Startups of the week: Funding gives cloud firm a big boost
Goldman Sachs’ investment hints at IPO as sales rise for Mountain View’s Egnyte
Egnyte, a Mountain View software company, has received $75 million in funding, its first financing in nearly five years and a strong indication that the company could be gearing up to go public as Wall Street proves increasingly welcoming to new stock offerings.
The company provides businesses with secure file sharing and data protection. Goldman Sachs put together the new round in under three months, according to Egnyte CEO Vineet Jain, bringing the company’s total funding to $137.5 million. Goldman orchestrated a $500 million infusion into Facebook in 2011, a year before it went public.
When Jain started Egnyte in 2007, he said
the movement of data to the cloud — remote servers, versus computer hardware purchased and maintained in-house — was just beginning to gain traction.
“I could see a trend developing where businesses ... didn’t want to deal with the overhead of hardware,” Jain said.
Since then, Egnyte has grown to more than 500 employees. It has offices in Spokane, Wash.; Raleigh, N.C.; Poland; and the United Kingdom. Customers using Egnyte software include Red Bull, BuzzFeed and Nasdaq.
Egnyte’s products, which allow customers to manage files and restrict access, are well suited for businesses in industries facing heavy regulation, Jain said, like finance and pharmaceuticals.
“They get the comfort that this product addresses all (their) compliance needs, but there’s no hardware to maintain,” Jain said.
The company has seen sales grow more than 30 percent a year. Jain said the funding could take that rate to nearly 50 percent, adding that Egnyte is cashflow positive.
Rob Enderle, a principal analyst at the Enderle Group, said Goldman’s funding shows that the bank has faith in Egnyte and indicates the company could go public in about a year.
Enderle said Goldman is probably counting on profiting from future deals with Egnyte. Goldman, like other banks, charges companies hefty fees when it takes them public.
New money: YourMechanic
What it does: Connects car owners to mechanics. What happened: The company raised $10.1 million in a round of funding led by Royal Bank of Canada and SoftBank Capital. Why it matters: With the rise of ride-hailing and car-sharing services, a breakdown isn’t just an inconvenience; it hits people’s pocketbooks. YourMechanic is betting that even self-driving cars will require a human to service them. Headquarters: Mountain View Funding: $35.3 million Employees: 51-100
Also trending: Rippling
What it does: Offers an employee management system where companies can update workers’ information in one place. What happened: The company plans to introduce Rippling for Accountants, which lets professionals manage multiple clients. Accountants who handle payroll and other tasks for businesses could be a good sales channel. Why it matters: “The whole concept of it is something more deeper and fundamental than an HR system,” says Rippling CEO Parker Conrad, who also founded Zenefits, a rival HR software company. Headquarters: San Francisco Funding: More than $7 million, according to Axios. (Conrad would not disclose the amount.) Employees: 55