ExaGrid Exacts $13.5M

Investors have stumped up $13.5 million in Series B funding for NAS startup ExaGrid Systems Inc. The Westborough, Mass.-based company now has $22 million and plans to use the funds to expand its reseller channel.

Can the young disk-system vendor differentiate itself in a tightfisted market against fierce competition? The question is open. But ExaGrid claims an unspecified number of customers who have beta-tested its Advanstor backup appliance have agreed to buy it, including W. A. Wilde, a direct marketing services firm, and ColoSpace, which offers disaster recovery and colocation services in New England.

ExaGrid was founded in 2002 and made its first announcement in November 2003, saying its product was based on elements of grid computing (see ExaGrid Picks Its Nodes). Despite claims to be in beta test with at least three companies, including Massachusetts General Hospital, the biotech firm Curgen, and The First Years Website, little materialized from the rollout.

"Although theyliked the concept, their need for a solution did not match the ExaGrid timeframes for release of a commercial product," writes an ExaGrid spokesman of the early betas, in an email today.

A year after its initial announcement, ExaGrid unveiled Advanstor (see ExaGrid Launches NAS DPS). The startup's pitch is still backup and disaster recovery for unstructured data, but the specifics are clearer. Advanstor combines a file-oriented NAS (based on a Dell server equipped with Windows Storage Server 2003 and proprietary software) with remote servers equipped with SATA disk storage. The vendor's software features an interface for setting data protection parameters, along with automated space allocation and data migration. The aim of the product is to be a single-console, "two-tier," backup, archiving, and recovery system that works across multiple IP-linked sites.ExaGrid is aiming mainly at mid-tier or enterprise departmental users. An average installation is priced in the $100,000 range.

Whether ExaGrid can distinguish itself sufficiently from competitors such as BlueArc Corp., Isilon Systems, Network Appliance Inc. (Nasdaq: NTAP), and Xiotech Corp. remains to be seen.

CEO Mark Kaufman thinks Advanstor will sell based on a value-per-pound sort of comparison. "We're not really going head to head. We find ourselves in a dollar purchase competition," says Kaufman, who replaced ExaGrid's first CEO, Jim Pownell, in early 2004.

It may or may not be enough to take the 40-employee startup to profitability by Kaufman's goal of mid-2006. One key to future success will be channel partners. So far, ExaGrid has signed with Bishop Technologies Inc. and Tri-Delta Resources. Colospace also resells the gear as part of its service. More resellers, and beefed-up direct sales, are on the agenda, Kaufman says.

The new funding came from existing investors Highland Capital Partners and Sigma Partners.Mary Jander, Site Editor, Byte and Switch