StorMagic has received fresh funding to grow its SvHCI edge replacement product for VMware.
The UK-based company’s SvHCI product combines a hypervisor, virtual networking, and SvSAN virtual storage software. StorMagic has received “a significant investment” to back its “fast-growing, edge computing” business from the Palatine Growth Credit Fund.
CEO Dan Beer stated: “StorMagic is thrilled to have Palatine’s support as the company recently entered a new market segment with the introduction of SvHCI. Since Broadcom’s acquisition of VMware, edge and SMB customers have seen massive price increases and many are looking for alternative solutions to help them run on-site applications reliably while reducing costs. SvHCI is the ideal replacement solution and can save SMBs and edge customers up to 62 percent over VMware alternatives.”
Palatine is a private equity business with two existing funds. The Buyout Fund invests between £10 million and £30 million in “dynamic and visionary management teams looking to drive their business through their next phase of sustainable growth.” The Impact Fund invests £5 million to £20 million in “commercially driven businesses with a mission to positively impact on society or the environment.”
Its new Growth Credit Fund “supports ambitious and innovative tech businesses based across the regions of the UK.” This, StorMagic told us, is “a brand new fund that recently closed,” and “StorMagic is the very first investment they made from this new fund.”
Palatine says the fund’s strategy “is to help businesses reduce equity dilution as they grow by partnering with fast-growing B2B businesses that are Venture Capital-backed.” We were intrigued by the reducing equity dilution angle so asked some questions about it.
Blocks & Files: How was this Palatine investment non-dilutive?
StorMagic: Palatine has made an investment in StorMagic by lending money (debt), hence this is a non-dilutive way to gain capital for growth. The main reason they invested was their understanding of the market dynamics, the opportunity presented by Broadcom’s changes that have impacted the SMB and Enterprise edge markets, and their belief that our new product direction (including SvHCI – full stack HCI software product) is a great fit for what customers are looking for.
Blocks & Files: How much cash did StorMagic receive?
StorMagic: StorMagic received the full proceeds of the investment. Since we are a privately held company, we are not disclosing the amount – however, it was a significant investment that will help fuel our growth as we develop new products that include hypervisor and virtual networking (along with virtual storage, which we’ve been selling for many years).
Blocks & Files: Does Palatine get board-level representation at StorMagic?
StorMagic: No – they will not be a member of our board.
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Although Palatine is a private equity business, it is not investing in StorMagic in the normal sense of taking an ownership position. Palatine is acting as a provider of debt funding and the loan package is supposed to help the company grow. The company did not make clear how large the sum is, nor what the repayment terms are.
