Virtual Iron Clinches $20M

Virtualization startup Virtual Iron has picked up $20 million in Series E funding, as the vendor ramps up its storage partner and reseller strategies.

The round, which brings Virtual Iron's total funding to $65 million, included Highland Capital Partners, Matrix Partners, Goldman Sachs, Intel Capital, and SAP Ventures.

"It's for continuing growth in the channel, sales, and in marketing worldwide," says CEO Ed Walsh. "A lot of this is for VAR recruitment and also for making existing VARs successful."

Virtual Iron has already racked up 375 resellers around the world, including Dell and HP, and is now looking to provide more support to these firms. This will include regional marketing events, promotional materials in local languages, and video-based training for resellers and OEMs. "We just need to get the message out," adds the CEO.

Recent months have seen Virtual Iron get close to a number of storage partners, such as NetApp, Compellent, EqualLogic, and FalconStor, a trend which Walsh is keen to continue."You will see a lot of announcements about our ecosystem this year," he says, though he's cagey about revealing which firms will be involved. "It will be in the storage layer, the network layer, the application layer, and the management/orchestration layer."

The startup also expects to increase its headcount from 78 people to around 100 during the coming 12 months, although the CEO is not planning to start hiring masses of sales people. "Because of our channel-only model, it's not like I have to hire 1,000 sales reps," he says.

The biggest challenge for Virtual Iron is still the same, and the startup remains face-to-face with established virtualization vendors like VMware and XenSource, which was snapped up by Citrix for $500 million last summer.

Virtual Iron has typically challenged VMware by wielding price as a cudgel, significantly undercutting its rival's flagship ESX Server. The startup also claims that its eponymous software is easier to use than its rival's offering, although this has not prevented VMware's business from growing at a rapid rate.

Now a public company after its $1.7 billion IPO last year, VMware announced fourth quarter revenues of $412 million this afternoon, 80 percent up on the same period last year, although slightly below analyst estimates.Not to be outdone, Virtual Iron confirmed today that its software has now been deployed in more than 1,450 organizations around the world, although the startup's actual revenues are still under wraps.

Describing the Series E round as "opportunistic", former EMC and Avamar exec Walsh also denied any suggestion that his firm was running out of money.

"We have plenty of cash in the bank," he says. "We had over $10 million, so we have over $30 million now."

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