Acopia Aces $25M

Acopia Networks Inc. went looking for a customer and found an investor.

The clustered file system appliance startup closed a $25 million series C funding round today led by Goldman Sachs & Co., with previous investors Charles River Ventures, Accelerant Networks Inc., Star Ventures, and Vesbridge Partners kicking in. The round brings Acopias total funding to $65 million (see Acopia Gets $30M Cornucopia).

Acopia CEO Chris Lynch says Goldman Sachs suggested the funding after evaluating Acopia's product and determining it was a player in a hot technology space.

“We didn’t do a funding round,” Lynch says. “Goldman Sachs came to us. They made us an offer we couldn’t refuse.”

Goldman Sachs hardly had to strongarm Acopia to get a signature. The funding round was one of the biggest for a storage startup this year. SAN vendor 3PARdata Inc. grabbed $32 million in February, and intelligent chip vendor iVivity Inc. and intelligent switch startup Maranti Networks Inc. hauled in $26 million apiece (see 3PAR Pockets $32 Million, IVivity Ingests $26M, and More Money for Maranti).Lynch says Acopia will use its new funding to more than quadruple its sales force. The company currently has a total of 10 salespeople among its 90 employees and plans to add 20 salespeople in North America and a total of 14 in Europe and Asia by the end of the first quarter next year. Lynch estimates the funding accelerated the company's growth by about three quarters.

So what's the product that hooked Goldman Sachs? Acopia Adaptive Resource Switches are appliances that sit between NAS filers and clients and consolidate files into one pool for easier management. The hardware supports CIFS and NFS files (see Acopia Ships Its Switch).

A key feature of Acopia's appliance is native global namespace support, which allows all attached servers to access a file using the same name -- something lacking in gear from NAS vendors Dell Computer Corp. (Nasdaq: DELL), EMC Corp. (NYSE: EMC), Hewlett-Packard Co. (NYSE: HPQ), IBM Corp. (NYSE: IBM), and Network Appliance Inc. (Nasdaq: NTAP).

Since global namespace allows NAS boxes to be managed as one big pool, Acopia's support of it has led to speculation that the startup could make an interesting partner for any of these companies. After all, NetApp paid $300 million to buy Spinnaker Networks a year ago for similar capabilities, and it partners with Acopia rivals NuView Inc. and Rainfinity (see NetApp Annexes Spinnaker, NetApp Ships NuView NAS App, and NetApp Smiles on Rainfinity). Storage analysts expect EMC will have to partner with a startup as well (see EMC Challenges NetApp NAS).

On the downside, Acopia got off to a slow start with its product, releasing it about a year behind its original schedule. Rainfinity and NuView shipped similar offerings first, and newcomer NeoPath Networks is lurking around the bend (see Rainfinity Debuts 'NAS Router', Rainfinity Virtualizes File Systems, NuView Fills Out, and NeoPath Nabs $12M).As for sales, Acopia has announced only two customers: Merrill Lynch & Co. Inc. and Warner Music Group. Lynch says it will announce more customers soon, Goldman Sachs among them, since Acopia focuses on Fortune 500 financial services organizations.

Lynch seems unfazed by questions about Acopia's lateness to market and its future prospects. He says the business plan calls for profitability in late 2005, with Goldman taking the company public in 2006.

“We made a bet on this market segment three years ago, and it's beat our expectations,” Lynch says.

— Dave Raffo, Senior Editor, Byte and Switch