Aviatrix valuation triples on investor enthusiasm for cloud tech
New funding raises the start-up's value to $2bn in just seven months
The latest unicorn start-up is Aviatrix Systems, a cloud networking provider now valued at $2bn. The company raised $200m in the deal, which highlights investors’ enthusiasm for technology that smooths big companies’ transition to the cloud.
TCV, a technology investment firm, led the financing, with participation from other new backers including Insight Partners and Tiger Global. It comes just seven months after a round that valued the company at $700m.
The steep rise in valuation underscores how eager businesses are to move digital information out of their own servers and into the cloud’s distributed data centres. Many companies work with several cloud providers, multiplying both the complexity of the work and the opportunities for services that help them manage the change.
It’s a good time to be a cloud start-up. Snowflake, a data warehouse company, went public about a year ago at a valuation of $33bn, just months after a funding round valuing it at $12.4bn. The valuation of data analysis company Databricks jumped to $38bn in August, from $28bn in February.
“The reason the valuations are so high is the growth is so high,” said Aviatrix CEO Steve Mullaney.
Before joining Aviatrix, Mullaney sold Nicira Networks, a company that pioneered the use of cloud-based servers, to VMware in 2012 for $1.26bn. He came out of retirement to run Aviatrix, which was founded in 2014 by Sherry Wei, now the company’s chief technology officer.
The Santa Clara, California-based company projects revenue on an annualised basis will be $40m by the end of 2021 and $100m by the end of 2022, Mullaney said. Its customers include Accenture, Heineken, Sony Pictures Entertainment and United Airlines Holdings.
Once cautious of losing control of their data, many companies have come to appreciate the flexibility that comes with using the cloud. They can easily adapt to sharp changes in customer demand or extended power outages. The gap Aviatrix fills is ensuring a company’s systems work smoothly with the various clouds from Amazon.com, Microsoft and Alphabet. For example, routing, firewalls and logins can be particularly problematic.
Mullaney compared the major cloud services to all-inclusive holidays, which can let down customers who on arrival realise the amenities aren’t quite what they expected. “It looks like a dream, all you can eat, all you can drink,” he said. “And then you get there.”
TCV sees Aviatrix as a modern-day Cisco Systems, which helped companies adapt to the internet era, but on a bigger scale. Companies work with so much more data now, and often across several cloud providers, said Tim McAdam, a general partner at TCV. “Those dynamics did not exist when Cisco was in its heyday,” McAdam said. “It’s a whole different magnitude of problem.”
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