Friday, September 5, 2008

Carbonite collects cash, distribution deal with Lenovo

By Christopher Calnan

Online backup provider Carbonite Inc. recently closed its second bundling deal with a major personal computer manufacturer and followed that up last week by closing a Series C round of financing.

Boston-based Carbonite closed an agreement to provide free four-month online backup service subscriptions for the Ideapad line of desktop and laptop computers made by Hong Kong-based Lenovo Group Ltd., CEO David Friend said.

In June, Carbonite reached a similar agreement with Netherlands-based Packard Bell BV for the PC maker to bundle subscriptions for purchasers of Packard Bell desktop and notepad computers in Europe. Lenovo officials declined to confirm the deal with Carbonite.

Although Friend would not disclose the specifics of the Series C financing, he expects it to be enough to fuel Carbonite before it completes an initial public offering.

“That’s the next step,” Friend said. “The projections show that it will be the last cash we’ll need. (Carbonite is) the type of company that should go public.”

In December 2007, investors pumped $5 million in Carbonite, increasing the amount of capital invested in the company to about $26 million.

Carbonite’s investors have included California-based Menlo Ventures, the 3i Group and Lexington-based Common Angels. Carbonite, founded in 2005, launched its unlimited online backup service in 2006. Customers pay $50 a year for the automated service, or $130 for three years.

Although the company doesn’t disclose revenue numbers, Friend said it’s operating 11 percent ahead of its own initial projections.

Friend has started five other technology companies since 1970. He founded or co-founded ARP Instruments Inc., Sonexis Inc., Pilot Software Inc., Computer Pictures Corp., and FaxNet Corp., which was acquired in 1999 for $240 million in stock and cash by Critical Path Inc.

Competitors to Carbonite include California-based Pro Softnet Corp., California-based Spare Backup Inc. and Washington, D.C.-based SwapDrive Inc., according to Henry Baltazar, an analyst for the 451 Group.

In June, California-based Symantec Corp. (Nasdaq: SYMC) acquired SwapDrive for a reported $123 million.

Other competitors include MozyEnterprise, a product of Hopkinton-based EMC Corp. (NYSE: EMC), which in October 2007 bought for an undisclosed amount Berkeley Data Systems Inc., the Utah-based provider of online backup service Mozy. At the time, published reports pegged the purchase price at roughly $76 million.

This month, Framingham’s Staples Inc. (Nasdaq: STPLS) is scheduled to introduce a new backup service called Thrive Online Backup for small and midsize businesses.
Friend said although 40 percent of Carbonite’s customers are small businesses, the remainder are conventional consumers looking for content protection — representing a broad base of potential users. “It’s not what I’d call a leading-edge type of person,” he said. “It’s the average person, and that bodes well for us.”