Intel Corporation (NASDAQ:INTC) is the latest big name to invest in Maginatics, a cloud storage start-up that just pulled in another $17 million in funding primarily from the IT crowd, reports Ari Levy at Bloomberg. Other recent investors include Comcast’s venture group, WestSummit Capital, EMC Corp’s venture unit, VMware, and Atlantic Bridge.
Maginatics was founded by successful entrepreneur Amarjit Gill
Maginatics was founded in 2010 by successful entrepreneur Amarjit Gill who has previously sold companies to Google Inc (NASDAQ:GOOG), Broadcom Corporation (NASDAQ:BRCM) and Apple Inc. (NASDAQ:AAPL). The cloud market is rapidly maturing, but Gill has been getting investments from the same companies that he will later look to for business. The repeated drives for funding, $27 million so far, double as marketing that guarantees he will have companies with a strong incentive to choose Maginatics over the competition.
“Being a startup and going to financial companies, semiconductor companies and media companies, it helps with credibility,” said Gill.
Maginatics has no intention of going after the consumer market
Storage companies like Nimble Storage, Coraid, and Egnyte Inc have also pulled in plenty of venture capital recently, and DropBox was one of the fastest growing companies of the last few years, but unlike these companies Maginatics has no intention of going after the consumer market, focusing entirely on business clients.
But all this enthusiasm for cloud computing seems to ignore the sea change happening after Snowden’s revelations about NSA spying. Privacy rights aside, one of the takeaways from the incident is that if you want to keep your information secure, you might not want to store it in the U.S. A number of secure email companies have shut down rather than turn encrypted files over to the U.S. government, and the implications for secure data storage in general hasn’t gone unnoticed.
Many consumers figure they have nothing to hide, but that’s not the market that Maginatics is interested in. In theory companies can encrypt their own data before sending it to a third-party storage company, but ease of use is part of the point. As Maginatics is showing through successful VC funding there are domestic firms that will be happy to use their services, but if expanding internationally is as challenging as it appears, the company will have a hard time maintaining strong growth.