Avamar Gets More Dough

Disk backup system startup Avamar Inc. announced today that it has received $13 million in fourth-round financing, continuing the springtime flow of capital to storage startups (see Avamar Raises $13M Round, VC Spigot Still Flowing, and Startups Tap VC Reserves).

The round, Avamar's largest so far, brings its total funding to around $35 million. Led by new investor Goldman Sachs & Co., the round also included all three of the companys previous investors, Benchmark Capital, CMGI Ventures, and Lightspeed Venture Partners. [Disclosure: Lightspeed Venture Partners is an investor in Light Reading Inc., which publishes Byte and Switch].

"I’m thrilled that Goldman led the round," says Avamar CEO Kevin Daly, who joined the company from Quantum Corp. (NYSE: DSS) last July (see Avamar Hires Daly). "I think we’re very fortunate to have four very good investors... This is great validation of the company."

IDC analyst Robert Amatruda agrees -- quite enthusiastically. "This is huge!" he says. "The ability of these guys to raise financing in a very difficult environment speaks to the product they offer and the people there."

While landing any funding in today’s depressed market is a feat in itself, Avamar had been hoping to rake in as much as $15 million. Daly admits the financing came in a down round, but insists that the company got the high end of what it was asking for. "We had a pretty wide range," he says. "I’m very happy with the $13 million. It’s enough to fund further development of the company."The Irvine, Calif.-based startup, founded in 1999, will use the majority of the money to boost its marketing and sales divisions as it attempts to gain customers for Axion, its disk backup and recovery system launched last fall. Last week, the startup announced that it has partnered with managed storage services provider Arsenal Digital Solutions Worldwide Inc., which has started incorporating its technology into its service offerings. Avamar says it expects to make other customer announcements soon (see Avamar Kicks It to Disk and Arsenal Uses Avamar).

The company, currently with about 45 employees, will be adding a few more to its sales and marketing staff, Daly says. Today, Avamar’s sales force is comprised of only eight people. Engineers make up between 60 and 65 percent of the company’s employees, but Daly says he expects that over time that number will drop to between 35 and 40 percent.

Avamar’s software allows companies to store their data as objects, (as opposed to files or blocks), which connect to multiple arrays of inexpensive Linux storage nodes. The software also uses a technique called "commonality factoring" to ensure that identical objects are stored only once to reduce the amount of data stored. The company claims this can allow companies to reduce the space required to store a given set of data by as much as 90 percent. Avamar also says Axion scales well beyond 1,000 terabytes (or 1 petabyte).

Architecturally, the Axion system is similar to the EMC Corp. (NYSE: EMC) Centera, which also uses object-based storage and inexpensive disks. In fact, Avamar uses the same term to describe its system that EMC uses for Centera -- "content-addressed storage" (see EMC Makes Centera Compliant, EMC Sells Petabyte of Centera, and EMC Has Eyes for Huge Archives).

"Clearly, from a solution standpoint, I think they really have a story that resonates well with customers," says IDC's Amatruda. "This helps people free up resources that they have already deployed."Enterprise Storage Group Inc. analyst Tony Prigmore also believes Avamar has what it takes to make it. The company has a great management team, a good product, and is addressing a very attractive market segment, he says. "All three stars were aligned for Avamar," he says. "I think we'll be reading about them for a long time."

— Eugénie Larson, Reporter, Byte and Switch