Growing At 200%, Boston’s Zerto Delivers Efficient Disaster Recovery As It Targets 2017 IPO, Forbes
This article originally ran in Forbes on November 12, 2013.
Ziv Kedem knows something about recovering from disaster. But with help from his brother, Oded, he has managed to turn that knowledge into an impressive payday once. And he is on track for a bigger exit in the next three to four years as their most recent startup accelerates towards $100 million in revenue.
As he explained in a November 12 interview, Ziv Kedem is CEO of Zerto – “a virtualization and cloud play in data replication and protection based in Boston and Herzliya, Israel.” Simply put, Zerto helps companies to backup and recover their data much more efficiently through software than by building a new data center.
Zerto is growing fast because it makes it quicker and cheaper for companies to do disaster recovery. According to Kedem, “We reduce by 100x the level of complexity of disaster recovery. A traditional approach takes weeks or months with professional services that require complex change requests and control. We can do it in a couple of hours.”
Kedem and his brother founded disaster-recovery company, Kashya, Inc., and sold it in 2006 to EMC for $150 million – that resulted in EMC’s RecoverPoint brand.
Kedem came by his startup DNA the traditional Israeli way. As he explained, “I was in a program that combined service in the Israeli army with university. I spent seven-and-a-half years in Israeli army intelligence. After I got out, I started a consulting business to provide the cash for Kashya.”
Kashya targeted the $3 billion market for data recovery software. As Kedem explained, “I saw a deficiency in the data recovery market. Based on my skills from the army, I know how to solve difficult algorithmic problems. We saw that we were competing in every case against storage array providers so we sold to EMC. I stayed there for a few months and then took some time off doing academic teaching and studying for a PhD.”
But he could not stay away from startups. As Kedem explained, “I do startups because I like it. And I saw that disaster recovery would be changing due to virtualization and the cloud. I realized that companies would be running into issues of matching physical systems with logical applications. There was a huge opportunity.”
Kedem raised capital for each stage of Zerto’s development. Said Kedem, “We raised $200,000 in pre-seed capital to develop a prototype. In May 2010, we raised $6 million from venture capital firms including Battery Ventures to build a product and launch it. In August 2011, we were ready for GA and we raised $15 million from U.S. Venture Partners and others.”
And in April 2013, Zerto closed a $13 million Series C led by RTP Ventures. Also participating in the round were Battery Ventures; Greylock IL, the Israel-based outpost of Greylock Ventures; and U.S. Venture Partners. The round brought Zerto’s total capital raised to $34 million.
Zerto has been growing fast. “In 2012, we got several million in revenue and over 100 customers. We learned what we needed to do to set up a sales force – how to divide up territories and what prices to set. And we found a new market segment – cloud services providers who were providing disaster recovery for small and medium-sized businesses,” according to Kedem.
2013 has been better than Kedem had expected. “We thought we would double in 2013 but we will end up growing 2.5x to 3x this year with over 300 customers and over 100 cloud services providers. We are an execution machine.”
Zerto makes good money off of this business. As Kedem said, “We bill by the number of virtual machines. Our enterprise prices range from $10,000 to $1 million and we get maintenance fees from 20% to 25% of that upfront price. We have 100 people now and will end 2014 with 150 and by 2015 will have 200 people.”
Kedem has ambitious goals for Zerto. “We want to give our investors and employees a return on their investment of capital and time, respectively. An IPO is our goal. We expect to reach the $100 million in revenue needed to achieve that by 2016 or 2017.”