“Primary Data secured $50 million of funding in 2013, before securing an additional $13 million B-round in 2014, and a $20 million C-round in August 2017. Altogether that added up to $83 million of funding, with an extra $20 million line of credit,” Dormehl reports. “As The Register points out, since the last round of funding was concluded in late summer last year that would represent rapid spending for a company with only around 100 employees.”
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“What happened? Neither the company nor the numerous investors to whom we reached out over the weekend have responded to our requests for comment,” Connie Loizos reports for TechCrunch. “But according to a trusted source close to the company, Primary Data’s problem from the outset was that its technology was never quite as compelling as it needed to be, given that it was trying to sell mission-critical software.”
“With Primary Data, VCs were re-investing in a team that had brought them financial success with their previous startup: Fusion.io, a flash storage company that enjoyed a highly successful public offering in 2011,” Loizos reports. “Indeed, when Fusion.io co-founders David Flynn and Rick White left in 2013, investors quickly provided the pair with $50 million to spin up their next thing. (It was separately becoming clear that Fusion.io was heavily reliant on two big customers. As those customers dialed back on their flash storage, Fusion.io’s share price began slipping, and it was acquired in 2014 by the chipmaker SanDisk.)”
“What we do know is the company had brought aboard the founders’ longtime colleague, Lance Smith, as Primary Data’s new CEO in 2014. Smith had joined Fusion.io as its president and COO in July 2008 and spent six years with the company,” Loizos reports. “Immediately upon joining Primary Data, Smith realized that its burn rate was out of control, particularly for a company with no revenue. But while the processes Smith instituted helped, they didn’t change the fact that Fortune 500 companies weren’t prepared to buy Primary Data’s technology — even after Wozniak joined the team shortly afterward as chief scientist.”
Much more in the full article here.
MacDailyNews Take: The V.C. world is never without heat.
Steve Wozniak joins Primary Data as Chief Scientist – November 19, 2014
Apple co-founder Woz joins Fusion-io as Chief Scientist – February 6, 2009