DataCore Scores $30M

DataCore Software has closed a $30 million equity round to help fund its growth and distribution, particularly in the U.S.

The round brings the total VC funding for the 10-year-old, 100-employee company to just over $100 million. It comprises a minority stake by two brand-new investors, Insight Venture Partners (which also funded Platespin, Parallels, and Acronis, among others) and Updata Partners.

Past investors, who didn't participate in this round, have included Hitachi Ltd., the Intel Communications Fund, and New Enterprise Associates, among others. DataCore's last round took place in 2005.

Part of the new funding will go to paying off past VCs. But much of it will be used to broaden DataCore's channel reach in the U.S. and boost its visibility with key virtualization partners. "We want to fuel sales expansion," says CEO George Teixeira. "We've got lots of partners in Europe and Asia, and we need more in the U.S. to fuel our development."

The CEO claims to be adding at least 300 customers a quarter worldwide, and he plans to hit a total of 5,000 customers overall by the end of 2008. The influx has helped DataCore to turn profitable over the last few months. While the company boasts many U.S. customers in a range of vertical markets, though, there is heavy representation in Europe, where DataCore sells enterprises like ABN Amro, Fujitsu Telecom Europe, and PriceWaterhouseCoopers in Belgium. Presently, DataCore makes nearly 60 percent of its sales in Europe. Getting better penetration stateside is the call.DataCore is counting on a timely message -- storage virtualization, with CDP, thin provisioning, and capacity management -- to help things along. By creating virtualized storage pools from ADM/Intel server disk space as well as iSCSI or Fibre Channel SAN arrays, the vendor advertises its wares as the underlying storage element in a corporate virtualization scheme.

DataCore says its products work with VMware, Citrix XenServer, Sun VM, and Microsoft's emerging VS, offering a software-only, hardware-independent layer of virtualized storage for any of these environments. DataCore says its approach gives customers a cheaper, faster way to achieve greater capacity with data protection than they'd otherwise obtain through hardware buildouts.

The Fort Lauderdale, Fla.-based company has high hopes for its latest product, SANharmony, to drive momentum. Unveiled at the SWN tradeshow earlier this month, SANharmony won't ship until the end of May, but it will add Windows-based NAS volumes to the pooling that DataCore's storage software provides.

"SANharmony allows us to integrated NAS into our superstructure of SAN software," Teixeira says. "It's also a framework for more tools and software that we'll integrate with virtual servers."

SANharmony will be offered initially as a free-of-charge add-on to the vendor's SANmelody package for SMEs, which sells from $1,000 to about $25,000; and for its enterprise-level SANsymphony, which runs from $40,000 to about $100,000.Despite its good news, DataCore faces a number of challenges. Described as a low-end solution by some industry observers, the company has had to fight the perception that it's only for SMEs or SMBs. And in any of its target markets, competition is fierce and getting fiercer, as Compellent, IBM, LeftHand Networks, and NetApp develop their own flexible software stories for SAN and NAS data protection.

None of it fazes DataCore's management, which takes its new investment as a vote of confidence that will bring it to the next level. And Teixeira is open to what that will be: "Whatever the next step is -- going public, being acquired, whatever it is -- we'll be ready."

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