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Startup Funding Nears $2 Billion: Page 3 of 5

SAN and NAS virtualization appliances from the likes of Zambeel Inc., StorAge Networking Technologies Ltd., and Panasas represent the hottest technology sector right now in terms of new companies launching in this space. But they are third on the list for the amount received in funding, with $270 million so far. This raises the question of whether all of these companies will receive enough investment down the line to survive.

Component startups just about make it on to the chart with a total of $54 million. The concern for these companies is whether the market will be big enough to support them when incumbents like Agilent Technologies Inc. (NYSE: A) and Lucent Technologies Inc. (NYSE: LU) have divisions devoted to this sector.

All this raises the question of whether too much money has been allocated to this market. The table below shows how many companies are involved in each category. (Let us know if we’ve missed any!)

Table 1: Investment in Storage Startups, by Market Sector

Market sector Total funding $millions Startups
Components 54 Silverback, Platis (bought by Adaptec), Trebia, Troika
Software virtualization 60 DataCore Software, Xiotech
Transport (IP-centric) 131 Nishan, San Valley
Transport (FC and Gig E) 144 Pirus, Sancastle, Andiamo (Cisco), Rhapsody, StoneFly, Maxxan, Sanera, Akara, Confluence
Storage management 150 StorageApps, Astrum Software, Neoscale, SANavigator, Prisa Networks, Terracloud, Trellisoft, Sangate
Infiniband 200 InfiniSwitch, Veio, Paceline Systems, Crossroads Systems, Lane15 Software, Mellanox, Baderacom
Next Gen SAN and NAS appliances 270 BlueArc, Panasas, Zambeel, Lefthand Networks, KOM Networks, StorAge, Intransa, SANgate Systems, Falconstor, Spinnaker Networks, Kashya, Storigen
High performance storage systems 303 3PARdata, Cereva, YottaYotta, TrueSAN
Storage Service Providers 542 Scale Eight, Storability, Storage Telecom, StorageNetworks, StorageAccess, WorldStor, Sanrise, StoreWay, ManagedStorage International, Skydesk, Arsenal Digital Solutions Worldwide, Callisma

The herd mentality is well under way among investors, according to most analysts. We counted no fewer than 60 different venture capital companies that have invested in storage startups to date.