EqualLogic Tallies $15M

Startup EqualLogic Inc. has pocketed a healthy $15 million second round as it sets its sights on launching its iSCSI-based storage array by midyear (see EqualLogic Nets $15M).

The round, which brings EqualLogic's total funding to date to $27 million, was led by TD Capital Technology Ventures and included participation from initial investors Charles River Ventures and Sigma Partners (see EqualLogic Takes Flight).

"This funding is all about building up the go-to-market team," says EqualLogic CEO Peter Hayden. He wouldn't comment on whether it was an "up" round -- meaning the valuation of the company has increased -- but he says $15 million was exactly the amount the company was looking to raise.

And while the company hasn't officially shipped anything yet, Hayden claims he's already got "more than one" order on the books. He wasn't able to name any beta customers but says there are several financial institutions among them, including a major U.S. bank based in Boston (see EqualLogic Draws Bank's Interest).

The headcount of EqualLogic, based in Nashua, N.H., is in the "mid to high 50s." Hayden says he expects to add on to that a bit but adds, "we've been very careful about spending money... Burning through millions of dollars in this economy is not a good idea." He says the latest funding should last through the end of 2003, but whether -- and when -- EqualLogic needs additional capital depends on how quickly it can ramp sales (see SAN Startups on the Block).EqualLogic is basing its supposedly "self-managing" storage arrays on iSCSI, which sends block-level SCSI storage commands over TCP/IP networks. The startup is also using Serial ATA drives, which are designed to provide high-end features at a lower cost. Hayden says the company is working with several disk manufacturers, including Hitachi Ltd. (NYSE: HIT; Paris: PHA), Maxtor Corp. (NYSE: MXO), Seagate Technology Inc. (NYSE: STX), and Western Digital Corp. (NYSE: WDC) (see Western Digital Hatches Raptor).

In Hayden's view, any big questions about when iSCSI will take hold have been answered, now that the Internet Engineering Task Force (IETF) has ratified the protocol and the technology has been quickly endorsed by major vendors, including Microsoft Corp. (Nasdaq: MSFT) and Network Appliance Inc. (Nasdaq: NTAP) (see iSCSI Gets Go-Ahead, NetApp Blitzes on iSCSI, LSI Lines Up iSCSI Mates, Microsoft to Unleash iSCSI, and Silverback Makes iSCSI Howl).

"There have been a lot of people casting a cloud over iSCSI, but I think that's rapidly clearing," he says. "The big missing link has been the end storage -- and now it's possible to deliver a full SAN solution to customers."

In addition to EqualLogic and NetApp, other vendors going after the IP SAN storage space include Eurologic Systems, Intransa Inc., LeftHand Networks, and Pillar Data Systems. Dell Computer Corp. (Nasdaq: DELL) also has said it has iSCSI plans in the crockpot (see LeftHand Picks Up $20M Round, Intransa Quiet on Plansa, Larry's Stealth Storage Startup, and our interview with Rhonda Gass, VP of Storage Systems Development, Dell).

So what's different about EqualLogic? Hayden says the key is the startup's "PeerStorage" architecture, which allows up to 256 arrays to gang up together and automatically load-balance data."The initial reaction is, 'Oh, another storage company,' " Hayden admits. "But that goes away in about five seconds. Managing storage is an arcane process that requires specialized people. We offer storage management that is completely unattended." He claims EqualLogic's storage array is so easy to set up that one of the company's pilot sites went "from cardboard boxes to operational SAN" in 18 minutes flat. [Ed. note: Wow! They built a SAN out of cardboard boxes?!]

EqualLogic, however, still isn't ready to divulge critical pieces of its strategy, such as pricing. "We'll be very competitively priced, but we're not just disk drives wrapped in sheet metal," Hayden says.

And it's still mute on many other particulars of its system. Here's what we were able to wheedle out of Hayden: The system's hardware is fully redundant, and it's capable of running at full Gigabit Ethernet line speed by employing some embedded TCP acceleration. The only software it requires on the host is an iSCSI initiator, and EqualLogic is participating in the beta test of Microsoft's Windows driver. Finally, users manage a PeerStorage group of arrays -- not individual arrays -- via a standard Web browser.

"The software is homegrown; the hardware is off-the-shelf components," Hayden says.

EqualLogic claims to have lined up several resellers, the names of which it can't disclose yet. And besides the reseller channel, the startup is in discussions with several potential OEMs, Hayden says."We want to directly touch end customers, but we're also very interested in partnering with other people who have broader and deeper customer reach."

Todd Spangler, US Editor, Byte and Switch

To view an archive of Byte and Switch's Webinar – IP Storage and iSCSI: Coming of Age – which was broadcast live on March 19, 2003, click here