Storage Startups Top $500M

Storage networking startups have taken over half a billion dollars in venture funding since the start of 2004 -- and the year's not over yet.

A search of announcements run on Byte and Switch over the last 11 months reveals that 27 companies have received over $500 million, many in double-digit awards.

This sum exceeds the total for all of 2003 given by at least one formal VC survey, the Quarterly Venture Capital Report from Ernst & Young and VentureOne. That survey put total venture funding for data storage startups for the first half of 2004 at $225.8 million (see VCs Shell Out for Storage).

At this rate, storage funding for 2004 could wind up higher than these analysts have tallied since 2001, when it hit a boom-time high of $671.65 million.

Table 1: Storage Networking Startups 2004

So far, 3PARdata Inc. has taken the biggest round this year at $32 million for advancement of its think-provisioning SAN (see 3PAR Pockets $32 Million). Blade system startup Egenera Inc. comes next with $30 million (see Egenera Generates $30 Million).

Two third-rounders, iVivity Inc., which makes storage processor chips, and Maranti Networks Inc., which makes intelligent switches, have gleaned $26 million apiece (see IVivity Ingests $26M and More Money for Maranti). Three others -- NAS software startup Acopia Networks Inc., backup array vendor Copan Systems Inc., and IP SAN maker Intransa Inc. -- scored $25 million apiece (see Acopia Aces $25M, Copan Sweeps Up $25M, and Intransa Scores $25M).

Most of these big rounds occurred after it looked like VC funding had slowed a bit despite an initial upsurge early in the year (see It's Raining VC Money and Funding Valve Is on Low).

Indeed, just a couple of rounds fell below $10 million: a top-off round for DataCore Software Corp., which has gotten $82 million to date for SAN management software (see DataCore Lands Venture Funding ); first funding for Onaro Inc., which makes SAN change management software (see Onaro Lifts Its Cover); and a round for Sanrad Inc., which makes an iSCSI appliance and claims to be on its way to $50 million in revenues this year (see Terminator Pumps Sanrad).

The volume of storage funding this year suggests that while IT spending may still be cautious, investors are confident of solid demand for storage products.

Mary Jander, Site Editor, Byte and Switch