On March 21, a small Pittsburgh startup made headlines when Google corporate made a surprising investment in it. The storage company, called Avere Systems, announced $14 million funding from both Silicon Valley venture investors and Google. Avere Systems, a Google Cloud partner since 2015, provides storage products to help large businesses utilize the cloud using a mix of software and hardware-based services.
Avere Systems, founded in 2008 on the North Shore of Pittsburgh, considers its services to be “hybrid”, where companies can manage some tasks at their own locations and others in the public cloud. Lots of companies have already migrated to the cloud, but what sets Avere apart is its scalable data storage system that grows and contracts based on demand, enabling faster data-transfer speeds and helping with privacy. This storage system would be managed on-site, whereas more complex tasks that require significant computer resources can be managed in the public cloud. CEO Ron Bianchini says that a company can use its own services or the cloud “at your whim”.
There are a few reasons why this investment is turning heads. For one, Google corporate does not often directly invest in companies, and especially does not invest in startups like this one. Google usually handles its startup investments through either CapitalG or GV (Google Ventures), dedicated Alphabet venture capital mechanisms. That being said, Google has invested in other startups directly before, which have usually turned out to be successes. Google directly invested in Pokémon Go developer Niantic and SpaceX in recent years, leaving us to expect Google has something big in mind for Avere.
In 2016, Avere grew its cloud business by 97 percent, double its growth from the previous year. This is exciting news for the small company, as a report from Gartner recently projected the cloud services market would grow to $250 billion in 2017, an 18 percent increase.
Google clearly sees the potential in a cloud services investment, and sees potential in Avere’s services. The cloud services market has been largely dominated by Microsoft’s Azure, which already utilizes a “hybrid cloud” approach similar to that of Avere’s. Google likely wants to try and chip away at the cloud advantage Microsoft has created thus far. In the first quarter of 2017, Azure’s revenue increased by 116 percent. Azure, along with Amazon Web Services (AWS), dominate the cloud industry. Google Cloud is the next biggest platform, but has for years been well behind Microsoft and Amazon. With the recent investment in Avere, they look to change this. Personally, I love to see investments being made in Pittsburgh technology companies, and given the track record of investments from Google, I think Avere Systems and the Pittsburgh area could be getting a lot more attention soon.