Cloud storage startup Wasabi nabs $112M, plans new datacenters

Cloud data storage company Wasabi today announced that it raised $112 million in series C financing, bringing its total raised to $219 million. The company says that the funding will be put toward expanding its network of resellers, partners, and distributors as it opens new datacenters, grows its team, and builds its brand via new marketing initiatives .

With cloud data storage growing 60% year over year, low-cost, reliable, and scalable storage services are in demand by a range of organizations. As of 2020, around 50% of all corporate data was stored in the cloud, according to Statista. And a 2018 report from Domo estimated that humans were creating 2.5 quintillion bytes (or 2.5 exabytes) of data per day, a number that has only increased since.

Launched by Carbonite cofounders David Friend and Jeff Flowers in 2017, Boston-based Wasabi offers what it calls “hot cloud storage,” a cloud object storage technology that provides an interface to use with storage apps, gateways, and other platforms. The company claims its offering is faster than traditional frequent-access storage products while treating all data equally and making it readily accessible.

Wasabi supports three types of data: hot data, active archive “cool data,” and inactive archive cool data. Hot data is data that needs to be readily available to the operating system or app with which it was created. Active archive cool data is considered too valuable to discard, but is only accessed occasionally. And inactive archive cool data is seen as essential to save but retrieved infrequently, typically for regulation and compliance reasons.

Wasabi, which doesn’t charge fees for egress or API requests (i.e., when data leaves the network in transit), claims its storage services work out to one-fifth of the cost of Simple Cloud Storage (S3) on Amazon Web Services (AWS). But as developer Robert Hook notes in a blog post, it’s difficult to perform a direct cost comparison because the pricing structure for Wasabi and AWS differs. AWS provides a range of options for different use cases and access patterns, levying fees on transferring objects in and out of storage. Wasabi’s pay-as-you-go pricing model is simpler, but customers who store objects are charged the full amount even if they delete them. Every object has a retention period of 90 days such that when an object is deleted, it’s moved into a deleted object store and remains recoverable for three months. Wasabi customers are charged the same for the deleted store as for their active store.

“[For example], if you delete the 100TB of storage in less than 23 days, Wasabi will be more expensive than AWS S3,” Wasabi explains on its website. “However, if you store the 100TB of data for more than 23 days, Wasabi will be less expensive than AWS S3 … In summary, if you have data that you only need to keep for short periods of time before deletion, then it may be more cost effective for you to keep this data in AWS.”

Attractive pricing

Wasabi’s pay-as-you-go pricing model is $5.99 per TB per month. The company also offers a reserved capacity storage pricing model with a 30-day storage retention policy that allows customers to purchase 50TBs or more capacity for one-, three-, or five-year terms.

The structure evidently appeals to some companies, as Wasabi says it has over 15,000 businesses storing “hundreds of petabytes” of backup, surveillance, medical imaging, life science, education, genomics, AI and machine learning, television, movie, and government data on its servers. Revenue grew by 5 times in 2019, and Q1 growth that year was in excess 40% compared with Q1 2018.

The real trick for Wasabi will be maintaining competitiveness in a cloud storage market that’s projected to grow to $137.3 billion in value by 2025. Beyond AWS, Wasabi counts Google Cloud Platform and Microsoft Azure among its competitors, as well as Cohesity, Datrium, Reduxio, and others. One rival, Rubrik, which offers cloud-based data and storage management, has raised over $292 million since launching in 2014.

“With revenues tripling for each of the last 3 years and over $100 million of new investment led by one of the world’s largest and most prestigious financial institutions, our customers will know that their data is in the hands of a reliable, fast-growing company with the substantial resources to meet their growing needs,” Friend said in a press release. “Storing the world’s data in the cloud is one of the biggest opportunities in the IT industry, and we are now well positioned to secure a leadership role in the evolution of the cloud.”

Fidelity Management & Research Company led Wasabi’s series C announced today, which had participation from existing investors. It follows on the heels of $27.5 million in debt financing announced in January.

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