BlueArc Wins $72M Round

Storage hardware startup BlueArc Corp. has won $72 million in a third round of financing, which will no doubt send a shiver down the spines of its key rivals, public-market stars Network Appliance Inc. (Nasdaq: NTAP), and EMC Corp. (NYSE: EMC). The funding sends a strong message to the market that BlueArc's new approach to network-attached storage is gaining momentum.

The round was led by Weston Presidio Capital and previous BlueArc investors Celtic House International, Apax Partners & Co., and Patricof & Co. Ventures Inc. Also joining this round were Dell Ventures, Euroqube, New York State Retirement Co-Investment Fund, J.P. Morgan & Co. (Nasdaq: JPM), and Fort Washington Capital. Including the $72 million, the company has secured over $100 million in funding so far.

Charlie Noreen, CFO for BlueArc told LightReading, "This is just the endorsement we needed to bring our product to market. It sends a pretty strong signal when other public companies in our space have had their valuations slashed in recent months." BlueArc expects to start shipping its recently introduced Si7500 storage server this quarter.

The Si7500 is a giant of a system that uses specialized chips capable of delivering 2000-Mbit/s throughputs. The result, it claims, is the first storage server capable of keeping up with the speed of optical networks.

The Si7500 connects Fibre Channel storage arrays at the back end of the network with network-attached gigabit Ethernet computer systems at the front end. The company says its architecture supports 100 times as many simultaneous connections and 30 times the storage capacity from a single system as rival network-attached storage products -- namely, from Network Appliance and EMC.Competitors at both Network Appliance and EMC have had few public comments about the company, but one EMC official told Light Reading off the record that they're waiting to see whether BlueArc can produce what it's promised. The product is currently being tested by beta customers.

IDC analyst Robert Gray noted recently that BlueArc's system is "2 to 10 times as good as today's products." BlueArc also counts among its fans technology seer George Gilder, who publishes a Silicon Valley technology report. He proclaimed in his latest report that the BlueArc "revolution" could affect not just the leading storage vendors but also companies like Cisco Systems Inc. (Nasdaq: CSCO), Alteon WebSystems (Nasdaq: ATON) (Nortel), and Extreme Networks Inc. (Nasdaq: EXTR) that sell equipment to balance loads on storage networks.

James B. McElwee, general partner of Weston Presidio said, "In BlueArc we found a company possessing a unique combination of technology and management committed to delivering network storage systems designed for the optical age." Coinciding with the completion of this round of funding, BlueArc announced that McElwee has joined BlueArc's board of directors. Jo Maitland, Senior Editor, Light Reading http://www.lightreading.com