A startup founded out of proceeds from Bandwidth’s IPO in 2017 has raised nearly $8 million to help companies recover their workloads in the event of disasters.
Arpio, based in Durham, closed on nearly $8 million of an $8.2 million round, according to a securities filing that dropped Friday. And, despite the competitive funding environment, it had multiple investors interested in participating, according to CEO and co-founder Doug Neumann.
In an interview, Neumann told Triangle Inno how the startup began and what’s next.
“After Bandwidth went public, I wanted to do something fun, so we decided we’d launch a startup,” Neumann said. He was the vice president of systems and software development at Raleigh-based communications software firm Bandwidth when the idea emerged.
Businesses – Bandwidth included – have to protect their IT systems. And when there’s an outage, they need the ability to recover them quickly. While there are solutions out there, “none really contemplate the types of workloads that people run in the cloud,” Neumann said.
He realized there had to be a better disaster recovery solution – and if there wasn’t, he could create one.
Then Bandwidth reached a big milestone – going public. The move meant big returns for employees at the time, including Neumann. He used his proceeds to make the company a reality.
Neumann had met his co-founder, Shaw Terwilliger, at Microsoft (Nasdaq: MSFT). The pair also worked together at Bandwidth, though Terwilliger had moved onto Pattern Health by the time Bandwidth went public in 2017.
They started collaborating. The result was an automated disaster recovery solution for cloud workloads running on Amazon Web Services (Nasdaq: AMZN). According to the company, the SaaS product can help companies recover from outages in minutes.
And backers bought in, including startup accelerator Y Combinator. So did customers. According to Neumann, the firm works with companies like SAS and Choice Hotels.
The latest fundraise will allow Arpio to take its product up a notch, Neumann said. And that means growing outside of just AWS. The plan is to also support workloads on Microsoft Azure.
The money will also go toward building a sales and marketing operation.
“We’ve built a great product, but we’ve not made significant investments in sales and marketing,” he said. “The idea is to take most of this money and invest it in building a sales team, get the messaging out there.”
The firm, at eight employees, is hiring – particularly in sales and marketing.
The funding – and the interest from multiple backers – validates the concept, as Neumann said five investors competed for the deal.
“Our customers are really excited about what we’re doing for them, so we were able to tell that story to the VC firms and show them how much opportunity there really was,” Neumann said.
The lead investor was S3 Ventures out of Texas, but altogether 27 backers participated, according to a securities filing.
Arpio is not the only startup that began as an idea at Bandwidth and is now closing on millions in capital.
Raleigh-based Relay announced earlier this year that it had closed on $13 million in financing. Relay was initially part of Republic Wireless, a low-cost mobile phone service that spun out of Bandwidth in 2016. The Republic Wireless brand was acquired by Dish Network in 2020.