June 11, 2015

BostInno

Why Boston Unicorn Actifio Isn't Rushing Into an IPO

CEO Ash Ashutosh delves into how the game is changing for fast-growing private tech companies.

For many large companies, getting lots of data to make their businesses run better is no longer the problem. The real issue is they've now got more data than they know what to do with.

For the past five years, Waltham-based Actifio has been working to rewrite how companies manage, access and use that information—100 times faster and at least 10 times cheaper than before. And the firm has built a business valued at $1.1 billion as a result. That makes Actifio one of just a handful of billion-dollar "unicorns" in Boston. And in late May, the company announced a number of new features aimed at solving DevOps challenges as part of its push to accelerate its growth even further.

Since being founded in 2009, Actifio has raised a total of $207 million in funding, making the company one of the best-funded in Boston's tech industry. Investors include Tiger Global Management, Advanced Technology Ventures, Andreessen Horowitz, North Bridge, Greylock and Technology Crossover Ventures. In March 2014, the company banked its latest round—$100 million—which valued the firm at $1.1 billion. At the time, CEO Ash Ashutosh said that the company was eyeing an IPO some time in mid to late 2015.

Yet as the summer approaches, it doesn’t appear that going public is a top priority for Actifio. That’s not to say it’s been ruled out—but Ashutosh certainly isn’t rushing into it.

Big Goals

Earlier this month, Actifio—which employs roughly 400 worldwide (180 in Waltham)—announced new features that fully automate the lifecycle of application data management, allowing customers to build higher-quality applications at a faster rate. Once an application is live in production, Actifio offers superior data protection, access, management and control. And users also have the ability to easily restore access to an application, running on a virtual machine, with the data as it existed at a specific historical point in time selected by the user.

“For some companies, accessing data to fix something instantly and make it available to users is critical,” Ashutosh said in a phone interview. “Taking two months to fix a bug is not an option if you’re Airbnb or Uber—your entire business is based on data.”

That’s a main reason why Ashutosh says the storage market is actively getting commoditized—which could be a big threat to traditional data storage companies.

“If you are a company building storage systems, selling storage devices...you’re facing a big cliff,” he told me. “Because of companies like Actifio, your customers are realizing that they need less space. And then you have companies like Amazon that are saying—forget paying for storage, you can get it for free in the cloud. This has happened to companies before in the server market—like IBM, which got out of the server business, sold it to Lenovo. Or Dell, which has gone private. This is inevitable.”

In the tech world, there's a lot of talk about how unicorn companies are waiting longer and longer to go public. And it’s believed that the reason for this is that it’s easier to pull in more private funding. Ashutosh noted that 10 years ago, innovation was far more incremental—whereas now it’s more transformational. And so a lot more people are willing to buy a technology product from a privately held company.

“The gap between the old guard and the new is so big that customers are no longer waiting for those younger companies to go public before they buy,” he said. “And if I have a private company that’s doing well, and my customers aren’t so anxious about an IPO, why would I expose myself to the scrutiny of going public until I’m completely ready—and my users need it? Not to mention, as you’re growing, there is enough capital available to pump into the business.”

So, does that mean Actifio is putting it off?

“There is no reason not to go public, but there’s no reason to,” Ashutosh added. “The right time is really when the users say it is the right time. That’s the only thing that matters to us.”