Software Players Get Sales Ammo

Two privately held makers of data-protection software locked up new funding this week, hoping to shift their growth into higher gear.

NSI Software Inc. secured a third round of $7 million from existing investor ABS Capital Partners. NSI has raised more than $60 million in capital to date, according to company sources. Indeed, given previous reports at the time of NSI's second round, the new funding should bring NSI's total to about $72 million (see NSI Notches $15M).

Separately, Unitrends Corp. announced Series B financing of $8.1 million, a windfall compared with the $1 million in venture funding it received in 2003. Aurora Funds led this latest round, which also saw contributions from existing investors Harbert Management Corp. and ECentury Capital Partners. Prior to that, Unitrends founder Steve Schwartz financed the company himself, says a company spokesman.

Neither NSI nor Unitrends is, strictly speaking, a startup. Fourteen-year-old NSI claims a customer base of more than 4,000 for its replication and disaster-recovery software. Unitrends, founded in 1989, claims several hundred SMBs use its backup-and-recovery products.

But industry observers say it's no surprise these longstanding firms are seeking fresh funding. Competition among data-protection suppliers is heating up, especially for SMBs, thanks to regulatory compliance concerns and rumblings from established players such as EMC Corp. (NYSE: EMC) and Veritas Software Corp. (Nasdaq: VRTS). (See Replication's All the Rage and EMC Dances With Dantz.) It's make-or-break time for smaller contenders, no matter how long they've been in business.