ONStor Secures $27M, Eyes IPO

Clustered NAS startup ONStor has clinched $27 million in mezzanine funding as the vendor gears up to join the growing list of storage IPOs. (See Onstor Closes Mezzanine Funding.)

The round included new investor Sand Hill Capital as well as existing investors Foundation Capital, ComVentures, Worldview Technology Partners, and Mayfield Fund. The cash influx brings ONStor's total funding to north of $100 million in four rounds, underlining a frenzy of recent activity in the clustering space. (See OnStor Stores $24M.)

ONStor CEO Bob Miller says that the money will be used to lay the foundations of a public offering. (See Voltaire Strikes IPO, BladeLogic Announces IPO Pricing, Netezza Closes IPO, and Double-Take Files for IPO.) "Assuming that the market conditions [are right] for storage companies like ourselves, the idea would be to do an IPO in the next 12 months."

Specifically, the mezzanine round will be used to increase the 115-strong ONStor workforce by about 40 people, mostly in sales, marketing, and engineering. (See ONStor Launches Into GNS and SNW: First Take.)

The ONStor CEO denied the suggestion that the mezzanine round was prompted by Compellent's recent decision to ditch ONStor as a reseller partner. (See Compellent Adds Integral NAS and The WSS Factor.) "Compellent was only about 20 Tbytes of about 4 Pbytes [total ONStor storage shipped]," he said.The former IBM executive also denied that ONStor was running out of money prior to the mezzanine round, explaining that recent revenue growth led to increasing "working capital demands." Although Miller refused to reveal ONStor's actual revenues, he confirmed that the firm's recent second quarter sales were up more than 350 percent year-over-year. (See ONStor Claims Big Sales and ONStor Doubles Base.)

The recent economic climate has certainly contributed to a slew of storage IPOs in the last few months, although Miller acknowledges that these conditions could easily change. "If the market changes, we have the funding to cash flow break even," he says, adding that this is also likely to happen within the next 12 months.

At this point, ONStor has around 330 customers, which include dating Website eHarmony, disaster recovery services firm Corevault, and the Italian National Institute of Geophysics and Volcanology (INGV) (See Storage Love at eHarmony.)

The vendor is also up against a well-established NAS competitor in the shape of NetApp (See NetApp's GX Targets HPC, NetApp Paints Rosy Picture, NetApp Ships Data Ontap GX, and 3PAR, NetApp Join Ranks.) Despite some high-profile trash talking from Isilon, which accused NetApp of failing to make inroads into clustered NAS, Miller cites the storage giant as ONStor's main competitor. (See NetApp Stokes Competitive Fires, Isilon's Counting on Clusters, and NetApp's Kidd Talks Turkey.) "Let's face it, NetApp was not late to market," he said, adding that ONStor will challenge its rival on scalability and virtualization.

ONStor is not the only clustering vendor picking up cash at the moment. Yesterday, for example, virtualization software specialist Qlusters secured $10 million in Series C money, bringing its total funding to $33 million. (See Qlusters Closes $10M Series C.)James Rogers, Senior Editor Byte and Switch