Zetera Zips Up $13.5M

Zetera Corp. today picked up $13.5 million in Series A funding to help further the development of its approach to storage transport that the company says is both easier and cheaper than iSCSI (see Zetera Picks Up $13.5M).

Warburg Pincus led the round with previous investor WI Harper Group kicking in. Zetera developed its technology and picked up OEM deals with Bell Microproducts (Nasdaq: BELM), Netgear Inc. (Nasdaq: NTGR), and StorCase Technology Inc. with less than $5 million put up by its founders and angel investors in 2002 (see Bell Micro to Sell Zetera and StorCase Uses Zetera Tech). Zeteras partners plan to ship product this summer.

Bell Micro and StorCase will ship storage systems for small to midsize companies while Netgear will use Zetera technology to go after the consumer market.

CEO Chuck Cortright says the OEM deals were necessary to get VC dough. "It wasn't until we got close though to those signed deals that we got serious with VCs," he says. "Now we know we have enough fuel to make things happen."

Cortright says he will add a few developers and others to build OEM relationships to his 25-person staff. The focus will be on pulling in more OEM partners.The Irvine, Calif.-based startup has patents pending for its own transport on top of IP that enables RAID without a specialized controller (see Zetera Rewrites iSCSI and Zetera Unveils New Storage Solutions). Zetera uses User Datagram Protocol (UDP) rather than the Transmission Control Protocol (TCP) used by iSCSI. The idea is to bump up performance without the need for TCP offload engine (TOE) cards, making the method cheaper and easier to use than iSCSI.

Even with its funding, Zetera is far from home free. With iSCSI taking off, Zetera might run into resistance with its proprietary approach -- especially if it tries to find a market beyond consumers looking to store MP3s and other multimedia files.

While the IP SAN market a year ago was dominated by fellow startups, it now includes EMC Corp. (NYSE: EMC), IBM Corp. (NYSE: IBM), and Network Appliance Inc. (Nasdaq: NTAP), and more established players are sure to follow (see NetApp Hits 2,000th iSCSI Customer and EMC Mounts iSCSI Blitz).

Zetera will try to win a space with its own technology, which Cortright describes as "not to distant from iSCSI, but with improvements." Nonetheless, he knows it will take convincing to win widespread acceptance. "You're always going to find some people in your market not read to jump on change, even when change is to their advantage," he says.

— Dave Raffo, Senior Editor, Byte and Switch0