Data protection startup Cohesity completed its merger with Veritas’ enterprise data protection business, creating one entity with 12,000 customers that is valued at $7 billion.
The deal was originally announced in February 2024. Cohesity valued Carlyle-owned Veritas’ data protection business at $3 billion at the time, according to CRN reporting. Cohesity declined to comment on price. The new entity has an annual recurring revenue of $1.5 billion and will be helmed by a team of executives pulled from Cohesity and Veritas in addition to outsiders.
The transaction was funded by a Series H round led by Haveli Investments with participation from Coatue, Sapphire Ventures, and Dragon Fund, among others; the final deal terms were not disclosed. This transaction only involved Veritas’ data protection business; the rest of the company will remain 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 survey executives at other data protection companies about how they viewed the industry. He said he heard from many that the industry was too fragmented and not necessarily a big enough market to support the dozens of players in the sector.
Poonen said Cohesity focused on Veritas’ data business as a potential acquisition target because Veritas had the same focus on enterprises as Cohesity, but a differentiated customer base. The fact that Veritas also thought the industry could use some consolidation didn’t hurt, either.
“We thought we could combine together to create more value for our customers and innovate faster,” Poonen said. “That’s the whole idea. Just consolidate an industry to save costs and things like that.”
Now that the deal is closed, the combined entity will continue to put money and resources into both sides of the business, Poonen said. This includes Cohesity’s products but also Veritas’ offerings including Veritas NetBackup, Veritas NetBackup appliances, and its Veritas Alta data protection offerings. He added that they will keep the Veritas name on products for now, especially in markets like Brazil, where Cohesity isn’t well known as a brand.
While product names may stay the same, at least for now, the go-to-market strategy for the new organization is focused on unity, Poonen said. The company will work to train sales reps to sell both products and will group them by vertical category.
“They will be able to articulate the [whole] road map,” Poonen said. “Of course, if it’s a new customer, they’ll have very good clarity. But we don’t need two sales reps, so we’re able to get some synergies and how we lay out the sales team. That doesn’t mean we have to lay off sales reps. In fact, we need more sales reps. It just means that we distribute the sales rep in a different fashion based on where they are.”
That strategy makes sense because the combined company will be looking to sell its existing Cohesity customers on products from Veritas and vice versa, Eric Brown, Cohesity’s CFO, told TechCrunch. Veritas has more of a global footprint, whereas Cohesity’s customer base is largely in the U.S.
“There’s less than 5% numeric customer overlap between the two businesses,” Brown said. “It’s truly a situation where, you know, one plus one is much greater than two.”
While Poonen states this move is entirely focused on Cohesity’s customers and improving the experience for them, market consolidation can result in higher prices. Less competition means fewer players setting pricing standards for the entire industry, after all. So far, the company says it has no plans to change pricing or customer contracts.
Poonen said this move puts his company in a great position for a future IPO, although he declined to share specifics on a timeline when asked. Cohesity had previously filed to go public in 2021 but pulled that off the table when market conditions soured shortly after.
“This is the transformative deal in the 11-year history of our company, no doubt,” Poonen said. “December 10 is day one for an exciting company that has a chance to get to a $2 billion run rate for the first time. With anybody, that’s huge. We couldn’t have done that at all.”
Cohesity was founded in 2013 and has raised nearly $1 billion in venture capital from firms including Sequoia, Wing Venture Capital, and SoftBank, among others. Veritas was originally part of Tolerant Systems, which was founded in 1983. Veritas was purchased by the Carlyle Group for $8 billion in 2015.