Cereva Closes In On Round Three

Cash-strapped startup Cereva Networks Inc. has brought in two of the heaviest hitters in the VC community to help it find more funding.

Venture capitalists Paul Ferri, founder and general partner of Matrix Partners, and Ed Anderson, founder and general partner of North Bridge Venture Partners, have replaced more junior partners from their companies on Cerevas board of directors (see Cereva Adds to Board).

Jeff McCarthy, a partner at North Bridge, and David Schandz, a partner at Matrix, will still be involved, but Cereva "needs the big guns calling the shots now," says an anonymous source within the storage networking outfit.

At one point last year, Cereva was just about the hottest thing in networking -- attracting a fat $58 million round from Goldman Sachs & Co., which led the round, along with WorldView Technology Partners, Oak Investment Partners, Matrix, and North Bridge.

But, oh Lordy, how things changed. As Light Reading reported back in May, this year Cereva has changed CEOs and announced layoffs as it has struggled to find more investment. It has also been rumored to be having problems with beta tests (see Cereva: Stalled, Not Stopped).Meanwhile, 3PARdata Inc., its chief competitor in the startup space, recently closed a huge $100 million third round (see 3PARdata Snags $100M), causing Cereva to drop a place on Byte and Switch's list of Top Ten Private Storage Networking Companies.

Mahesh Ganmukhi, president and CEO since May, looks as if he might be turning this around. ”I’ve known Paul and Ed for many years, going back to my days at Cascade,” he told Byte and Switch. “We are very close to closing our third round."

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