Local venture capital investors are in line for returns of up to 20x investment, resulting from the acquisition of data technology company Instaclustr by US hybrid cloud data services and data management company NetApp (NASDAQ: NTAP).
Canberra-founded Instaclustr is an investee of ANU Connect Ventures, OIF Ventures (formerly Our Innovaqtion Fund), Bailador (ASX: BTI), MTAA Super (now merged into Spirit Super), Artesian Venture Partners, Capital Angels and Sydney Angels.
ANU Connect Ventures, led by chief executive Nick McNaughton, the angel groups and Our Innovation Fund, LP, then newly set up by Geoff Levy of Monash Private Capital and Dimension Data founder David Shein, were investors in Instaclustr’s $2 million seed round in 2014.
Our Innovation Fund went on to co-lead Instaclustr’s $7 million Series A round with Bailador in 2016. ANU Connect Ventures also participated in that round. Bailador’s contribution was $4 million.
Our Innovation Fund was set up as an early-stage venture capital limited partner (ESVCLP) fund which means that its returns of capital are tax free.
New York growth equity firm Level Equity led a $21 million investment round in Instaclustr in 2018. Our Innovation Fund and ANU Connect Ventures supported that round.
San Jose-based NetApp announced on 7 April that it had signed a definitive agreement to acquire Instaclustr with the deal subject to customary closing conditions.
No value for the deal was disclosed but it is likely to be more than $500 million noting that Instaclustr had reportedly been working towards an IPO last year.
NetApp chief executive George Kurian said: “NetApp has long been a leader in solutions enabling customers to run applications. The acquisition of Instraclustr will combine NetApp’s established leadership in continuous storage and compute optimisation with Instaclustr’s fully managed database and data pipeline services to give customers a cloud operations platform that provides the best and most optimised foundation for their applications in the public clouds and on-premises.”
The acquisition of Instaclustr is the latest of a series of strategic acquisitions by NetApp in a bid to lead the CloudOps platform space. Other acquisitions include Spot, CloudCheckr, Data Mechanics and Fylamynt.
NetApp’s general manager, public cloud services, Anthony Lye said: “As companies race to modernise and digitally transform in the cloud, they must implement solutions that enable them to focus more on building and releasing cutting-edge applications at speed, spending less on infrastructure management operations. Instaclustr does just that and will be a significant addition to our Spot by NetApp portfolio, solving common challenges of cloud complexity, cost overruns, single vendor lock-in and customers’ lack of internal technical resources. The acquisition marks a critical advancement in our strategy to run application driven platforms and infrastructures.”
Instaclustr chief executive and co-founder Peter Lilley said data management technology platforms are increasingly important for enterprises looking to accelerate application development.
“Instaclustr delivers fully managed open-source solutions that give companies increased productivity and reduced cost,” Lilley said. “Instaclustr’s growth has been driven by the fact that companies want to leverage open-source databases, pipelines, and workflow applications without overwhelming themselves with the complexity and cost of managing and operating them.”
Lilley said that, in future, organisations building multi-cloud and hybrid cloud applications would be able to access Instaclustr’s data technology along with NetApp and Spot by NetApp infrastructure technology.
Instaclustr chief technology officer and co-founder Ben Bromhead said NetApp’s infrastructure paired perfectly with Instaclustr’s “data-layer-as-a-service” offerings.
“For enterprise customers operating applications in the public cloud or on-prem, NetApp and Instaclustr’s combined platform will offer an unparalleled solution for overcoming cloud complexities,” he said.
ANU Connect Ventures chief executive Nick McNaughton said the firm was delighted that Instaclustr was to be acquired by NetApp. “Our mission is to back unique ideas, providing their early capital as they strive for global success,” he said. “We have been on this journey with Pete and the team since 2014. Today is a result of the hard work of countless people in the company, on the board, from investors and from partners.”
On 8 April, Bailador announced that, following announcement of the acquisition agreement for Instaclustr, it would increase the holding value of its stake in the company by $54 million to $118 million.
Instaclustr is Bailador’s second largest investment after Siteminder (ASX: SDR).
Instaclustr was founded in 2013 by Adam Zegelin, Ben Bromhead, Doug Stuart and Peter Lilley. By mid-2019 it had annual revenue of around $14 million and had opened additional offices in the US and the Europe.
Early last year, Instaclustr acquired Germany-based credativ, a global provider of support for open-source relational database technologies including PostgreSQL, Kubernetes and Debian.
Instaclustr was advised on the acquisition by AGC Partners, Blackpeak Capital and Morgan Stanley.