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Storage Services Surge

Two providers -- one with new funding and another with new services -- are demonstrating further evidence of positive growth in the resurgent market for outsourced storage services.

First, Arsenal Digital Solutions Worldwide Inc. secured $15 million in funding from Wells Fargo Foothill, pushing the data-protection provider's haul above $100 million (see Arsenal Closes $15M Debt Facility). Also today, Time Warner Cable announced a new disaster-recovery service targeting business customers (see Time Warner Cable Offers Ethernet, Storage).

Arsenal's move represents a different take on startup financing. Unlike big VCs, Wells Fargo Foothill, a subsidiary of Wells Fargo & Company, will essentially extend Arsenal a $15 million line of credit and take only a small equity stake in the company.

This approach has a number of advantages, according to company sources. First, it gives the company more flexibility to use the funds as it sees fit, which at this point could be new services, international expansion, or even acquisition -- none of which the company has ruled out.

The financing also comes at a good price and establishes a relationship with a large bank that could help the company down the road. Perhaps more importantly, though, it validates Arsenal's business model and growth plan because debt financers such as Wells Fargo Foothill only consider established companies with strong potential, says Steven Horan, CFO of Arsenal.

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