Symantec Buys Online Backup Service SwapDrive For $123 Million
Tuesday, June 10, 2008; 8:09 PM
Online storage is back. Last September, EMC bought online storage startup Mozy for $76 million. Last week, Symantec signed a deal brewing since February to buy SwapDrive. A source close to the company says that Symantec paid $123 million.
According to my source, the company made $13 million in profits last year, on revenues of $22 million. That's up from $5 million in revenues the year before, and the company is projecting $40 million in revenues this year. Those numbers put the acquisition at roughly 10X profits and 5.6X revenues (most likely those are operating profits, but my source couldn't say for sure).
Neither Symantec nor SwapDrive issued a press release, but if you go to SwapDrive or Backup.com (the other site it operates) they are both identified as now being operated by Symantec. And Symantec's PR firm confirms that the acquisition took place and offers the following statement from the company:
Symantec has signed a definitive agreement to purchase SwapDrive, a privately-held online storage company to strengthen the services offerings in the Norton consumer portfolio and to help consumers manage data across their devices. This is a small, targeted acquisition and is a very natural move for us because of our close two-year OEM relationship and existing product partnership on Norton 360. The transaction is expected to close by the end of the June 2008 quarter.
Backup.com alone claims to have 2 million users. In an era where you can get 5 GB of storage for free (from Microsoft's SkyDrive or AOL's XDrive, for instance), both SwapDrive and Backup manage to charge$50 a year for 2GB of storage ($100 a year for 5GB). Yeah, I was scratching my head too.
It turns out the real growth-driver for the business is as a white-label online backup and storage service. The company, which was founded in 1998 and is based in Washington, D.C., powers the online backup services sold by more than 60 partners, including Iomega, Dell, Intuit, Best Buy, and Symantec. All told, the company is adding 13,000 new customers a day, and has 50 employees. The company raised $2.65 million in a series A round in 2001 from Core Capital Partners and some angels. It raised another round later from Contour Ventures and ASAP Ventures. We are still trying to find out the total amount raised, but it is fair to assume that the investors made a very decent return.