Brit disk biz Nexsan out of the frying pan and into the firing line Imation's purchase of Nexsan for $120m will be seen as a failed exit for Nexsan's venture capital backers in the eyes of the most ferocious investors. Nexsan is in the second tier of disk drive array storage vendors, and has found it hard to progress into the top tier. It has failed twice at launching a successful IPO since it …
To me, it looks as though Nexsan has been built up over the last couple of years for a sale/get-out for the VCs and Imation has (perhaps unwisely) taken the bait.
As, if Nexsan had anything highly profitable up their sleeves then why would the VCs bail ?
And if continued & sustained organic growth looked likely then surely the VCs would hang around a little longer in order to secure a better return ?
The math on VC return assumes the VCs owned 100% of the company, which is unlikely - even if some of the rounds were very dilutive, they probably didn't own more than 70% (the rest owned by founders/option holders). Of course, depending on liquidation preferences, it's possible that the common holders were underwater and the VCs did get the whole pie, although their individual return would very greatly depending on what round they invested in and what the valuation and preference stack was. In any case, it probably wasn't a great exit for anyone involved which says folks just wanted to cut their losses and move on.
I have known Nexsan since the beginning as a channel partner and from what little I know, I think the deal was a win-win. For investors, Nexsan probably didn't grow fast enough to make an interesting exit. After 12 years, I suspect the investors wanted an exit with a decent return - which they got. The problem Nexsan has is their hardware didn't fit a unique enough niche for tier-1 vendors to compete over (same goes for Exagrid now - they have no unique value prop and ultimately very few exit strategy options).
For Imation, they need to leverage their brand as the Nexsan brand alone probably isn't enough to take them to the next level.
One other note: Of all the storage vendors I've dealt with over the years, Nexsan had the best modular storage out there. It's a fast workhouse that never went down. Of all the vendors we worked with, we had the fewest support calls on Nexsan product - it's an incredible value for what it is. From a cost per TB perspective, Nexsan was always near the lowest cost and their annual maintenance costs are also some of the lowest in the industry. It's a well engineered, solid working modular storage solution.
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