Data protection startup Cohesity has completed a merger with Veritas' enterprise data protection business, creating a single entity valued at $7 billion with 12,000 customers.
The partnership was originally announced in February 2024, CRN reported. Cohesity valued Carlyle's Veritas' data protection business at $3 billion at the time, CRN reported. Cohesity declined to comment on pricing. The new company will have annual recurring revenue of $1.5 billion and will be led by an executive team drawn from Cohesity and Veritas in addition to outsiders.
The deal was funded by a Series H round led by Haveli Investments with participation from Coatue, Sapphire Ventures, Dragon Fund and others. Final transaction terms were not disclosed. This transaction involved only Veritas' data protection business. The remainder of the company will continue to be owned by Carlyle.
Cohesity CEO and President Sanjay Poonen (pictured above) told TechCrunch that when he joined Cohesity in August 2022, one of the first things he did was educate executives from other data protection companies on how to He said he conducted a survey on how people view the issue. He said he has heard from many people that the industry is too fragmented and the market is not necessarily large enough to support dozens of players in the space.
Poonen said Veritas, like Cohesity, has an enterprise focus, but Cohesity focused on Veritas' data business as a potential acquisition target because of its differentiated customer base. The fact that Veritas thought the industry could use some consolidation didn't hurt either.
“We thought we could work together to create more value for our customers and innovate faster,” says Poonen. “That's the whole idea: Consolidate the industry to save on costs and so on.”
Poonen said that now that the transaction is complete, the combined company will continue to invest capital and resources into both sides of the business. This includes Cohesity products as well as Veritas products such as Veritas NetBackup, Veritas NetBackup Appliance, and Veritas Alta data protection products. He added that the company plans to keep the Veritas name on its products for the time being, especially in markets like Brazil where Cohesity is less well known as a brand.
While the product name may remain the same, Poonen said the new organization's go-to-market strategy is focused on uniformity, at least for now. The company plans to train salespeople to sell both products and group them by vertical category.
“They are [whole] roadmap,” Poonen said. “Of course, if it's a new customer, you'll understand very clearly. But you don't need two salespeople, so you can get synergies, and you can figure out how to deploy your sales team. That doesn't mean you need to lay off salespeople; in fact, you need more salespeople. It means to place a person.
Cohesity CFO Eric Brown told TechCrunch that the strategy makes sense because the combined company plans to sell Veritas products to existing Cohesity customers and vice versa. Cohesity's customer base is primarily in the United States, while Veritas has a more global footprint.
“The customer numbers overlap between the two businesses is less than 5%,” Brown said. “This is really a situation where one plus one is much greater than two.”
Poonen said the move is entirely focused on improving Cohesity's customers and their customer experience, but market consolidation could result in higher prices. After all, less competition means fewer players setting industry-wide price standards. The company says it currently has no plans to change pricing or customer contracts.
Poonen said the move puts the company in an excellent position for a future IPO, but declined to provide details about the timeline when asked. Cohesity had previously filed for an initial public offering in 2021, but pulled the plan after market conditions deteriorated shortly after.
“This is definitely a transformative transaction in our 11-year history,” Poonen said. “December 10th is the first day for an exciting company with a chance to reach $2 billion in run rates for the first time. That's a big deal for anyone. We just couldn't do that.”
Cohesity was founded in 2013 and has raised nearly $1 billion in venture capital from companies including Sequoia, Wing Venture Capital, and SoftBank. Veritas was originally part of Tolerant Systems, founded in 1983. Veritas was acquired by Carlyle Group in 2015 for $8 billion.