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Report: Most Storage Startups Flop: Page 2 of 4

“There’s an unintentional mis-gearing in the way different storage companies are capitalized,” he says, pointing out that, while the amounts invested in different segments are about the same, the number of companies that actually survive in the different segments varies greatly.

Figure 1:

Source: NVCA, Thompson Financial, VentureOne, Company Reports, Dow Jones Factiva Database

The report shows that mean total investments in storage companies in nearly every segment is clustered around the $25 million mark (except service companies, which received a mean investment of $61.7 million). But while 56 percent of all funded tape companies, and 35 percent of all disk and component companies make it to IPO, only 23 percent of NAS vendors and a mere 17 percent of service vendors persevere.

Figure 2:

Source: NVCA, Thompson Financial, VentureOne, Company Reports, Dow Jones Factiva Database

“People are investing the same amounts, but with dramatically different outcomes,” Borchers says. “There’s much lower success in services and NAS.”