Mendocino Cops $18M

Mendocino Software has closed an $18 million second round of funding as it prepares to launch its continuous data protection (CDP) product through EMC Corp. (NYSE: EMC) and other OEM partners (see Mendocino Bags $18M).

The funding brings Mendocino's total to $33 million since its founding in March 2003 (see Mendocino Scores $15M).

Unannounced OEM deals likely helped Mendocino convince VCs to open their checkbooks this time. Industry sources say EMC will use Mendocinos second-generation technology as a key piece of the CDP initiative it announced last month at its analyst day (see CDP: An OEM Game and EMC Casts Wider Net). EMC is expected to announce its CDP product in October.

Although Mendocino still won’t comment on the EMC deal, marketing VP Eric Burgener says the startup has secured several major OEM deals. “There are others we have already signed, and we are continuing to pursue additional ones,” he says.

Burgener says Mendocino has been beefing up its tech support staff to prepare for its OEM deals and is now searching for channel managers. The company’s headcount is at 63.Mendocino is among a small group of startups that offers CDP -- the ability to restore data from any point in time -- for databases and other block storage.

Mendocino has been shipping a host-based CDP product called RealTime for close to two years and lists a few small financial institutions as customers. Its new CDP product is expected to be a network-based appliance that doesn’t require agents to install on all protected machines. That product is still in beta, but is scheduled for release in the fourth quarter -- around the time EMC is scheduled to make its CDP splash.

Mendocino hopes its ability to protect databases gives it a leg up on the file-only type of CDP product that IBM Corp. (NYSE: IBM) launched and Symantec Corp. (Nasdaq: SYMC) has in beta (see IBM Hops CDP Bus and Veritas Uncages Panther). Mendocino is counting on its partnerships to give it the upper hand against other startups, including InMage Systems Inc., Lasso Logic, Revivio Inc., Storactive Inc., TimeSpring Software Corp., and XOsoft. InMage and Revivio's are the other products that protect block storage.

Most of those startups are also chasing partnerships, which might be necessary for survival. That’s especially true for those that protect databases holding some of their customers’ most important data.

“We don’t think Fortune 2000 companies are going to be interested in buying these products from startups,” Burgener says. “When the multibillion-dollar three-letter acronym companies get in the game, it will take off.”Other major storage companies are ripe for OEM deals. IBM is planning CDP for block-level data, perhaps through a partnership. The same goes for Hewlett-Packard Co. (NYSE: HPQ), which last week announced it will bundle Microsoft’s “near-CDP” file-based Data Protection Manager (DPM) with NAS servers (see HP Bundles Up With MS).

Symantec is another candidate for a CDP partnership, because it will need a response to EMC’s CDP for its Legato backup products. Mendocino has ties to Symantec. Mendocino chairman Peter Levine, CEO Steve Colman, CTO Jeff Rothschild, and Burgener all came from Veritas, which Symantec acquired this year for $13.5 billion (see Symantec & Veritas: It's a Deal).

Foundation Capital led Mendocino's funding round, which also included investments from previous investors Accel Partners, Advent International, and Mayfield.

— Dave Raffo, Senior Editor, Byte and Switch