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Eyeing an IPO, Waltham’s Actifio takes aim at EMC

Small Waltham firm says its system will simplify costly data backups — and the big players are paying attention

Actifio is expected to release the latest version of its data-storage product Monday as the Waltham upstart tries to infiltrate a massive technology marketplace long dominated by the likes of the Hopkinton giant EMC Corp.

The new version is the most significant upgrade yet for four-year-old Actifio. Its product promises to vastly reduce the time and expense associated with traditional backup systems.

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Actifio seeks to simplify the process by creating a single master copy of a company’s data and making it available to different applications — rather than using the common practice of creating duplicate copies that seem to multiply into a storage mess.

The storage sector is full of determined start-ups that have proclaimed they will disrupt that businesses, dominated by giants like Seagate Technologies LLC, IBM, Hewlett-Packard Development Co., and Symantec Corp., as well as EMC.

But Actifio has taken some customers from EMC and is causing the big players to pay close attention, said Dave Simpson, an analyst with 451 Research.

“They are trying to replace some of the most entrenched vendors in the industry,” he said. “Vendors that know how to fight back, like EMC.”

EMC did not reply to a request for comment.

The main attraction for customers is that Actifio’s software for backing up important files does not create a multitude of duplicates, meaning that companies can spend less on expensive storage hardware.

“It enables you to get rid of this stuff that’s been sold for decades,” Simpson said. “I don’t use this word loosely at all, but they are certainly one of the more disruptive companies in the storage industry.”

The company has grown fast since it was founded in 2009 and has attracted about $108 million in funding from top Silicon Valley and Boston venture capitalists such as Technology Crossover Ventures, Andreessen Horowitz, North Bridge Venture Partners, and Greylock Partners.

Its most recent round of funding, in March, gave the company a valuation of about $500 million, according to media accounts at the time.

It’s now preparing for an initial public stock offering in 2014. This month, it hired former Acme Packet chief financial officer Peter Minihane as its CFO to prepare the company to go public.

Though it has no plans to relocate to Boston or Cambridge, as many other hot tech start-ups have, Actifio is planning to open a research and development center in Kendall Square this year to compete with other tech companies for engineering talent.

“We’ve set out to build a long-standing company,” said Ash Ashutosh, chief executive officer. “This is a massive opportunity.”

After selling a previous storage software company, AppIQ, in 2005 to HP for an undisclosed price, Ashutosh went to work as a venture capitalist at Greylock. While there, he began tinkering with an idea for a new company that could eliminate the duplication issues in backup services.

Typically, when organizations back up files on disks, they end up saving 120 replicas, according to International Data Corp., of Framingham. It said that companies will spend $44 billion this year on “unnecessary storage of multiple copies of data.”

Indeed, stripping away those copies saves money, said Dr. John Meyers, who is the director of technology in the medicine department of the Boston University School of Medicine — and one of Actifio’s first customers.

“You just have too many copies of things,” Meyers said. Instead of buying extra disk space, “that’s money that can go to far more noble purposes.”

He estimates he saved the medical school several hundred thousand dollars with the switch to Actifio.

When Meyers started to update the department’s technical services, he approached all of the big storage providers for proposals for less expensive and more efficient backup products.

The major players were stunned when he chose an unknown start-up, he said.

“They pulled the whole, ‘Oh my God, you’re going to ruin your career,’ thing,” Meyers said. “They weren’t happy.”

Actifio, though, is a long way from hurting the bottom line of a company like EMC, said Simpson, of 451 Research. EMC’s revenue was $21.7 billion last year, a 9 percent jump over the previous year.

Actifio has about 250 customers that pay an average of $350,000 for its backup services. The company would not reveal specific revenues.

Ashutosh said he’s not trying to knock the Hopkinton data storage king off his throne, just take some of its business.

“People aren’t using boxes anymore to store their data,” he said.

Michael B. Farrell
can be reached at michael.farrell@globe.com.
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