Software maker Code42 raises $85 million from investors

Code42, a Minneapolis software company that provides data storage services, has raised $85 million in new financing, the biggest venture capital investment for a Minnesota company since 1999.

With it, Code42 is positioned to add more staff or take advantage of opportunities to buy stakes in other companies, the company said Tuesday.

The money is coming from two firms that previously invested in Code42, Accel and Split Rock Partners, and two new ones, JMI Equity and New Enterprise Associates Inc.

Chief Executive Joe Payne said in a statement that the new investment will allow Code42 to focus on developing more services for businesses, a direction he has emphasized since arriving at the company this summer.

The company last raised capital in 2012, when Accel and Split Rock put in $52.5 million.

Its new round of financing is the biggest seen in Minnesota since early 1999, when WamNet — a company in Eagan that offered network, storage and application services during the first Internet boom — raised $92.6 million. The firm struggled after the dot-com bust in 2001 and its assets were later sold.

In more recent years, CVRx, a medical device maker in Minneapolis, raised $84 million in 2008, according to data from Pricewaterhouse Cooper's MoneyTree Report.

Before Code42's announcement, the two biggest capital rounds on the Minnesota tech scene this year were a $30 million round at Field Nation, which provides a service that matches contract IT and other freelancers with corporate clients, and $27 million at Lead Pages, which provides digital marketing products.

Code42 began in 2001 as a provider with a simple-to-use data backup service for consumers. As its product, called CrashPlan, became more robust, the company late in that decade began selling it to corporate customers. It grew in popularity as corporate IT administrators coped with the proliferation of smartphones and the blurring of the lines between devices that are used for personal and corporate use.

The company, which has its office in the Marcy-Holmes neighborhood near downtown Minneapolis, says it has 37,000 business customers, who have backed up data equivalent to the volume of 100,000 movie libraries of Netflix, the video service provider.

"This funding enables us to grow even faster in endpoint backup and accelerates our efforts to build analytics and actionable intelligence on top of the historical archive of end-user data," Payne said.

Evan Ramstad • 612-673-4241