Cisco, NeoPath Make It Official

Cisco leads funding round, with hints of deeper relationship to come

May 23, 2006

3 Min Read
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Cisco is officially entering the file virtualization arena though a strategic investment in NeoPath Networks.

NeoPath will formally announce a funding round led by Cisco this week. As reported last month, Cisco's investment could be just the first step in a relationship that includes an OEM deal or even an acquisition. (See Cisco Walks a NeoPath.)

NeoPath CEO Alan Baratz says the round totals $11 million including contributions from the startup's previous VCs, but he considers the lead investor more important than the amount raised.

"The funding was done for the purposes of having Cisco become an investor," he says.

Industry sources believe Cisco will eventually sell NeoPath's file virtualization software on its switches. It's also no secret that Cisco is always looking for startups to acquire.Neither side is discussing those plans yet, though. "We are not allowed to comment on any further aspects of the relationship," Baratz says.

Cisco refused to comment on any potential deals or business arrangements with NeoPath, but did express an interest in NeoPath's NAS virtualization in a statement released to Byte and Switch: Cisco thinks NeoPath has a strong storage migration tool, which is getting traction in the market. In addition, we are interested in their vision for virtualization in the Network Attached Storage space and in how this space develops.”

NeoPath sells its product on an appliance that sits in the network and manages files stored across different NAS systems as one big pool, using virtual namespace and load balancing. The technology has been in demand over the last couple of years. (See NeoPath Enhances File Management and Users Wary of FSV.)

Cisco's Fibre Channel switch rival, Brocade, jumped into file virtualization last March when it acquired NeoPath rival NuView for $60 million in March (See Brocade Bags NuView.) Industry sources say they expect other partnerships to develop.

"These types of products are destined to become blades on switches," analyst Brad O'Neill of the Taneja Group says of file virtualization.NAS vendors are obviously interested in the technology because it complements their wares. EMC picked up one of NeoPath's rivals last year when it bought Rainfinity for $80 million. Now, EMC sells it as the EMC Rainfinity Global File Virtualization appliance to manage multiple NAS systems.

Baratz is looking for NeoPath's relationship with Cisco to help it compete with rival independent startups Acopia and newcomer Attune Systems. (See Attune Launches Virtualization.) He is also looking to cozy up with Network Appliance, EMC's major NAS rival. Like EMC, NetApp lacks global namespace in its NAS products and requires a third-party product.

With that in mind, it's likely no coincidence that NeoPath is hiring former NetApp sales VP Ali Zadeh as its chief operating officer. Baratz says Zadeh will spearhead the startup's marketing expansion.

NeoPath, which claims 45 employees, now has $29 million over three funding rounds. August Capital, Doll Capital Management, and Gabriel Venture Partners are its other investors.

— Dave Raffo, News Editor, Byte and SwitchOrganizations mentioned in this article:

  • Acopia Networks Inc.

  • Attune Systems Inc.

  • August Capital

  • Brocade Communications Systems Inc. (Nasdaq: BRCD)

  • Cisco Systems Inc. (Nasdaq: CSCO)

  • DCM - Doll Capital Management

  • EMC Corp. (NYSE: EMC)

  • Gabriel Venture Partners

  • NeoPath Networks

  • Network Appliance Inc.

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