Israeli startup Eon 2024 is one of the most talked-about companies in the high-tech industry. Founded only earlier this year amid an ongoing battle, the company has successfully become a magnet for some of the brightest names in Silicon Valley. Funding has already been granted thrice. The cloud backup solutions startup disclosed its most recent funding round was completed a few weeks ago at an estimated $750 million. Eon currently has no revenue because product development is not yet complete and it only has 36 people.
In an exclusive first interview marking Ian’s exit from stealth mode, it’s clear that the three founders—Ofir Ehrlich, Ron Kimchi, and Gonen Stein—were surprised by the rapid pace of events, which were much faster than expected. Although all three founders are in their 40s with families, for Ehrlich and Stein, this isn’t their first startup.
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Founders of Ian.
(Photo: Eon)
“As of today, we still haven’t had time to prepare a presentation for investors,” they laugh. “We knew we had the right idea at the right time, but we didn’t expect what happened. We started the company in December 2023 and didn’t even think about doing a funding round. Because of the war and the fact that Americans usually take it easy in December and early January, we wanted to raise a large amount of funding and “The timing is not good because of the war. The first or second quarter of 2024, but by then we will have closed our first funding round,” Ehrlich said.
“Since I know many investors, I started contacting them and discussing the company. As a result, there were dozens of offers. I was very surprised; obviously, we were able to tell an amazing story because we know the field very well, especially understanding Israel at a time like this. We decided early on to limit ourselves to funds.”
From the limited information that has leaked so far about Eon, it’s clear that it’s an unusual event reminiscent of Wizz—experienced entrepreneurs who previously sold a company to a tech giant and learned how the market works so they can create something more ambitious. venture. The first fundraising round for Eon, which took place before the founders were considered, was led by Sequoia Capital for $20 million, with Shawn Maguire as managing partner, and participation from Wynn Ventures, Eight Rhodes and Meron Capital. About a month later, another round raised $30 million, led by Lightspeed and joined by Omri Kaspi’s Sheva, which became the largest Israeli investor in the company. This second round valued Eon at $215 million. The last round, a Series B that was completed a few weeks ago, was led by Greenox with participation from Quiet Ventures. The round was remarkable for a company less than a year old, raising $77 million at a $750 million valuation. Thus, since it began operations in the middle of the war, Eon raised $127 million in less than a year before launching a product, employing only 36 employees between its offices in the US and Azrilei Sharona in Tel Aviv. Ehrlich and Kimchi are based in Israel, managing a development center, while Stein lives in New York, focused on business development.
Why keep secrecy when so many investors are already into the company and there is considerable buzz around it?
“We wanted to make sure we understood our messages well before they reached people disproportionately or forced them to change direction. We didn’t want privacy; we talked to a lot of people about the product. However, we also took advantage of the relative silence. At this point, we had hundreds of customers in the world of backup and storage. We have registered hundreds of patents.”
At this rate, I have to ask, are you already gearing up for a fourth funding round?
“We understand that the latest valuation is too high; we remember 2021, and I remember that as an investor. That’s why, even in the third funding round, we didn’t accept all the offers we received; we didn’t want things. It was only after seeing the responses from companies regarding our product that they really needed it. And I thought we could raise more money with the intention of making the purchase,” Ehrlich explained. “We are working quickly with a lot of knowledge provided by a team of 8-9 employees who joined Ian from our previous company CloudEndure, which was sold to AWS. Although we don’t have sales yet, we already have initial customers and you can say we are in talks with more than 100 companies, we have been in the last nine months. Worked, we know the similarities between us and Wiz are hard to ignore. t Now we believe in small, efficient teams, it becomes more challenging to maintain the same quality, so despite raising significant capital and great interest in the company, we are only adding 10 people Engineers.”
