Turbonomic, the Boston startup formerly known as VMTurbo, announced on Monday that it closed a $50 million financing round led by former GE Chief Information Officer Gary Reiner.
The round, which was led by Reiner's venture capital firm General Atlantic, was also supported by existing investors Bain Capital Ventures, Highland Capital, Globespan and Iconiq. This brings the company's total funding to $120 million and its valuation to more than $800 million — a figure first reported by Forbes that Ben Nye, Turbonomic’s CEO, confirmed in a phone interview with me later on Monday.
Bill Veghte, the company's chairman, told Forbes the company plans to use the round for research and development, as well as to determine whether the company wants to focus on profitability or growth. The company made it onto last year's Inc. 5000 list of the fastest-growing private U.S. companies, with a 954-percent revenue growth over three years to $44.6 million in 2015.
At 400 employees now, Turbonomic plans to hire over 150 people this year, Nye said. The company is split between its headquarters in Boston, two offices in New York state, a development office in Toronto and an o ffice near London.
Nye said the company didn’t need to raise this most recent round of funding, especially since it still had most of the previous $50 million round it raised in 2015 because the company has been running very efficiently. However, he said, the company decided to raise the money anyways to ensure it has the resources, “regardless of macro economy,” to match its momentum.
With over 1,600 customers and such fast-growing revenue, the company has proven there is big demand for its “autonomic platform for any cloud,” which helps companies manage application performance in a hybrid cloud environment and, ultimately, save a lot of money. Nye said 93 percent of customers have received a full return-on-investment payback in less than three months, and that’s because the company’s software knows when to allocate the right amount of computing and storage capacity to applications at any time.
"It’s a kind of intelligence that doesn’t exist anywhere else on the market."
The reason it’s a big deal, Nye said, is that data centers and cloud services are “among the most expensive business real estate” for a company when factoring the cost of the hardware, the space for any on-premise servers, the people operating them and other factors. With Turbonomic, he said, it can “typically free up or reclaim as much as 30 percent to 60 percent” of a company’s data capital while also assuring the performance of its applications.
Nye said Turbonomic’s approach of using a self-managing computing model is different from how other companies help customers stay on top of application performance. These other companies, which are technically competitors, Nye added, will only alert customers when their applications are starting to run slowly or about to break down. “It’s a kind of intelligence that doesn’t exist anywhere else on the market,” Nye said.
With the levels of funding and revenue growth Turbonomic has, I asked Nye if the company had any ambitions about going public. He dodged the question, instead highlighting how the company brought on Reiner, the former GE CIO, as a lead investor and board member, as well as Veghte, the company’s chairman who was previously COO at HP and a top executive Microsoft for years. “It gets me really excited,” Nye said.
That could be an answer in and of itself.
