New Wave of Investments for Zynstra

Zynstra, a hybrid cloud company that only launched in 2013 from Bath-UK, received yet another round of funding of $8.4 million from various investors. This is the second round of funding within a year of launching its first product.

The company received a combination of seed an angel funding of $2.4 million in2012. In September 2013, they held their first round of investor funding. The series A-round of funding netted $3.8 million which was used to support their ‘SMB IT Appliance’, a hybrid cloud application designed for small and medium sized businesses (SMB’s). This brings the total amount of funding raised to a little over $12.5 million so far.

Zynstra is a hybrid cloud startup that has taken the UK market with a storm. Instead of downsizing a hybrid cloud application to suit small and medium sized enterprises, like most large cloud companies do, Zynstra opted build products that specifically target SMBs. Their products allow this market segment to enjoy the same benefits of an on-premise application coupled with the economies of cloud computing at an affordable rate.

So why the need for this latest round of funding? Accelerated hybrid cloud adoption growth rate.

According to a study, 85% of UK businesses have adopted a hybrid cloud application. The growth of cloud computing has accelerated by 15% since September 2013. Currently, 78% of businesses operate one cloud service at the minimum. The Cloud Industry Body (CIF) approximates a further 5% growth rate increment by end of September 2014. The report also revealed that the general growth of cloud adoption had grown by 61.5% since 2010.

During the announcement of their series B funding, Zynstra co-founder and CEO Nick East confirmed these statistics, “When we started developing our initial offering three years ago, we knew we had a great solution. Since then the market has moved relentlessly in our direction, embracing a hybrid approach to IT.” He further added, “Our first year since publicly launching has seen strong growth in our customer base, and in the number of significant partnerships signed.”

Another key factor that may be playing into Zynstra’s hands is the anticipated halt of mainstream support for Windows Server 2003 in July 2015. Although Microsoft’s clients will continue to enjoy an extended support for a further five years, businesses will be on edge over their future use of this platform. This will definitely see a number of businesses move to other applications with similar features, and Zynstra is counting on it.

East continued, “Businesses are reconsidering the way they purchase technology – seeking a significantly lower administrative burden, greater flexibility and a predictable opex payment model. At the same time, we are facing one of the largest server infrastructure refreshes of recent times when the Windows Server 2003 platform reaches the end of support in July 2015. It is a compelling time to consider refreshing an IT estate, and a hybrid approach is becoming the new norm. We anticipate even faster growth over the next 12 months as a result.”

Zynstra enjoyed the support of their early investors led by Octopus Investments. The other investors are Jon Craton who is Zynstra’s Chairman and former founder and CEO of Cramer, Richard Brennan who is the former EVP Global Marketing at Orange Group, and Tom Vari who is the former CIO of Cable at Rogers Communications Inc.

The company intends to use the funds to expand their presence in the UK as well as penetrate the US market.

Zynstra seems to have made a timely entrance into the cloud industry. Whether this was a tactical move on their part or not, all the parts of the puzzle seem to be falling in place at the right time.