CreekPath Reels In $22M

Storage resource management software startup CreekPath Systems Inc. completed its first funding round in three years, pulling in $22 million in a C round that financial analysts speculate may put it in the running for a public offering or acquisition.

New investor Lehman Brothers Venture Partners led the round with participation from existing investors New Enterprise Associates, A.G. Edwards Captial, TeleSoft Partners, and Sequel Partners. The new funding brings CreekPaths total to $54 million.

CreekPath is among a small group of SRM vendors that has shown promise of competing with established players (see Panel Endorses SRM Separatism). Earlier this year, it was mentioned by insiders as an IPO candidate (see Window of Opportunity). Merrill Lynch & Co. Inc. last week issued a research note citing CreekPath as a potential acquisition target of EMC Corp. (NYSE: EMC).

For now, CreekPath says it will use the new investment to grow the company, further product development, and expand sales and marketing.

"We have been following the company for several years and have been impressed by the team's ability to win deals with blue-chip customers in a large and growing market," says Brian K. Paul of Lehman Brothers Venture Partners in a statement. Paul now assumes a seat on the CreekPath board of directors.CreekPath competes in the fastest growing segment of storage software -- SRM. IDC's most recent forecast of the SRM market predicts 14.4 percent annual compounded growth from 2004 and 2008, compared with 9.8 percent for storage software overall.

The road to success, though, is rife with competition. CreekPath is duking it out with Veritas Software Corp. (Nasdaq: VRTS) and EMC for a share of that market, which IDC estimates at $642 million for the second quarter. And the SRM space is one where other startups have had success, such as Softek Storage Solutions Inc. and AppIQ Inc.

(see Softek Taken in Management Buyout and Sun Shines on AppIQ).

— Brett Mendel, Senior Analyst, Byte and Switch Insider