October 23, 2017

Miracle, OpenIO raised $5M

OpenIO (www.openio.io), the late comer open source object storage player, from France, just raised $5 million from Partech and a few other investors.

This is just incredible confirming that investors have some difficulties to understand the storage market climate associated with this segment, players presence and trends.

The company started very late, probably too late, especially as it exists many vendors, probably too many, and above all it’s not a market.

The revenue is of course ridiculous and the raising campaign was an answer of a dead end in a few months.

The number of customers is also very limited and the pricing model on top of open source generates very small figures.

There is no IP and there is no patent associated with OpenIO, one key criteria for investors normally.

The product has several limitations, just to name a few

  • The architecture is pretty fragile,
  • Erasure coding is very young and not optimized coming from a public module,
  • Access methods are pretty weak with too many layers showing latencies and limitations performance. Sorry it’s not a performance play just a capacity one.
  • And lack of data services.
The company represents a real business risk for a prospect with a real question about its future presence.

The management team is also very junior with lack of vision and difficulties to execute with very frequent changes and hesitations.

Others information are the market climate with an obvious saturation with already too many object storage players – more than 20 –, some commercial companies died such Coho Data and Formation Data Systems, pretty well founded by top VCs and respected management, one open source projects disappeared as well Skylable, several commercial companies have difficulties and at least 3 other open source projects recognized on the market.

This open source object storage group is led by three projects: Ceph, Swift promoted by OpenStack and SwiftStack and Minio and I can even mentioned Gluster. But all these stories are completely different, the management and the founders are people with real track records, past successful exits (for Inktank and Gluster and even SwiftStack management) and real enterprise DNA. For open source, building a community is a key factor of success and how a vendor is able to transform a use to a revenue stream with an interesting conversion ratio. Here, the community is a dream and open source storage models like Gluster, Ceph, Swift or Minio are super far.

The other dimension is the difficulty for many open source companies to find the second wave and raise a new round even with a large active community. This is what happened to Gluster and Inktank, meaning that no alternative exists except accepting a forced exit.

What investors saw here is a mystery, the rationale should invite people to avoid the project, on our side we’ll monitor the trajectory of this company….
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