Meet Code 42, Accel’s first Big Data Fund investment

Code 42, a Minneapolis, Minn.-based backup and software recovery company received a whopping $52.5 million round of capital from Accel and Split Rock Partners. This is the first investment from Accel’s $100-million big data fund. The new investment dollars will be used by the company (which is profitable) to diversify and become what it calls an “information management provider.”

Sounds lofty, doesn’t it? It could be. Matthew Dornquast, co-founder and CEO of Code 42, says Accel had been pursuing the company for two years, but only now was he ready to pull the trigger. With the growth in mobile devices and the data stored on corporate and consumer networks that is moving not only from device to server, but device to device, Dornquast realized Code 42’s software could become more than just a backup and sharing service, but a way for corporations to understand what data and how data was moving between employees and the devices they use.
Code 42 makes CrashPlan, software that backs up data on devices in real time. It offers consumer and enterprise versions of the product. CrashPlan launched in 2007 after six years of Code 42 attempting other products and ways to bootstrap the business. For the last three years, Code 42 has been profitable, although Dornquast did not disclose revenue.
So what’s the future for CrashPlan and Code 42 with $52.5 million burning a hole in its pocket? The first step is to expand globally and add new features. The new features should add up into an interesting whole. Dornquast says the company’s ability to see data on devices in real time and back that data up offers a world of opportunity, from making e-discovery easier by knowing which documents reside on whose computers to controlling who can access certain files. For example, in the healthcare industry, which is governed by the Health Insurance Portability and Accountability Act (HIPAA), being able to restrict access to information or follow it across devices is a valuable compliance tool.
Another facet of Code 42’s software that works in its favor, is that it can deliver the stored documents to its own cloud, a private cloud run by the enterprise, other computers or devices or a combination of any of the above. Enterprises tend to request delivery to their own cloud in four out of five of CrashPlan’s initial deployments, said Dornquast in an interview.
At this time, he said CrashPlan is protecting over 100 petabytes of data, mostly from North America. For perspective, one year ago, Fusion-io (s fio) — the company helping incorporate SSD drives into servers — issued a release touting it had shipped 15 petabytes of data in 2010, which was, “enough storage-class memory to hold more than 199 years’ worth of continuously played HD video or 15,360 times the entire print contents of the Library of Congress.”
Accel’s Ping Li said putting such a large amount of a $100-million fund in Code 42 was an exception and the fund’s other investments aren’t likely to be that large. Ling emailed me, “As for the $100mm, it comes out of our current venture and growth funds which is well north of $1 billion globally. If we find more opportunities that takes [sic] us above $100mm, we definitely have enough available capital. … Also, I highly doubt we will be doing a ton of big data fund investments of this size. For example, the next big data fund company is a seed deal where we putting [sic] in $750,000.”
As Code 42 takes on the larger role of helping companies track and manage their flows of information between devices and people, Dornquast will undoubtedly encroach on territory that, Dropbox and others have staked out. It may also end up going against Google Enterprise Search, (s goog) although that, so far, seems an opportunity that Google has yet to mine.
Dornquast is ready for the challenge, having the benefit of existing enterprise customers and a heritage of making software that enterprises trust and that consumers want to use. I understand that Accel is calling this a big data investment, but in many ways it feels more like a response to the consumerization of the enterprise. Because if people didn’t want to use it, those petabytes of data– and the advantages of having access to those — wouldn’t be there.