NeoScale Secures $12M

Security appliance startup NeoScale Systems Inc.

today filled its coffers with $12 million in venture funding, a reflection of the increased role security is playing in storage networking.

Recent news is full of examples: Symantec Corp.s (Nasdaq: SYMC) $13.5 billion acquisition of Veritas Software Corp. (Nasdaq: VRTS) in December came in recognition of the need to combine storage and security (see Wedding of the Year and Symantec & Veritas: It's a Deal).

Then the fear factor kicked in last month with news of storage security breaches that have Congress considering federal legislation to punish companies that compromise personal information. ChoicePoint Inc., which stores credential verification information, admitted hackers may have gained access to the personal information of about 145,000 customers (see Regulators Raise Security Bar). The company estimates the breach could cost it $20 million in revenue this year. Also, Bank of America revealed it lost digital tapes containing the credit card account records of 1.2 million federal employees.

NeoScale was neck deep into its funding round when all that news broke, and it certainly didn’t hurt. “This has been in the works for awhile, but the timing is obviously perfect for us,” NeoScale Marketing VP Dore Rosenblum gleefully observes.

The startup landed a new lead investor, Advanced Technology Ventures (ATV), and retained previous investors Bay Partners, Lightspeed Venture Partners, and Sevin Rosen Funds.