Top Storage Funding Deals 2007

It's been a year of dramatic growth for the storage networking industry. Nowhere is this more evident than in the number of startups who got funding rounds in the double digits in 2007.

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While storage firms still represent a fraction of total IT funding by VCs, analysts have noted that the range of late-stage deals reflects that more companies are going public in the sector than ever before. (We'll be covering this year's storage IPOs in a related upcoming article.)

A key characteristic of this year's late-stage funding deals is their size. Since January, we've reported funding news on over 25 storage-related IT firms, representing total funding of over $550 million. Of that, more than half represented awards of $20 million or more.

This money's pouring into firms in a number of storage-related fields, most notably virtualization, disk-based backup with CDP and/or data de-duplication, email archiving, MAID, and high-speed storage interconnects. Below, in ascending order, we take a closer look at the biggest storage-related VC funding stories of 2007:No. 11: Mimosa. A round of $17 million last April helped this email archiving supplier reportedly triple demand for its CDP-equipped product. But Mimosa faces competition from a slew of players. Zantaz's acquisition by Autonomy and increased competition from Fortiva are just two of the obstacles to IPO. Nonetheless, rapid growth of email archiving products and services bodes well for future success.

No. 10: Desktone. This desktop virtualization firm made a splash in June when it snagged $17 million in Series A funding from investors that included a Chinese firm and Citrix Systems. Desktone competes with desktop virtualizers from companies like VMware, via that company's acquisition of Dunes for an undisclosed sum in September 2007. Desktone says its solution is "more complete" than others': Execs claim Desktone's vDesktop software virtualizes storage, applications, client devices, servers, processing, and network technologies -- and controls them all from a single management console.

No. 9: Exanet. The clustered NAS startup's $18 million Series C funding last June brought its total to over $40 million. With more than 100 customers and regular product enhancements, it's at least possible that Exanet will continue to carve its niche despite competition from NetApp.

No. 8: ExaGrid Systems. With its $20 million round announced last month, disk-based backup vendor ExaGrid's positioning itself for a battle against rival Data Domain. While analysts have cited ExaGrid as a lower-end solution than Data Domain's, ExaGrid's execs aren't backing down. They boast a growing roster of over 35 channel partners, and they plan for profitability by the end of 2008.

No. 7: Expand Networks. WAN optimization is on the rise, and Expand's latest funding round of $21 million is a vote of confidence in the firm's ability to compete against Cisco, Packeteer, Riverbed, and others. The company hopes to keep its hand firmly in play by developing the WAFS specialization it's acquired with its Disksites acquisition and building on Chinese partnerships.No. 6: Atempo. This startup specializes in CDP-equipped backup software. Its $22 million Series B funding, announced in September, is aimed at expanding the firm's sales to U.S. service providers, European storage customers, and Chinese technology buyers. Red-hot competition from EMC and Symantec, among others, will make maintaining a 100 percent growth rate year-on-year a tough goal to meet.

No. 5: Sepaton. Few topics are hotter in storage these days than de-duplication, and Sepaton's combination of this disk-based data protection technique with data de-duplication in February 2007 helped generate significant momentum this year. With $22 million in Series E funding this past April, Sepaton embarked on international expansion that some analysts predict could help move the firm toward IPO.

No. 4: ONStor. A mezzanine round of $27 million brings this clustered NAS vendor's total to "north of $100 million," according to execs. CEO Bob Miller says the money, awarded in August, is earmarked to increase ONStor's workforce, expand its 300-plus customer base, and gear up for a public offering.

No. 3: Copan. The MAID pioneer's Series D funding of $32.4 million, awarded in September by eight VCs, showcases aggressive backing for the disk power-down technique Copan has popularized. But MAID continues to meet some resistance from end users uncomfortable with the concept of turning off disks when they're not in use.

No. 2: Xiotech. After buying former parent Seagate's mysterious Advanced Storage Architecture (ASA) group in November, Xiotech took $40 million in fresh investment to develop the acquisition. Xiotech, a ten-year-old firm that makes clustered storage arrays, remains mum on what its past funding has been. Seagate sold it to private investors in 2000 for about $360 million.No. 1: Force10 Networks. A whopping $113 million Series F round has brought the 10-Gbit/s Ethernet switch vendor's IPO plans into focus. After backing down on IPO in 2005, Force10 has reportedly taken the fresh funding either to avoid acquisition or to tide it over for a while, until another S-1 can be filed. Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.