Wasabi Raises $112M Series C at $700M Valuation

Wasabi Secures $112 Million to Challenge Amazon S3

Competing with Amazon S3 in the cloud storage sector presents a significant challenge, yet Wasabi has developed a strategy for cost-effective storage and is passing those savings on to its clientele. The Boston-based company recently announced a $112 million Series C funding round, resulting in a $700 million valuation.

Investment Details and Growth

Fidelity Management & Research Company spearheaded the investment, with contributions from existing investors. To date, Wasabi has raised $219 million in equity, supplemented by debt financing. Building a robust storage infrastructure requires substantial capital investment.

According to CEO David Friend, the company is experiencing rapid growth and the new funding is essential to sustain this momentum. “Business has been expanding rapidly. Achieving a $700 million valuation in this round demonstrates strong performance. We’ve seen threefold growth over the past three years and are currently exceeding projections for the current year,” Friend stated.

Expansion and Data Sovereignty

Demand for Wasabi’s services continues to increase, with growing interest from international markets. This expansion is a key driver for seeking additional capital. Furthermore, compliance with data sovereignty regulations, which mandate in-country storage for sensitive data like financial and healthcare information, necessitates building capacity in specific geographic locations.

The company has refined its approach to constructing storage facilities, typically within co-location centers. During the pandemic, efficiency was enhanced by outsourcing hardware assembly to a specialized firm. Channel partners, including managed service providers (MSPs) and value-added resellers (VARs), are also incentivized to promote Wasabi to their customer base.

Pricing and Competitive Advantage

Wasabi’s storage services begin at $5.99 per terabyte per month. This pricing is significantly lower than Amazon S3, which starts at $0.23 per gigabyte for the initial 50 terabytes, equating to $23.00 per terabyte – a considerably higher cost than Wasabi’s offering.

Despite its competitive pricing, Friend acknowledges that Wasabi, as a startup, still faces obstacles. Companies prioritize long-term stability, and this substantial investment from Fidelity, a reputable investor, enhances Wasabi’s credibility with large enterprise clients, without the intrusive demands often associated with venture capital firms.

Strategic Investment and Future Outlook

“Fidelity represents an ideal investment partner. They do not seek a board seat or dictate company operations. Their interest lies in supporting a business with a virtually limitless market opportunity, potentially leading to an IPO,” he explained.

Friend positions Wasabi as a disruptive force in the market. He believes the company has outpaced competitors within its segment, and that larger hyperscalers haven’t fully recognized the threat due to Wasabi’s current smaller market share. While an IPO remains a future consideration, securing an institutional investor at this stage is seen as a step towards that possibility.

“The market size is substantial, and we entered at an opportune moment with the right technology. I am confident that Wasabi has the potential to evolve into a significant public company within the cloud infrastructure landscape. We’ve established a distinct niche and I foresee continued growth,” he concluded.