Storage Funding Finds Its Feet

The amount of VC money flowing into the storage sector is down from last year, though more and more startups are clinching late-stage deals to fuel IPOs and M&A activity.

Recent figures from consulting firm Ernst & Young and DowJones VentureOne highlight the buoyant nature of the overall U.S. venture market, which reached $7.4 billion in the second quarter of 2007, up from just over $7 billion in the first quarter and an increase of 8 percent on the same period last year. (See VC Investment Grows in Q1 and Venture Capital Funds Decline.)

IT-related deals, totaling $4.1 billion, made up more than half of the second quarter's total funding. That IT deal figure was up roughly one third from $3.1 billion in the prior quarter, and it represented a 10 percent hike above the same period last year.

Still, despite an apparent boom in technology funding, storage represents just a fraction of these overall figures.

VentureOne's research reveals that storage-related financing accounted for $164 million in the second quarter of this year, up about 64 percent from just under $100 million in the prior quarter, although 21 percent below the $207.6 million recorded by VentureOne in the second quarter of 2006.