OVP Invests $1.5M in Cloud Data Storage Startup, Symform
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partnering with big manufacturers like LaCie, Buffalo Technology, and Netgear, to put its software on their storage devices. For now, though, Symform is focused on getting small to medium-sized businesses (fewer than 1,000 employees, say) signed up through its distribution partners.
Lastly, Ashida added a fair bit of perspective on the investment strategy. “Software exits are not going to be as high as they used to be. Companies need to have a different kind of economics,” he says. “Symform can get to break-even pretty quickly. They can keep costs low. We don’t have to invest a lot of money, and they don’t have to give up a lot of the company.”
“A joke is that VCs always want to know how big the market is,” Ashida says. “The reality is when you actually get to the market with a product, the actual addressable market is much smaller. You can only sell to 30 percent of them, say. Then you realize there’s a competitor, and you’re down to 15 percent…So we always like to start big. In this case, there are so many millions of businesses that don’t back up [data] at all. Companies that actually have a catastrophic failure and they didn’t back up—they’re often out of business in a month. I’m sure as we get closer to the market, we’ll find there are some people we can’t reach.”
Which is why the startup’s founding team is so important, of course. “As you get closer to the market, you have to maneuver,” Ashida says. “That takes a great deal of flexibility. We can adapt our product to the reality. Very few startups end up doing what they started off doing. So you need a team with mental horsepower and flexibility.”
Ashida just got back from Silicon Valley with a new appreciation for the challenges his companies face. “It’s pretty clear a lot of companies down there need a lot of money. They’re having a really really hard time these days. Some had valuations around $50-60 million, and they’ll be lucky to get $20 million,” he says. “I think there’s a new reality out there. I don’t think things are going to go back. With Symform, let’s hope to do it with less money, and still be successful. As investors, we could end up doing twice as many [smaller] deals. The teams themselves have to be better. If we’re dealing with more companies, we can’t spend as much time with each.”
None of this seems to be tainting Garg and Tabbara’s startup experience. “It’s been amazing,” Garg says. “I continue to learn every day. I spent the first year unlearning everything I learned at Microsoft, and learned a new set of tools and skills. We both feel really fortunate that we took the chance, and it’s actually panning out.”
As for his thoughts on the hardship of fundraising, Garg says, “People are saying, ‘Oh, you have to spend all this time raising money.’ My experience is you spend time making the business real, then people will want to invest. I don’t want to spend any time raising money…At our OVP meeting, Mark said, ‘You’re ready to be funded.’ And Chad [Waite] said to us, ‘If you’re talking to anyone else, you can stop right now.'”
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