Flash array storage startup Pure Storage announced a massive new $225 million Series F round that values the company at $3 billion and signals a growing trend toward startups raising private capital instead of testing the public markets.

This latest investment actually looks more like an IPO than a private fund-raising. It validates the opinion that many executives have recently expressed to me that they would rather do a massive private round of financing than deal with the hassles of being a public company. Dell Computer is the most notable example of a once-public company that has recently taken itself private, and a slew of startups like Dropbox and Cloudera are doing massive private rounds that equate to the proceeds that were traditionally generated from an IPO.

The numbers support their caution. Public companies like Fusion-io and Violin Memory are trading significantly below Pure Storage’s valuation. Violin is valued at $337 million and Fusion-io at $1.06 billion based upon current stock price. Another way to look at it: Pure Storage is worth 5% of EMC and 25% of NetApp.

This trend won’t necessarily last. Some industry executives have told me privately that we are approaching bubble-popping time and startups are in a mad rush to rake in as much dough as possible before the “music stops”.

In a prepared statement Pure Storage CEO and @theCUBE Alumni Scott Dietzen said the landmark investment validates the disruptive potential of all-flash arrays. “No one should be buying mechanical disk to run databases or virtual machines,” he said. Pure Storage intends to “lead the ferociously competitive storage market as we leave the mechanical legacy behind.”

Pure’s latest funding round came from T. Rowe Price, Tiger Global, and Wellington Management Company. Previous investors Greylock, Index Ventures, Redpoint, and Sutter Hill all participated. The company has raised a total of $470 million in venture capital.

Competition Undervalued?

Competitors like Violin Memory and Fusion-io aren’t sitting still. Violin recently brought in EMC powerhouse Eric Herzog to run marketing and business development under new CEO Kevin DeNuccio. It also recently announced a jointly developed product with Microsoft for a new Windows Flash Array (WFA). This is Microsoft’s first all-flash high-performance storage array powered by Windows Storage Server 2012.

Meanwhile, Fusion-io attacked the enterprise hyperscale market with the announcement of NMV Compression at the recent Percona Live conference. NMV Compression is a flash-aware interface that can double the usable capacity of Fusion-io memory while eliminating the performance impact associated with disk-era compression algorithms that are common in flash SSDs.

Fusion-io executive Gary Orenstein says NMV can deliver up to four times the flash endurance by streamlining commands to optimize MySQL databases for persistent flash memory architectures when integrated with the company’s Atomic Writes interface.