Tallinn-based Leil Storage has secured €1.5 million in seed funding led by Karma Ventures, with participation from Specialist VC, to democratize access to hyperscale storage infrastructure. Founded in 2022 by engineers Aleksandr Ragel and David Gerstein, Leil develops HDD-native software that makes shingled magnetic recording (SMR) drives practical for enterprise-scale deployments—delivering up to 20% more capacity per disk and 70% lower energy use. The technology allows organisations managing vast datasets—such as broadcasters, archives, and AI training centres—to scale cost-effectively without the environmental or operational overhead of conventional hard-drive systems. The new capital will fuel product roadmap expansion and go-to-market growth, helping Leil extend its customer base across data-intensive industries.
The enterprise storage market is valued at approximately $22 billion and is growing at a rate of nearly 20% annually. Every day, the world now produces over 330 million terabytes of new data — a volume expected to triple by 2030. At current rates, we generate a full year of 2010’s data in roughly six days. Scaling these archives on conventional hard-drive systems is increasingly expensive and power-hungry, driving demand for lower-energy infrastructure.
Leil builds software that makes high-density shingled magnetic recording (SMR) hard drives practical at enterprise scale. SMR overlaps data tracks like roof shingles, fitting around 20% more data per disk than conventional CMR drives, used in most data centres today. This architectural efficiency reduces SMR drive costs by approximately 20% per terabyte and lowers power consumption. The benefits compound: needing fewer drives reduces hardware expenditure, energy consumption, cooling requirements and operational overhead.
Dropbox runs 90% of its storage fleet on SMR and has reported significant cost savings and power efficiency gains per terabyte.
However, the overlapping track design requires data to be written sequentially to prevent overwrites or corruption, necessitating specialised software. For over a decade, SMR usage remained almost exclusively confined to hyperscalers such as Google, AWS, and Meta. These companies developed proprietary tools for their own workloads but never commercialised them, leaving the broader market without a viable solution.
Leil’s software automates that complexity. It manages how data is written, moved and recovered across thousands of drives while retaining its higher density and lower power consumption. Crucially, it classifies content by access patterns, groups together inactive files, and powers down the respective drives until the data is needed again. Depending on the use case, this enables up to 70% energy savings without compromising availability.
SMR drives are best suited for data-intensive organisations, such as national broadcasters, public archives, data and AI training centres, and research institutes managing multi-petabyte installations (one petabyte equals 1,000 terabytes). Leil’s software is already used by customers across these segments.
“The next wave of innovation in AI and science is buckling under the weight and cost of its own data,” said Aleksandr Ragel, Co-founder and CEO of Leil. “We founded Leil to change that. We are making hyperscale storage economics a reality for every enterprise, delivering significant cost savings, reducing environmental impact, and ensuring critical data remains under our customers’ control. Our HDD-native approach builds a high-performing, more resilient and efficient foundation for the data-intensive future.”
Leil operates on a capacity-based subscription model and supports a gradual infrastructure transition, allowing companies to deploy its software alongside existing hardware and integrate SMR drives over time.
The new capital will accelerate Leil’s go-to-market strategy, with key priorities including expanding the product roadmap and growing the commercial team.
“What impressed us was the team’s rare mix of deep storage infrastructure expertise and their ability to productise a complex technical problem,” said Kristjan Laanemaa, Partner at Karma Ventures. “AI needs more than just compute — it needs smarter, sovereign infrastructure for storing the colossal datasets that the models rely on. Leil is solving that bottleneck.”
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Read the orginal article: https://arcticstartup.com/leil-storage-raises-e1-5-million-seed/
