Making enterprise file sharing more like personal sharing

September 30, 2013, 4:08 PM UTC

FORTUNE — From college students distributing documents for a class to CEOs working on their Powerpoint presentations on the train, most people are familiar with and depend on cloud storage to make file sharing a breeze. While brands like Dropbox and Box have become household names for cloud storage, a new company is trying to take secure cloud file sharing to the next level.

Egnyte is an enterprise company that takes the approach of connecting cloud and local storage technologies to make file sharing a step easier. Egnyte’s customers can store data in the cloud, but they also have the option of using the cloud as merely a transfer mechanism between their local storage devices. By keeping data on office servers, businesses become less susceptible to third-party attacks than they would by relying solely on cloud storage, which can be more vulnerable.

On September 25, Egnyte announced its release of the industry-first product Storage Connect. The file-sharing tool, designed for the protection of sensitive information, will give businesses that need to access their firewall-protected data a way to transfer it from their servers to their mobile and desktop devices safely through the cloud.

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“We fundamentally believe that the cloud is not enough in the context of the enterprise,” said Egnyte CEO Vineet Jain. “Not all of your data can completely live in the cloud. Some are so large that they cannot be stored in the cloud, so they need a local drive.”

Storing data in the cloud, while convenient for remote access, can also leave a company’s sensitive information vulnerable to hacking, or cloud storage may not be allowed by regulatory standards of an industry.

Other competitor file sharing companies like Box and Dropbox — which have received over $300 million and over $250 million in funding, respectively — have grown in popularity as secure cloud storage platforms and have been developed for both business and personal use. Egnyte, however, has tailored its hybrid storage model solely toward businesses. It doesn’t adhere to the “free-mium” pricing model of other companies where users have free product usage until they hit a data limit. Instead, it charges companies based on a monthly fee per employee with a free trial available.

Forrester, an analytics, research, and advisory firm that focuses on business and technology, released a report on file sync and share platforms in July that rated Egnyte as a “strong performer” in the industry on a scale that decreases from leaders to strong performers to contenders to risky bets. According to the report, Egnyte trails slightly behind IBM (IBM), Box, and EMC (EMC), who are the only companies in the “leader” category.

“Enterprises will always have files that cannot be stored in the cloud due to government regulations, privacy, or intellectual property concerns,” said Jain in a press release. “These are often the most valuable to an organization, so providing private access to these files when and where business happens is critical. Many companies haven’t embraced the cloud due to these exact concerns. We believe the addition of Storage Connect will enable companies of all sizes to fully embrace the cloud era without compromising their privacy or security.”

One such security threat that Jain believes will be quelled with his technology is the government’s PRISM surveillance program, the National Security Agency’s plan to use electronic surveillance to data mine citizens’ information.

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“Storage Connect will not have most data in the cloud, making it more protected and immune to PRISM because it will be hidden behind a firewall,” said Jain.

With funding from Kleiner Perkins Caufield & Byers, Google Ventures (GOOG), Floodgate Fund, and Polaris Venture Partners, Egnyte raised $33 million in the past four years, with the last round of funding in July 2012 totaling $16 million. Jain expects revenues in the range of $40 million this year.

Matt Murphy, a partner at the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, and his team began investing in Egnyte two and a half years ago when the company decided to double down on enterprise technologies. The firm was intrigued by the idea of a hybrid storage system that included cloud and local drives.

“There was no way to marry these worlds before,” said Murphy. “Customers want business life to be very similar to consumer life. They want everything to be accessible through the cloud without compromising security.”

Egnyte currently employees 170 workers, and Jain plans to expand his company by bringing in new investors. Egnyte just began the process of applying for a new round of funding that will take place within the next 60-90 days, and Jain hopes to receive funding within the range of $25 million. With the new Storage Connect product available, he plans to put the funding toward the marketing and sales of existing products.