Sandial's on the Clock

An unsuccessful round of Dialing for Dollars has forced switch startup Sandial Systems Inc. to slash half its staff while it looks for a cash infusion.

Sandial laid off 35 employees at the end of June after a venture funding round fell through. Marketing EVP Mike Welts says about 25 of the 35 remaining employees are developers, with most of the rest in sales and support. Sandial executives are still looking for investors to keep them going or suitors interested in acquiring the company.

"Its been an uphill battle,” Welts says. “We’re in a cash-conserve mode, and seeking alternative strategic investors. Our plans are to keep moving forward.”

The Portsmouth, N.H., startup raised $65 million in three funding rounds dating to August 2000 when the company was called Malachite Technologies (see Malachite Plans to Light Up SANs and Malachite Unearths $30M). After failing to close a $20 million round with a new lead VC, Sandial is looking for strategic investments from technology companies. Sources say switchmaker McData Corp. (Nasdaq: MCDTA) is among the companies talking to Sandial, although Welts wouldn’t confirm that.

Sandial executives had hoped the $20 million would be enough to take it to profitability. Welts says SanDial has 20 customers, brought in $1 million in revenue in the first quarter of this year, and has $3 million worth of orders on the books.