VC Dollars Still Flowing To Virtual Storage, NAS


Two storage industry start-ups reported securing additional equity investments this week, indicating venture capital money is continuing to place its bet on virtual storage management and network-attached storage.

Confluence Networks, Milpitas, Calif., on Wednesday closed a round of funding for $28.3 million, bringing its total funding to date to about $45 million, company executives said.

This followed by a few days the news that Spinnaker Networks, Pittsburgh, closed its Series B round of funding of $31 million, bringing its total funding to date to about $51 million.

The Confluence funding was led by Venture Strategy Partners, and included Redpoint Ventures, New Enterprise Associates, and Dali Hook Partners, as well as strategic investors Comcast Interactive Capital and Seagate Technology.

Mark Davis, senior vice president of marketing and business development for Confluence, said his company is not yet willing to discuss details related to its product development, except for a brief reference to in-band storage virtualization. "It's a next-generation storage management platform that is network-resident," he said.

Confluence believes strongly in the channel, and will be focusing on both tier-one solution providers and OEMs when the product is available, Davis said. "The nature of delivering and deploying advanced SAN is such that vendors like us are not the right way to handle it," he said.

The company's products are scheduled to be released this fall, he said.

Spinnaker, which was founded in 1999, currently has a new type of highly-scalable NAS in beta, said Ron Bianchini, president and CEO. Its second round was led by Mellon Ventures, and included GIC Special Investments, Menlo Ventures, and Norwest Venture Partners.

The Spinnaker NAS hardware and software offering will be focused on the enterprise data center market, where scaling is a major concern, said Bianchini.

"The enterprise data center is facing bursting growth," said Bianchini. "Scaling is a big issue. Instead of a single-point NAS server, the enterprise needs one that can scale with the growth of the data center."

While NAS servers from companies such as Network Appliance and EMC can be added to the data center as storage requirements grow, the problem is that five servers look like five servers in terms of management, Bianchini said.

"Customers are managing five servers in this case," he said. "With ours, multiple servers appear as a single image."

Spinnaker expects 40 percent to 50 percent of its sales to go through the channel, and it is already in discussions with 10 to 12 solution providers in the United States, said Jeff Hornung, vice president of marketing and business development.

The company plans to focus its direct-sales force on specific verticals such as gas and oil companies or life sciences, while relying on channel partners to reach horizontal markets, he said.