ILM Tide Brings OuterBay $12M

OuterBay Technologies Inc., which has ridden the crest of the ILM wave on an OEM deal with EMC, today picked up $12 million in funding that CEO Michael Howard says could bring the startup to profitability by September (see OuterBay Pulls in $12M).

Focus Ventures led the round with a $4.2 million investment, and previous investors BA Venture Partners, Leapfrog Ventures, Mayfield, and Redpoint Ventures joined in. OuterBays total funding is $40 million over four rounds.

OuterBay’s Application Data Management suite identifies and archives completed transactions in databases or custom applications, and sends the archived data to cheaper storage. EMC resells ADM as Database Xtender (see EMC Pounds ILM Pulpit and EMC Puts OuterBay Inside). OuterBay also has OEM deals with NEC America Inc. and Sybase Inc. (see OuterBay, NEC Announce OEM and Sybase Integrates OuterBay).

OuterBay and another startup, Princeton Softech Inc., are in the forefront of database archiving -- a market Meta Group Inc. forecasts to reach $2.2 billion by 2007 (see Report: Applications Key to ILM ), Princeton Softech Expands Archiving, HP Uses Softech Archive in ILM, and Princeton Softech Pines for Partners).

Howard says the funding will pay for OuterBay’s recent expansion of sales and support in North America, England, and Asia. He says the company has added around ten people to run its headcount to just below 100, and he expects to add another five to ten.The plan is to help spur direct sales of ADM, which the company upgraded today. Howard says most of Outerbay’s 200 customers are direct sales, although he credits EMC with priming the ILM pump by pushing a tiered storage strategy (see Tucci Touts ILM).

“They’ve done an incredible job of advocating the ILM market,” Howard says of EMC. “There’s now a category where people could understand what it’s called and what the benefits are for the software we're selling.”

The EMC-OuterBay relationship has been cozy enough that analysts have speculated that OuterBay could join EMC’s expanding list of software acquisitions. Howard won’t bite. He says his goal is to hit profitability by the third or fourth quarter of the year, and part of the strategy involves OEM deals with other storage vendors.

“Our strategy is to build around direct and indirect models,” he says. “We hope to find other resellers and OEMs. We want to hit profitability, because it gives you many options. With liquidity, your options become much more robust.”

— Dave Raffo, Senior Editor, Byte and Switch0