IStor Seeks More Funding

IP storage startup iStor Networks is aiming to nail down a $10 million to $15 million funding round and says its iSCSI controller card will start beta testing by midsummer.

The company, which received $11 million in February 2002, says it has just started negotiating a Series B round and hopes to close it in June or July. In addition to the company's current Asian investors -- CDIB Ventures, D-Link Systems Inc., Paclink, Quanta Computer Inc., and VIA Technologies Inc. -- several California-based VCs will participate in the round, according to Simon Huang, iStor's cofounder, president, and CEO. "We are just at the beginning of the round of funding," he says, adding that the company has already received a $5 million commitment from its current investors (see IP Storage Has a Pulse).

The Irvine, Calif., company, which is developing ASIC-based iSCSI controller cards, will use most of the additional funding to expand its engineering and business development, Huang says. Currently, 34 of the company's 38 employees are engineers. "We don't want to put too much funding into sales and marketing," he says. "So our burn rate is pretty good."

IStor is producing high-end iSCSI storage controllers to let storage systems connect to IP networks on the front end. Its 4-by-10-inch card offers either one 10-Gbit/s port or between one and eight 1-Gbit/s ports, and supports up to 128 Serial ATA drives.

Huang says he expects the additional funding to last until the middle of next year, when the company is aiming to hit the breakeven mark. That may be a push, however, since the company has yet to even start beta tests. But Huang insists that the technology is very close to the final stages of development.More important, Huang says, he brings with him important OEM contacts from the previous company he founded, storage controller chip supplier CMD Technology Inc., which he sold to Silicon Image for $45 million in June 2001. IStor is currently gearing up to demonstrate its technology for three OEMs next month; Huang declined to name names, but said that dealings with the smallest of the OEMs -- a $300 million company -- could be finalized as early as January 2004.

A sample of the product will be available in July, Huang says, and beta testing of the technology can then begin.

When iStor does launch, it will, of course, face its fair share of competitors, including Adaptec Inc. (Nasdaq: ADPT), LSI Logic Corp. (NYSE: LSI), QLogic Corp. (Nasdaq: QLGC), and Silverback Systems Inc..

But Huang notes that iStor is delivering a complete iSCSI controller -- not just silicon -- and, unlike most of its competitors, both 1- and 10-Gbit/s Ethernet connectivity. Trebia Networks Inc., for instance, offers 1-Gbit/s chips but hasn't forged into the 10-Gbit/s market, he says. Meanwhile Astute Networks Inc. is boasting of 10-Gbit/s technology, but that company is not planning to offer a 1-Gbit/s version, according to Huang (see Is Trebia Up for Sale? and Silverback Makes iSCSI Howl).

Eugénie Larson, Reporter, Light Reading