SSD Developer Fusion-io Buys CO-based NexGen Storage for $119M
NexGen Storage, a developer of data storage technology based in Louisville, CO, has been acquired by Fusion-io in a $119 million deal, the companies announced today. The acquisition is a sizable sale for a Colorado tech company and believed to be one of the largest exits in the past decade.
Fusion-io (NYSE: FIO) is paying $114 million in cash and about $5 million in stock for NexGen, according to a release. Fusion-io is based in Salt Lake City and makes data storage platforms that use solid-state drive technology to boost the performance of data centers.
Fusion-io will add about 50 NexGen employees to its team, including NexGen’s senior management. Fusion-io already has a research and development center in nearby Superior, CO.
NexGen co-founder and CEO John Spiers put the deal in perspective on NexGen’s blog.
“All of us at NexGen are in it for the long haul. The Fusion-io acquisition is not an exit, it’s the beginning of something great,” Spiers wrote. He will become a senior vice president and general manager of NexGen products.
“One of the interesting things about NexGen in the light of today’s news is that we never had an exit strategy. Our goal was to grow the company in the way that would best serve the needs of customers. Today, we essentially went public through becoming a part of Fusion-io. Getting to that stage happened a lot more quickly than anyone ever imagined,” Spiers wrote.
The addition of NexGen will allow Fusion-io to market hybrid storage systems that combine the performance of SSD with the capacity available in standard magnetic hard drives, according to the companies. Target customers are small-to-medium size enterprises.
“The hybrid NexGen solution combines memory attached flash and disk on leading server platforms to provide a system tuned to deliver performance, price and capacity. With this acquisition, we will maintain the current NexGen product model as we transition to supporting customers’ preferred server platforms with our OEM partners,” Fusion-io CEO and Chairman David Flynn said in a statement.
Fusion-io was founded in 2005 and reported revenue of $359.3 million in its most recent fiscal year. Apple co-founder Steve Wozniak is Fusion-io’s chief scientist. The company’s IPO was in 2011.
NexGen was founded in 2010 and raised $12 million in two investment rounds.
While NexGen is young, the history of the company’s founders in Colorado goes back decades and includes links to some of the companies that defined the data storage industry, one of the first tech industries to take off in the Boulder area.
Spiers co-founded LeftHand Networks and served as its chief technology officer. NexGen co-founder and CTO Kelly Long co-founded and was director of software at LeftHand Networks.
LeftHand developed storage virtualization and IP-based storage area networks. Hewlett Packard acquired LeftHand in 2008 for $360 million in cash.
Investors in NexGen include Access Venture Partners, a venture capital firm with an office in Westminster, CO, which is between Boulder and Denver. Access Venture Partners managing director Kirk Holland was a NexGen board member.
The deal is “definitely one of the top technology company exits here in Colorado in the last 10 years,” Holland said.
The companies are ideal fits for each other, Holland said. He has known Spiers and Long since 2002 and invested in LeftHand Networks when he was a general partner of Vista Ventures.
“At the end of the day, they are coming up with a revolutionary way to store data,” Holland said.
Before LeftHand, both Spiers and Long were software engineers at Maxtor, a Longmont-based company that was one of the world’s largest hard drive manufacturers before Seagate acquired it in 2006 for $1.9 billion.
Grotech Ventures and Next World Capital also invested in NexGen.
The sale is the second major deal for a Boulder-area company this month. Rally Software Development raised $84 million in its IPO a few weeks ago. Vista Ventures was an investor.
“It’s certainly been a great April with both the Rally IPO and now this exit,” Holland said.