“We never saw it coming”: How a single whitepaper download led to Sydney startup StorReduce’s acquisition
Wednesday, February 27, 2019/
At the time of being acquired by one of the world’s largest data-storage companies, Vanessa Wilson’s startup had raised just $400,000 in seed and Series A funding and had only been around for just over three years.
And when the acquisition opportunity did come, it wasn’t through a networking connection or the evolution of a long-term partnership. It was through a single download of a whitepaper.
Wilson is the former chief executive officer and co-founder of StorReduce, an Aussie startup which made cloud-based software solutions for data storage, that was founded in Sydney in late-2014.
The company had experienced a fairly typical run by Australian startup standards, being accepted into the Springboard accelerator program at the end of 2014 and raising a $400,000 seed round the year after.
Things really started to kick off for StorReduce a few months into 2015, with the startup partnering with Amazon Web Services as one of a handful of partners on its IA platform launch, along with being a launch partner for the Google Cloud Storage Coldline launch.
“With this experience, we started being walked into meeting with marquee clients. It was tough work in a lot of ways, but it was also a bit of a dream come true,” Wilson tells StartupSmart.
But despite the company’s high-profile partners, Wilson says StorReduce was still running on low revenues, and without any dedicated sales or marketing.
“We would email the head of architecture at big technology firms and offer them a free trial of our software,” she laughs.
“But usually, if we could get them in a room with us, we would get a deal.”
The company’s reputation began to land them more clients, with corporations spreading the word about the startup’s ability to reduce data transmission by as much as 80%, with the startup even landing a contract from one of the top 10 companies in the Fortune 500.
A whitepaper and a prayer
“We weren’t looking to be acquired. We had money in the bank, we were starting to get clients, and we were scaleable,” Wilson says.
However, one day, Wilson noticed someone from US-based storage hardware giant Pure Storage had downloaded the company’s whitepaper, which stoked the team’s interest.
“We did some digging and worked out it was a high-level technical team member from Pure Storage, so we reached out and asked if we could set up a meeting,” she says.
“He actually told us to go away and wait to let him actually read the whitepaper first,” she laughs.
Eventually, the team set up a phone call with members of Pure Storage’s business development team, but Wilson still had no inkling the massive public company was looking to scoop up the Aussie startup.
“We thought they wanted to talk about resales or some sort of OEM agreement with us,” she says.
Thinking that’s all it was, the team tried pushed back the meeting to a less busy time for the startup, but was told by Pure Storage they needed to meet sooner. Then, after a few more meetings, documents were signed and the deal entered due diligence.
“Though we never saw it coming, we quickly realised it was a match made in heaven. Through all our meetings we quickly realised there was a 100 per cent synergy between our companies,” she says.
“We were wowed by them.”
Due diligence a “killer”
While being acquired is likely a startup founder’s recurring dream, Wilson says the process itself is not all it’s cracked up to be, labelling it a “killer”, even with all best preparation.
Wilson and her team were catching about four hours sleep a night during the weeks of due diligence, which the co-founder says was in no way due to any incompetence on her or Pure Storage’s part.
“It’s incredibly intense, even when you have all your ducks in a row. We had great lawyers, and we were set up as a C-corporation from the start, everything was done the way you’re supposed to do it, and it was still a slog on the due diligence side,” she says.
Eventually, the deal was completed (with undisclosed financial terms) and Wilson and her team were absorbed into Pure Storage, where just this month the startup’s flagship product has been officially integrated into the Pure Storage platform.
Wilson says she’s keen to be working in the company, though admits the idea of laying on a sunny beach for the rest of her life did cross her mind.
“It did go through my head, but one of my investors and advisors who had done well with other company exits said they did that for a week and got bored,” she laughs.
For other startups on the cusp of a potential acquisition, Wilson’s best piece of advice is to seek good advice, saying StorReduce enlisted the help of an investment banker who had worked with Pure Storage before, and his insight was invaluable.
Furthermore, Wilson says she found some fantastic advisors and assistance in Australia, with the now US-based team saying their experience Down Under was key to their success.
“There’s a wealth of brilliant knowledge and help in Australia for startups, you’ll find pretty much all the help you need there,” she says.
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