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MSI Springs on $22M

ManagedStorage International Inc. (MSI) has raised $22 million in equity funding and has spent $6 million of it acquiring the DataVault storage services business of bankrupt storage service provider (SSP) Sanrise Inc. (see MSI Secures $22M).

The funding round was led by Tudor Ventures with participation from current ManagedStorage investors Great Hill Partners and J.P. Morgan Chase Bank & Co. Innovation Advisors assisted and advised the company with the financing.

MSI, located in Broomfield, Colo., was the only company bidding for Sanrise's DataVault remote backup business, which it secured on Jan. 10, 2003, in a Northern Californian bankruptcy court. It paid $3 million up front and will pay an additional $3 million when Sanrise's customers successfully transition over to MSI. There are apparently about 200 DataVault customers, although MSI wouldn't name names. The company expects to complete the integration of the DataVault
business during the first quarter of 2003 (see Sanrise Files Chapter 11).

The fact that MSI was the only company bidding for Sanrise's services arm raises some questions about the validity of the SSP market. After all, StorageNetworks Inc. (Nasdaq: STOR), CreekPath Systems Inc., Storability Inc., Scale Eight Inc., and many others have long since turned their backs on the outsourcing model for storage and are selling software instead (see StorageNetworks Hacks Self in Half, StorageNetworks Softens Up, SSPs Switch to Selling Software, and SSPs: RIP).

In other words, just when you thought the SSP market was dead and buried, here's a company raising capital and acquiring another company's assets in this sector. What's going on, then?

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