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Sepaton Swigs $23.5M

Virtual tape startup Sepaton Inc. next week will announce a $23.5 million Series D funding round, with which CEO Mike Worhach plans to expand sales.

The round is Sepaton's fifth and is led by Menlo Ventures, with participation from new investor Valhalla Partners and previous investor Jerusalem Venture Partners (JVP). Sepaton has raised $53.6 million over four funding rounds.

Sepaton's backers are apparently impressed by the traction the Southborough, Mass.-based company has made since launching its first enterprise disk backup library and changing its name from SANgate Systems in December 2003.

The name Sepaton is no tapes” spelled backwards (see Sepaton's Got Virtual Tape and SANgate Tries Again), a reference to what Sepaton calls its virtual tape approach, which uses software to emulate tape libraries and formats so customers can perform backup-and-restore on disk the same way they are using tape now.

But Sepaton may justly be called Selason (“no sales”) outside of New England, where nearly all of the startup's 20 customers are based. CEO Worhach wants to use the new money to change that by adding sales staff in Atlanta, New York, and Chicago, and on the West Coast. He expects Sepaton to add 13 people by the end of June, bringing its headcount to 45. In addition, there will be some engineering help as well: Some of the new additions will be application developers in the company’s headquarters.

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