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Ehrlich is the driving force behind both CloudEndure and Eon. True to the archetype of the Israeli businessman, he is a computer geek who started programming at the age of 9 and joined the 8200. Shortly before recruitment, he met Stein, a friend’s partner, and they have since moved in. good friends Together, they founded CloudEndure in 2013. For Ehrlich, this was his third and most successful startup: the company developed technology to quickly migrate data without losing it and establish an infrastructure for rapid recovery against data loss. It raised only $18 million, was barely profitable on annual revenue of about $20 million, and was sold to AWS, Amazon’s cloud division, for $200 million. Ehrlich and Stein met in 2019 with Kimchi, who joined AWS in Israel as general manager of disaster recovery and cloud migration.
Stein and Ehrlich were serial entrepreneurs who didn’t have time to pursue academic degrees, while Kimchi followed a more traditional path, completing his studies in mathematics and computer science after serving in the IDF’s elite shadowg unit. After nearly five years in the Amazon, the trio set out to find Ian. Also, Ehrlich, who became an active angel investor with investments in 30 companies, almost transitioned to a career in venture capital, but ultimately decided he had not yet fulfilled his entrepreneurial ambitions. “With our current team and at this moment in the cloud market, it became clear to me that I had to do it again. During this time I saw a lot of companies as an investor, which gave me valuable insights. I felt. I started to understand this world better.”
The name Eon represents a long era in history, a vast market where three founders have identified in the field of data backup in the cloud and beyond.
“Eon is a level below ‘Eternity’. It’s very appropriate, because we can’t intentionally use the words ‘backup’ or ‘cloud,’ which allows us a lot of mental flexibility,” explains Ehrlich. Eon’s founders and their investors aren’t the only ones who see the potential in this space, as evidenced by the recent sale of Eon, which operates in this market, to Salesforce for $2 billion.
Like the founders of Wiz, who faced transition challenges while working at Microsoft after selling their first company, Adallom, Ehrlich, Stein and Kimchi saw the difficulties organizations faced in moving to the cloud. “Processes during the transition to the cloud and managing cloud backups can be very chaotic,” explained Ehrlich and his partners. “Data is the most important asset in an organization. I initially thought that backing up data was a completely solved problem, but I found out that this is far from the reality. We have a large client in AWS, which is a target. Once a ransomware attack is solved, there are no dramatic consequences of data being backed up. We expected not, because different people in the organization transferred to the cloud without a centrally managed plan. Everyone assumed that the cloud handled everything without adequate control over the process: cloud companies provide the infrastructure, but the rest is responsible. When a company moves applications to the cloud, they are the responsibility of the company itself.
What makes Ian unique, like Wiz, is that it is one of the few backup and data recovery companies designed specifically for the cloud era. It also exploits the fear of moving to the cloud, which sometimes comes at the expense of a streamlined and organized process, leading to a loss of control over event management in organizations.
“Large, established organizations have really moved to the cloud in the last three years, revealing significant gaps in their backup strategies. That’s why today between 10% and 20% of cloud spending goes to backup,” explains Ian. “If you consider the cloud infrastructure market growing rapidly—from $247 billion by the end of 2023 to $300 billion today—we understand the magnitude of the opportunity.”
If it’s such a big problem, why hasn’t it been solved yet, or at least why are there so few contenders for a solution?
“All the companies in this field were born in the world of old servers and they just started moving their boxes to the data center. You can’t just take a square and fit it into a circle; you have to develop the product accordingly. The way the cloud works right now, we basically see Rubric as a competition, which is with the American company Cohesity It went public this year at a valuation of $5.6 billion.
Right now, that sounds ambitious, but your investors must set tough goals. what are they
“Our goal is to build a large, billion-dollar company. It’s challenging, not trivial, but we have an opportunity to achieve it because the market is favorable. It’s naive to talk about an IPO at this stage, because we’re still very early. Valuation is an indicator of the company’s condition in our journey. An interesting derivative, however, is that it is ultimately measured, not at intermediate points right now, as we want to focus on product adoption and subsequent revenues.
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