DataGravity Snapped Up by HyTrust After Struggles and Layoffs

DataGravity, one of New England’s bigger tech bets, has been acquired by California cybersecurity firm HyTrust.

Terms of the deal weren’t disclosed, but the financial outcome doesn’t seem to be a good one for DataGravity’s investors, who had pumped at least $92 million into the company. Mountain View, CA-based HyTrust also announced a $36 million Series E funding round on Tuesday, and said it will use a portion of that investment to fund the DataGravity acquisition. (An unnamed source told Axios that DataGravity’s investors are “not expected to recoup all of their original investment.”)

An Xconomy e-mail message seeking comment from DataGravity CEO Paula Long was not immediately returned.

Nashua, NH-based DataGravity was founded in 2012 by Long (pictured left) and John Joseph, two veterans of EqualLogic, the storage company acquired by Dell in 2007 for $1.4 billion in cash. With DataGravity, they were part of a trend in IT around combining data storage and computing resources to create “smart storage.” The idea is to help businesses glean insights from their corporate data in ways that aren’t easy to accomplish with older, more traditional storage systems from big companies like IBM and Dell EMC.

About two years ago, DataGravity started emphasizing its cybersecurity features, adding capabilities to its product that help companies and organizations protect their data from within their storage system. The company employed 130 people at the time.

But DataGravity apparently encountered difficulties with its approach. The company laid off an unspecified number of people in February 2016 to trim spending, Fortune reported. The following month, it decided to stop selling hardware as part of its package of products, instead opting to run its software on other vendors’ storage arrays. That decision also involved job cuts, Fortune reported.

HyTrust said DataGravity employees will join the company, but DataGravity chief technology officer David Siles told The Register that “not everyone was retained” in the acquisition.

New England has seen several acquisitions this year in IT and cybersecurity, although DataGravity seems to be one of the smaller ones. Other deals include the $650 million sale of IT hardware and software provider SimpliVity to Hewlett Packard Enterprise, and the $614 million sale of application testing and security firm Veracode to CA Technologies.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

Trending on Xconomy