HPE Scoops Up MA “Unicorn” SimpliVity for $650M, Ending IPO Talk
The purchase price is about 2.4 times the amount of venture capital—$276 million—that eight-year-old SimpliVity had raised from Waypoint Capital, Accel, CRV, DFJ Growth, Kleiner Perkins Caufield & Byers, and others. But it falls well short of the $1 billion-plus valuation that the IT infrastructure firm received from investors when it raised a $175 million round in March 2015.
At the time, SimpliVity founder and CEO Doron Kempel told Xconomy that it was possibly the last venture funding his company, which sells IT software and hardware infrastructure, would need before holding a public stock offering.
“At some point in time this company is going to have an IPO, but we don’t want to put our finger on a month…but it’s in the foreseeable future,” he said in 2015.
Since then, the market for tech IPOs has been sluggish, and SimpliVity didn’t follow through on its public offering plans. Instead, it will join Palo Alto, CA-based HPE (NYSE: HPE), the enterprise technology company spun off from HP (NYSE: HPQ) in 2015.
“Over the past eight years we’ve been on an incredible journey, and joining HPE is the logical next step for SimpliVity,” Kempel said in the press release announcing the deal Tuesday.
From the beginning, Westborough, MA-based SimpliVity has aimed to simplify IT by taking almost all the hardware used in legacy IT infrastructure—such as the server and the systems for storage, backup, networking, and security—and combining them into a single product. (Fun fact: the “box” product made by the fictional startup Pied Piper in the HBO comedy series “Silicon Valley” was based on SimpliVity’s OmniCube.)
SimpliVity is part of a shift in IT toward converged infrastructure, also called “hyperconvergence.” The hyperconverged IT infrastructure market generated an estimated $2.4 billion in sales last year and could rise to $6 billion by 2020, according to the HPE press release. HPE said it plans to integrate SimpliVity’s data management platform with its infrastructure, automation, and cloud management software.
“This transaction expands HPE’s software-defined capability and fits squarely within our strategy to make hybrid IT simple for customers,” HPE president and CEO Meg Whitman said in a prepared statement. “More and more customers are looking for solutions that bring them secure, highly resilient, on-premises infrastructure at cloud economics. That’s exactly where we’re focused.”
The deal is expected to close by the end of April, HPE said.
HPE has looked to the Bay State for other deals in recent years. Back in 2011, when it was still part of HP, the combined companies bought Vertica, a database management and analytics software firm headquartered in Billerica, MA.