The cloud has become an increasingly important part of various organizations’ infrastructure. While some organizations are still not confident enough to move their critical workloads to the cloud, others have been swiftly migrating to the cloud for a couple of years now. However, it is common knowledge that the cloud helps organizations keep their data safe with the help of efficient backups and recovery options. Cloud data management takes care of tasks like data security, backups, recovery, monitoring, and analytics. Various cloud data management tools are available in the market today that help enterprises ensure their data is safe and readily available in case of a disaster. These tools help simplify the handling of data and are great investments. Therefore, it only makes sense that investors and venture firms would want to invest in the vendors that provide these tools as they are proving lucrative. With the recent acquisition of Veeam, it has become even more apparent that the cloud data management market is raking in money and investors want in on that action.
About Veeam
Veeam is a Baar, Switzerland-based startup that offers an efficient cloud data management solution that empowers customers with features like backups and intelligent recovery, data recovery orchestration, monitoring and analytics, and cloud mobility among other tools. Veeam is compatible with virtual, physical, and cloud platforms. Veeam takes over major data management tasks thereby reducing administrative overhead. Veeam is a dominant cloud data protection and management company in Europe. However, it is lesser-known in the U.S. Veeam has over 350,000 customers worldwide. It is constantly growing and gets around 4,000 new bookings per month. The company has incredible customer retention and currently provides its services to around 81 percent of the Fortune 500 companies. Veeam has offices in over 30 countries and customers in over 160 countries, making it a leader in the cloud data management market. It has partnerships with companies like HPE, NetApp, Cisco, and Lenovo.
Veeam is already profitable and has managed to generate a revenue of over $1 billion in 2019.
Insight Partners and its acquisition of Veeam
Insight Partners is a New York-based private equity firm that has been an investor in Veeam for a while. Insight Partners led the investment of $500 million into Veeam last year. However, before that investment, Veeam had already raised $32 million without any external funding. Insight Partners has been known to make investments in software and SaaS companies. And, the acquisition of Veeam is not its first. In 2019, Insight Partners acquired a threat intelligence technology company, Recorded Future, for $780 million. Recently, Insight Partners announced the acquisition of an IoT security startup called Armis for $1.1 billion. Insight Partners has a division called Onsight that helps portfolio companies with scaling and operations. Onsight helps startups grow by boosting sales and marketing and gets them ready for exits like IPOs.
The acquisition of Veeam is Insight Partners’ biggest ever, valued at $5 billion. Announced in January, this acquisition is expected to be completed by the first quarter of this year. Veeam has wanted to expand globally and the only thing preventing that was not having a presence in the U.S. market. The U.S. cloud market is growing faster than ever and is home to all the important cloud vendors.
Veeam was founded in 2008 when the U.S. and the rest of the world were going through an economic crisis. Being established in Europe made it a popular choice for the European market, but not so much in the U.S. Various vendors based in the U.S. face the opposite problem of not making inroads into Europe. With this acquisition, Insight Partners wants to help Veeam with its “Act II.” Veeam will now be a U.S. company with its headquarters moving somewhere in the U.S. as well. Insight has already reorganized the leadership to help meet this new market head-on.
Veeam can survive on its own, however, this acquisition is a nudge to speed up the growth by entering previously uncharted territory. Insight Partners has already helped several companies with IPOs and that’s what it wants for Veeam eventually. However, Insight Partners believes that a lot of work needs to be done to get Veeam ready for that.
What’s next and how does it affect the cloud data backup market?
After modernizing backup and recovery, Veeam wants to help organizations with migration. Many organizations are also gravitating towards the hybrid cloud infrastructure for more agility. Veeam wants to capitalize on the growing need for cloud data management across their hybrid infrastructure. It plans on doing this by diving deep into the hybrid cloud market. The company is already working in that direction with recent offerings like Veeam backup for AWS, Office 365, and Azure. Veeam will keep providing its services to existing customers without any major changes in the future.
However, this acquisition is a huge deal. Insight believes with this funding, Veeam has the firepower to become a juggernaut in the data backup market. Insight Partners wants to increase the workforce that is currently at 1,200. Increasing the headcount will help Veeam work on innovating and expanding its horizon even faster. Investment in more engineers will help existing customers using the hybrid cloud infrastructure. Insight is not a tech firm, therefore, the main motive behind this acquisition is the returns they’ll get when Veeam expands. Insight won’t look to dissolve or discontinue Veeam like many other tech firms do when they acquire another tech firm. Insight wants this to work and is offering Veeam the financial support it needs to succeed. The new leadership will help put it in the center of this market allowing it to have an unparalleled opportunity for growth.
Several changes coming
Veeam is more than just a unicorn that attracted a venture capital firm to invest in it and eventually buy it. It has already been profitable without even focusing on the U.S., which is the biggest market for data management and data backup. With a clear growth path, it is constantly making strides to become better. And with this acquisition, the future seems bright. Insight is fully committed to making Veeam a success story. With a complete reorganization, Insight is going to make Veeam more appealing to the U.S. market attracting new shareholders and partnerships.
Venture capital firms investing in tech companies is something that doesn’t always go well. However, in this case, we have Insight, a venture capital firm, that has a lot of experience in acquiring unicorns and leading them to successful IPOs and Veeam, an already profitable private company. In the next couple of months, Veeam will go through several changes. What we have to look forward to is how it uses the resources it now has to spread across adjacent markets and make a splash in the U.S. with a group of competitors already far ahead. There could be several announcements in the next few weeks. Finally, only time will tell what this marriage actually leads to.
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