “breakeven,” though he claims it’s closer than ever to crossing over the threshold.
“We are not cash-flow breakeven yet,” he says. “But in 2018 we managed to reduce our [cash] burn rates to very modest levels—even flirting with cash-flow breakeven in [the fourth quarter] of 2018.”
And it looks like the company is facing a similar set of choices as before.
“We could drive to cash-flow breakeven, but that would not be the best business decision for our employees and investors,” Flanagan adds. “With our strong balance sheet, we intend to invest in product, engineering, as well as sales and marketing in hopes of accelerating our already impressive growth rates.”
