The Growing Need for Robust Data Protection

With an increasing number of organizations depending on digital infrastructure for daily operations, they are simultaneously becoming prime targets for cyberattacks. This trend, accelerated by recent global events, is driving a significant demand for effective data protection strategies in the event of a security breach.

HYCU, a provider of multi-cloud backup and recovery solutions for both mid-market and enterprise clients, has announced a substantial funding round. The company secured $87.5 million in Series A funding.

Investment and Expansion Plans

This capital injection will be utilized by the Boston-based startup to further develop its platform, extend its service reach into new markets, and expand its team by hiring an additional 100 employees.

According to CEO and founder Simon Taylor, HYCU aims to deliver backup and storage services with the same ease of use as consumer-level solutions like iCloud.

He explained that while primary storage has largely transitioned to a SaaS model requiring minimal professional services, data backup remains a complex, legacy process. Current solutions often lack the flexibility needed for multi-cloud environments.

The HYCU Ethos

The company’s name, pronounced “haiku,” reflects its core principles. It alludes to the Japanese poetic form, which appears simple but contains deep meaning, and also represents “hybrid cloud uptime.”

HYCU is well-known for its integration with Nutanix, but has broadened its capabilities to support enterprises utilizing VMware, Google Cloud, Azure, and AWS. The company also offers HYCU Protégé, a tool designed to facilitate data migration, which will also undergo further development.

Funding Details and Investors

Bain Capital Ventures led the funding round, with participation from Acrew Capital, which recently invested in Pie Insurance’s $118 million funding round. The specific valuation of HYCU has not been publicly disclosed.

This marks the company’s first major external funding announcement since its founding in 2018. Despite this, HYCU has rapidly grown into a significant competitor against established players such as Rubrik, Veeam, Veritas, and CommVault.

Customer Focus and Future Growth

HYCU currently serves over 2,000 customers across 75 countries. Taylor emphasized that delaying external funding allowed the company to prioritize customer needs and build a product aligned with their requirements.

With its current scale achieved, the company is now poised for accelerated growth. Taylor stated, “This is just round one for us,” indicating plans for further funding rounds in the future.

Exploring Funding Options

The funding round followed considerable inbound interest, not only from traditional venture capital and private equity firms, but also from Special Purpose Acquisition Companies (SPACs) seeking investment opportunities.

Bain Capital Ventures’ significant investment in Nutanix, totaling $750 million last August, highlights a strategic alignment. Supporting businesses integral to the infrastructure of portfolio companies makes logical sense.

Competitive Landscape and Industry Trends

HYCU’s capital raise is driven not only by its own growth potential but also by the investment activity of its competitors. Veeam’s acquisition by Insight for $5 billion and subsequent purchase of Kasten, and Rubrik’s acquisition of Igneous, demonstrate a trend of consolidation and expansion within the industry.

However, the sector isn’t without its challenges. The acquisition of Igneous occurred while the company faced financial difficulties, and Rubrik experienced a data leak in 2019, underscoring the importance of robust security measures even for data protection specialists.

Addressing the Ransomware Threat

Taylor acknowledged that ransomware remains a persistent threat for customers, mirroring observations from the broader security community. HYCU’s approach centers on delivering services in an agent-less environment.

“We integrate into the platform,” he explained. “This ensures rapid deployment without requiring professional services for integration, and it also complicates matters for malicious actors.”

Strategic Focus and Future Direction

Looking ahead, HYCU will maintain its focus on backup and recovery, with no immediate plans to expand into adjacent areas like broader security services. The company’s goal is to provide IT departments with visibility and protection throughout their cloud journey.

Board Appointments and Industry Validation

Enrique Salem, a partner at Bain Capital Ventures and former CEO of Symantec, will join HYCU’s board of directors. He recognizes the market opportunity for HYCU’s innovative approach.

“We are in the early stages of a multi-decade shift to the public cloud, but existing on-premises backup vendors are poorly equipped to enable this transition, creating tremendous opportunity for a new category of cloud-native backup providers,” Salem stated. “HYCU is a clear leader in a space that will continue to create large multi-billion dollar companies.”

Stefan Cohen, a principal at Bain Capital Ventures, will also be joining the board.