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StorageWay Snags $42M

A dose of good medicine for the storage service provider market came today as SSP StorageWay Inc. snagged $42 million in additional funding from two top venture firms (see StorageWay Gets $42 Million).

This brings the total equity investment in the company to $98 million, with a cumulative total of $150 million in equity and lease financing since StorageWay opened for business in October 1999.

The seal of approval from Matrix Partners and Redpoint Ventures

is significant for a couple of reasons.

To start, the financial market is skeptical of SSPs as a business model after the failure of application service providers (ASPs) and managed service providers (MSPs) to get off the ground before going broke. Thus, additional funding at this point is a significant vote of confidence in StorageWay's ability to succeed.

And secondly, these two venture capital firms have an impressive record. Matrix was an early investor in Sycamore Networks Inc. (Nasdaq: SCMR), PSInet Inc. (Nasdaq: PSIX), and Veritas Software Corp. (Nasdaq: VRTS). Redpoint can claim involvement in the success of Juniper Networks Inc. (Nasdaq: JNPR), Foundry Networks Inc. (Nasdaq: FDRY), and Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), among many others.