Permabit Chews On $12M

Closes third round of funding, but still smarting over loss of StorageTek OEM deal

August 30, 2005

3 Min Read
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Permabit Inc., after being dumped by its OEM, Storage Technology Corp. (StorageTek) (NYSE: STK), a few months ago, rebounded today by announcing a $12 million funding round to help it try to pick up the pieces.

Permabit CEO Tom Cook says the Cambridge, Mass., startup closed a third funding round led by previous investor Baker Capital bring its total funding to $32 million. The funding round was one of Cooks top priorities when he replaced Randy Seidl as CEO of the content addressed storage (CAS) vendor in April (see Permabit Cooks Up New CEO).

“This gives us a tremendous push,” Cook says. “It should give us significant growth.”

Cook says he will expand the 30-person company’s staff, most notably adding sales, business development, and marketing VPs. Cook also says Permabit added five customers over June and July, bringing its total to around 20.

Permabit still faces a challenging future, even with the funding. Cook says partnerships are an important part of Permabit’s strategy, but it lost its biggest partner when StorageTek pulled out of its OEM deal in June (see StorageTek Rolls Its Own CAS, Permabit, NorthSeas Form Archive Pact, and Permabit, QStar Hook Up for DR). Permabit expected its OEM deal announced in January to make it a major player in the CAS space, but StorageTek unveiled its own competing product five months later and sent Permabit packing (see StorageTek Taps Permabit's CAS Act and StorageTek & Permabit Mingling).That’s apparently still a sore subject at Permabit. When asked about losing the StorageTek deal, Cook said he had to get to a meeting and handed the phone to VP of development Jered Floyd. Floyd said he could only talk about products, not business relationships.

Floyd did have something to talk about: Permabit also today announced an upgrade to its Permeon Compliance Store archive for fixed content and compliance records (see Permabit Upgrades Archiving). The upgrade is largely packaging. Permabit is moving its high-availability and replication features into modules that customers can choose or leave out.

Permabit added a module that allows for customization of retention policies and increased the size of the files it supports from 10 gigabytes to 2 terabytes.

Floyd says Permabit is making gains in the financial services and healthcare markets, but other CAS and compliance archiving competitors are also circling those verticals. Besides major players EMC Corp. (NYSE: EMC), Hewlett-Packard Co. (NYSE: HPQ), and IBM Corp. (NYSE: IBM), and startup Archivas Inc., the roster keeps growing (see EMC Centera Gets Nodes Job, HP Adds Archiving Apps, and Archivas Seeks Archiving Action).

StorageTek entered the market in June, and Nexsan Technologies Inc. jumped into the CAS market last week (see Nexsan Encrypts CAS). Sun Microsystems Inc. (Nasdaq: SUNW) is preparing to launch its Honeycomb archiving system later this year, and Veritas -- now part of Symantec Corp. (Nasdaq: SYMC) -- acquired CAS technology through a $58 million acquisition of DataCenter Technologies Inc. (DCT) in April (see Sun Pushes Into NAS and Veritas Archives Another Startup).— Dave Raffo, Senior Editor, Byte and Switch

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