With $23.6M, Seattle Startup Igneous Systems Targets Next-Gen Datacenters

5/7/14Follow @bromano

Igneous Systems is quietly working on something to do with modern datacenter infrastructure—something that attracted a $23.6 million Series A funding round, announced by the Seattle startup today.

New Enterprise Associates led the round, which was joined by Seattle-based Madrona Venture Group (which incubated the company’s founders over the last nine months and led a $3 million seed round last summer), Redpoint Ventures (also a seed investor), and Sujal Patel, the co-founder of Isilon Systems.

Igneous’s co-founders also come from Isilon, the enterprise storage company that was acquired by EMC in 2010 for $2.25 billion, and has since become a significant source of talent for the next generation of Seattle software startups. Qumulo is another example, with a funding pattern, pedigree, and quiet nature that is strikingly similar to Igneous.

Igneous is led by CEO Kiran Bhageshpur, formerly vice president of engineering at EMC, where he was head of Isilon Storage Division product development; engineering vice president Jeff Hughes, director of engineering in the same division; and chief architect Byron Rakitzis, the first non-founder employee of NetApp, where he worked on technologies including flash storage.

At a high level, it sounds like Igneous is working on a product that would put the kind of bespoke datacenter management technologies developed by Internet giants such as Google, Facebook, and Amazon for their own use into the hands of other large businesses that have datacenters, but may lack the expertise to build the best tools to optimally manage and operate them.

That was my impression after talking with Madrona managing director Matt Mcllwain; reviewing Igneous’s funding announcement, where the company stakes out a goal of resetting “expectations about how best to build, maintain and scale enterprise data center infrastructures;” and reading coverage by GeekWire’s John Cook, who noted that Bhageshpur opened their interview by stating his intention not to talk about “what we are actually doing.”

McIlwain

McIlwain

These kind of datacenter architecture and management tools—if that is indeed what Igneous is after—represent another wave of technologies to migrate from the Internet giants to the broader business world, following, most recently, big data technologies.

“Probably the best example is Hadoop, which came out of Yahoo—and in some ways, by extension, Google—and is being commercialized by companies like Cloudera and Hortonworks,” McIlwain says.

Other relevant trends in this area include the Open Compute Project, in which Facebook is sharing its custom-developed datacenter hardware and software in the style of an open-source project, and the OpenStack open-source cloud computing software platform, bolstered today by HP’s announcement of Helion, a portfolio of existing and new cloud computing products that rely on OpenStack technology. (The Helion effort, by the way, is based here in Seattle.)

McIlwain says Igneous isn’t doing anything specifically related to Open Compute or OpenStack.

The company doesn’t have a website yet and consists of a “pretty small” team, but with nearly $24 million in capital, it’s poised to get big fast, McIlwain says.

A Series A funding round of this size is definitely on the large end of the scale, but it also may represent a kind of “new normal” for certain companies as early-stage funding splits into the haves and the have-nots, according to an analysis of Crunchbase data by Nikhil Basu Trivedi, associate at Shasta Ventures.

“There are countless examples of the ‘standard’ $2-6M Series A from 2007-2011 even for companies with significant usage or sales traction,” Trivedi writes on Medium. “Yet something seems to have changed over the past year and a half.” Specifically, there has been a decrease in the average Series A size, and, at the same time, a marked increase in the number of Series A funding rounds totaling between $10 million and $25 million. Trivedi counts 102 such rounds in 2013.

The Series A crunch, is really a “Series A bifurcation,” he writes.

“Companies with factors such as traction as exhibited by usage growth or revenue growth, or an all-star team, or an insanely compelling story are raising larger Series A rounds than in the past,” Trivedi writes. “But companies without such momentum are finding it harder to raise a Series A, often having to raise smaller Series A/’Seed+’ rounds, or bridge rounds, or facing the reality of having to shut down.”

McIlwain sees Igneous as another company with the potential to bolster the Seattle area’s position as a capital of cloud computing, anchored by Amazon Web Services, and Microsoft Azure, the leading and “strongest No. 2 player” in cloud computing, respectively.

“The next-generation datacenter is going to be a cloud-capable datacenter,” McIlwain says.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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