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The Storage Rollercoaster

Mixed messages are once again issuing from the storage segment: Despite growth in startup funding, at least one major supplier decries IT spending patterns even as its chief competitor cites fresh growth. Meanwhile, mergers continue unabated and IPOs abound.

Let's take that from the top. Late last week, figures from Ernst & Young and DowJones VentureOne showed that VC funding may be slightly down in the storage sector, though investment remains robust. (See Storage Funding Finds Its Feet.)

VentureOne's research reveals that storage-related financing accounted for just $164 million of the overall U.S. venture market of $7.4 billion in the second quarter of this year. But that storage investment was up about 64 percent from just under $100 million in the prior quarter. Further, more and more startups are clinching late-stage deals to fuel IPOs and M&A activity.

Case in point: The $27 million mezzanine round announced by ONStor on August 1. CEO Bob Miller told Byte and Switch that this money will be used to take the firm public sometime within the next 12 months. (See ONStor Secures $27M, Eyes IPO.)

In this vein, need we remark that going public is the rage among storage startups? An unprecedented number have gone public this year, or are seriously planning to do so. (See Storage Forecast: Clear, Sunny, Data Domain Debuts With Q2 Loss, Voltaire Strikes IPO, BladeLogic Looks to $80M IPO, Netezza Closes IPO, Double-Take Files for IPO, EMC Still Rules VMware, and Compellent Preps for IPO .)

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