Over on El Reg, Chris Mellor broke the news that DataGravity, the high-flying security vendor that had amassed close to $100M in funding had been sold. Details were sketchy, but it seemed the acquisition was something of a last-minute move to stave off the company’s collapse – it came after an internal shutdown warning and a number of layoffs. It also came amidst an alleged attempt by DataGravity to sell itself to Veeam and/or Zerto and to raise more money – all efforts which were futile. DataGravity was founded back in 2012 by a seasoned team and was focused on the data management and security space.

I can now confirm that DataGravity was the subject of an acquisition, and the acquiring company is workload security vendor HyTrust, itself a venture funded organization. HyTrust’s stated mission is to make private, public and hybrid cloud infrastructure more trustworthy for enterprises, service providers and government agencies. To do so, the company provides solutions that automate security controls for virtual compute, networking and storage to deliver visibility and control.

HyTrust is backed by a bevy of legacy infrastructure vendors looking to remain relevant in the virtualized world – VMware, Cisco, Intel, and Fortinet. It also has the backing of the (in)famous investment arm of the US spy industry, In-Q-Tel.

New funding adds salt to the wounds

When a vendor announced a $36 Million funding round that, in part, is being used to acquire a company that has attracted almost $100 Million in funding, even a high school math student can see that something isn’t adding up. There was likely stock involved in the deal but it’s pretty obvious that the DataGravity investors had to swallow a very bitter pill here in accepting HyTrust’s Hail Mary.

As can be expected, terms of the deal were not disclosed, but the announcement says that members of the DataGravity team will be joining HyTrust, which indicates a very pared-down org chart is making the move. Interestingly (some might say ironically), Veeam, one of the suggested potential acquirers for DataGravity, was quoted opining about the deal saying:

In today’s digital era, data and workload Availability is paramount. Veeam has been working closely with both HyTrust and Data Gravity to develop joint solutions that meet customers’ needs for 24.7.365 Availability, and it is great to see two of our strategic partners come together, accelerating the deployment of solutions that will address customer needs for policy-driven data security in virtualized data centers.

Indeed…

HyTrust sticks to its regular Modus Operandi

Of course, this isn’t a first for HyTrust, the company has built before through acquisitions. Three years ago, the company bought HighCloud Security to add data security and encryption for workloads, which became the foundation for the cloud and virtualization encryption solution HyTrust DataControl.

The DataGravity acquisition comes at an interesting time of rapid growth in the cloud security solutions market. According to Forrester, the global cloud security solutions market will grow 28 percent annually over the 2017 to 2021 period, from $1.5 billion in 2017 to $3.5 billion in 2021. White putting numbers to predictions is always fraught, the reality is that the security space generally is incredibly frothy.

MyPOV

Any result which sees a vendor continue, as opposed to failing outright, is a success at some level. While DataGravity didn’t meet its potential, it lives on, at least as a small part of a larger whole. While investors won’t be happy, DataGravity’s product set fits well within HyTrust and maybe, just maybe, they can realize some future value from the acquisition.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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