Sepaton Scores $22M

Data protection firm Sepaton has secured $22 million in a round of Series E financing led by new investor HarbourVest Partners. Existing investors Jerusalem Venture Partners, Menlo Ventures, and Valhalla Partners also kicked in.

Sepaton has raised $60.5 million to date, including this round and several others.

The funding, to be officially announced on April 16, is earmarked to expand Sepaton's sales and service internationally. For starters, the firm has opened an office in Beijing where it claims to have 25 customers, including China Life insurance, China PICC, and two of the country's largest banks.

The news comes on the heels of competitor Data Domain's bid for an IPO, and rumors of further consolidation in the VTL and data de-duplication markets, where de-duping VTLers Diligent, FalconStor, and Quantum are also competing furiously. (See De-Dupe Vendors Shake Hands.) Indeed, data de-duplication continues to be one of the year's hottest technologies, as IT pros look to reduce the bulk of backed-up data. And VTL in general is climbing: According to IDC, worldwide VTL revenues are set to double by 2011, reaching $1.4 billion annually by a CAGR of 47.5 percent.

Sepaton has garnered its slice of the riches, including an OEM agreement with HP. The 110-employee company claims to have sold 18 Pbytes of storage to more than 500 customers. Besides HP, Sepaton has other OEMs in the works, though the company won't name them."We didn't need the money," says CEO Mike Worhach. "But the best time to raise money is when you don't need it." He says the drive to expand global sales and marketing should help Sepaton to profitability this year.

Considering that a number of bigger companies are working out their own de-dupe and VTL strategies, the bid to be profitable hints that Sepaton may want the same exit strategy as Data Domain, instead of being acquired, as Avamar was by EMC for $165 million last year. (See New Company Launches New Product.)

Sepaton just recently added data de-duplication to its wares, with the release of its DeltaStor Appliance in February 2007. (See Sepaton Adds De-Dupe to VTL.) Sepaton de-dupes data after it is written to a target disk, a technique that saves bandwidth bottlenecks but may require more processing power than other approaches. Data Domain, Quantum, and Diligent de-dupe data "on the fly," as it is being sent to backup.

Mary Jander, Site Editor, Byte and Switch