3PARdata Snags $100M

3PARdata Inc. has scored a huge $100 million in third-round financing; the new injection of funds pushes its valuation up to $300 million, the company says (see 3PARdata Bags $100M).

The round was led by Amerindo Investment Advisors Inc. and 3PARdata's original investors, Mayfield Fund and WorldView Technology Partners.

Interestingly, a major pool of equity has been taken by strategic partners, including Sun Microsystems Inc. (Nasdaq: SUNW), Veritas Software Corp. (Nasdaq: VRTS), and Oracle Corp. (Nasdaq: ORCL).

These technology partners were critical in this round,” 3PARdata president and CEO, David Scott, told Byte and Switch. “In the block-based storage world customers are concerned with how well startup technology will integrate with their existing environments... Having companies [like Sun and Oracle involved] minimizes this perceived risk."

The funds will be used for product development, manufacturing, sales force expansion, and bringing 3PARdata's products to market, says Scott, who expects them to sustain the company through to profitability within the next two and a half years.Judging by the size of this funding round, 3PARdata’s product is an expensive machine to build. Scott was unwilling to divulge much on the technology side, as 3PARdata is still operating in stealth mode. He did say it will reduce total cost of ownership (TCO) for those implementing either internal or external service provider business models and will be protocol agnostic in terms of the network infrastructure it supports. TCO is obviously a key concern for customers implementing storage networks.

Based on our research, 3PARdata is planning to go head-to-head with EMC Corp. (NYSE: EMC). (For more on this see Top Ten Private
Storage Networking Companies.) Scott says the company should have products ready for commercial release sometime next year.

3PARdata’s funding round isn’t good news for everyone, of course. Cereva Networks Inc.

and Yotta Yotta, the other two obvious startups going after EMC, will face much steeper competition from 3PARdata now.

And there are downsides to such a big round. “$100 million is only a lot of money if it gets the company to revenue positive; otherwise it’s a rather hefty debt burden. As always, execution is king,” says William Hurley, storage analyst with the The Yankee Group.

Scott is a 17-year veteran of Hewlett-Packard Co. (NYSE: HWP), where he was former General Manager of HP’s Enterprise Storage division. He is looking to hire a CFO and a VP of operations, having already been joined by several industry experts to form 3PARdata's executive team. These include: Ashok Singhal, CTO, who was the chief architect of three generations of Sun servers; Jeff Price, VP of engineering, Sun's former head of engineering for servers; and Bob Rando, VP of sales, who previously held senior executive sales management posts at Hitachi Data Systems, Hewlett-Packard, Data General Corporation, and EMC Corp.International partners from the Japanese market included Net One Systems, Nissho Electronics, and Intec IT Capital. Other financial investors in this round included: Anshutz Investment, Aurora Technology Fund, Dain Rauscher Wessels, iGlobe Partners Fund , Merrill Lynch & Co. Inc., Mitsubishi International, Thomas Weisel Partners, and Van Wagoner Capital Management.

— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com