AppIQ Scoops Loot

SRM startup nets $12M second round. Can it ride CIM standards all the way to the bank?

February 28, 2003

4 Min Read
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Storage resource management startup AppIQ Corp. has pulled down a $12 million Series B round from its original investors, Matrix Partners and North Bridge Venture Partners, bringing its total funding to $20 million to date (see AppIQ Snaps Up $12M Series B).

The funding is a solid affirmation by its VCs of AppIQ's efforts to date. And this outfit is practically bursting at the seams waiting to tell us even more good news -- including, say AppIQ execs, a positively huge OEM deal in the pipeline, several customer wins, and partnerships with four storage-oriented systems integrators.

"We've got customers, we've got partners," says Alex Neihaus, AppIQ's VP of marketing. "We're getting lots of traction." OK. But for now, we'll basically have to take his word for it, since AppIQ isn't prepared to lift the lid on what they have cooking. Patience, young Jedi.

Sticking to the basics, David Lemont, who recently joined AppIQ as president and CEO, says the latest funding was an "up round," which means the total valuation of the startup is higher than it was in the previous round. "The exciting thing is the initial investors showed amazing confidence in us," he says. "They took the whole round. We had offers from other VCs that we had to turn down."

So what's AppIQ's current valuation? No comment. "It's kind of gauche to talk about valuation," says Lemont. Color us crass arrivistes, then.AppIQ's headcount is currently in the mid-50s, Lemont says. With the additional funding, he expects that to grow about 10 percent per quarter. Specifically, AppIQ plans to expand its direct sales force and increase its marketing activities. It's also increasing its "offshore development" activity with a team of software engineers based in Hyderabad, India. "We are expecting to get a multiplier on our engineering investment," Lemont says.

Before coming to AppIQ in December, Lemont was CEO of Revit Technology, a maker of building design software, which he sold to Autodesk Inc. in April 2002. Prior to that, he was COO of Concentra Corp., a customer relationship management (CRM) software company, which he took public in 1996 and which was subsequently bought by Oracle Corp. (Nasdaq: ORCL). Lemont has also held sales positions at Electronic Data Systems Corp. (EDS) and other technology companies (see AppIQ Names CEO).

Why are its VCs so hot on this Burlington, Mass., company? And what makes it different from the rest of the SRM field, which includes Astrum Software Corp., Fujitsu Software Technology Corp. (Softek), IBM Corp. (NYSE: IBM) (via its TrelliSoft acquisition), ProvisionSoft Inc., and TeraCloud Corp.? (See Astrum Catches 11 Sweet Ones, ProvisionSoft Founders Cut Loose, and IBM Snaps Up TrelliSoft.)

The way AppIQ explains things, it's in prime position to ride the storage industry's wave toward a common storage management standard. Its application-oriented SRM software is based on the Common Information Model (CIM), which serves as the foundation for the Storage Networking Industry Association (SNIA)'s Storage Management Interface Specifications (SMIS) (see AppIQ Has a Clue, The Common Code, and SNIA Puts the Pieces Together).

In fact, AppIQ claims it's quickly become the de facto supplier of CIM-based technologies to other storage vendors. Through its CIMIQ licensing program, AppIQ has already lined up Brocade Communications Systems Inc. (Nasdaq: BRCD), Hitachi Data Systems (HDS), LSI Logic Storage Systems Inc., Network Appliance Inc. (Nasdaq: NTAP), and Sun Microsystems Inc. (Nasdaq: SUNW)."The cost of building storage management software is outrageous, because there are so many devices you have to support," says Ash Ashutosh [ed. note: Gesundheit!], founder and CTO of AppIQ. "Using CIM knocks months off the development cycle." As evidence of the difficulty of producing viable storage management tools, he points to BMC Software Inc.'s (NYSE: BMC) recent decision to cease development of its storage management product (see BMC Folds Storage Unit).

But how soon will SNIA's CIM-based standards actually be widely supported and usable? Ashutosh says by mid-2003 he expects nearly all the major hardware vendors will have committed to delivering CIM-compliant systems, with most software players coming on board in 2004.

Others who are party to the standards-setting process, however, don't have as clear a picture as that. "When will SMIS be a viable standard? I don't know," says an industry executive who did not want to be identified. "There is a mountain of work still to go... The spec itself is still very fluid. That needs to stabilize."

If the industry adopts storage management standards in relatively short order, AppIQ may well be in the catbird seat. But there's always the chance that some companies will drag their feet.

"All the major vendors do have a proprietary API strategy, as well as their CIM strategy," says the storage executive. "This could fall apart if a significant chunk of vendors decide to go their own way... by not really investing in CIM, and instead investing in the status quo."Todd Spangler, US Editor, Byte and Switch

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