Xangati Grabs $10.7M

Network and storage monitoring startup Xangati picked up $10.7 million in Series B funding today as the firm gets ready to enhance its products and ramp up its U.S. and international operations.

The round, led by Walden International, included existing investor Alloy Ventures and brings Xangati's total funding to around $18 million.

The Cupertino, Calif.-based startup only emerged from stealth a little over three months ago, touting its Rapid Problem Identification (RPI) appliances as a way for users to pinpoint the source of application and network performance problems.

The RPI devices scan network data from switches and routers and use a set of algorithms to check the bit and packet rates associated with applications, such as backups. This information can then be used to reallocate storage resources, if a backup, for instance, is under-performing.

"We have a couple of releases coming up," says Alan Robin, the Xangati CEO, explaining that the first of these will take place "very shortly" and the second will be at the beginning of next year.Although he would not go into specifics, Robin explains that the first announcement will enhance the appliances' ability to identify applications and devices.

Despite clinching this round, Xangati still faces stiff competition from other, more established vendors in this space, such as NetQoS and NetScout, which recently bought monitoring specialist Network General for $205 million.

As the newcomer to the market, Xangati plans to use its cash influx to expand both its 23-strong workforce and its international operation. "We will probably add another seven to 10 employees over the next six months to a year," says Robin. "We're starting to build out sales and field operations, as well as adding strength around our engineering operation."

Initially, the startup is looking to expand its U.S. facilities. In addition to Xangati's existing sales offices in New York and Chicago, the firm is also planning to open additional sites in Chicago and Dallas.

The CEO is also eyeing up overseas opportunities, particularly in burgeoning eastern markets. "We will start driving internationally at the very end of 2008 going into 2009, by opening up operations in Europe, China, and Japan," says Robin.He told Byte and Switch that the startup now has 20 customers, almost double the number when it emerged from stealth three months ago.

Only two of these organizations, Bernalillo County in New Mexico, and California-based Kerman Telephone, have been made public, although Robin claims that firms in other industries are also considering Xangati. As well as telcos and government bodies, law firms and large financial organizations are also looking at the technology, according to the CEO.

Another funding round is unlikely for Xangati, at least in the immediate future. "This should take us to, or very close to, profitability, which should be in mid-2009," says Robin.

The CEO also finally explained the story behind Xangati's unusual name. "It's a derivative of a Sanskrit word, which means 'working together to learn more about ourselves.'"

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