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OnStor OnTap for $24M

Warchest filled for NAS gateway battle with NetApp and EMC

ONStor Inc. will become one of the best-funded NAS startups when it closes a $24 million round this week. But its battle for survival could be the toughest.

OnStors fourth round brings total funding to $79 million, which the company will use to beef up support and expand its sales channel. Marketing VP Jon Toor says this is the last trip to the VC well. "We’re confident we’ll get to breakeven with this funding,” he says.

OnStor has averaged two new customers a week since rolling out its Bobcat NAS gateway in January, Toor claims, and, including buyers of its previous gateway, the startup has around 100 customers total (see ONStor Hits NAS Gas and ONStor Peddles SAN Consolidation).

Though Network Appliance Inc. (Nasdaq: NTAP) and EMC Corp. (NYSE: EMC) still dominate the NAS market, startups are staking their ground. Isilon Systems grabbed $20 million in funding last week; BlueArc Corp. rolled out software enhancements and got a commitment from investors to put up cash as needed; and PolyServe Inc. scored an OEM deal with Hewlett-Packard Co. (NYSE: HPQ). (See Isilon Lays On $20M Icing, BlueArc Branches Out, and HP Upgrade Features OEM Crowd.)

From a competitive standpoint, OnStor faces the most daunting task of the private NAS contenders. While BlueArc and Isilon focus on vertical markets, and PolyServe has HP behind it, OnStor is a general-purpose NAS vendor that goes head-to-head with NetApp and EMC. “The competition has been intense since day one,” Toor says. “We don’t go after high-performance computing or niche markets.”

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