SAP Takes Tiny Piece of Sistina

Sistina Software Inc. executives like to say they're in the eye of the perfect storm due to market conditions favorable to their clustered file system software. If that's true, it must be the kind of storm that rains money -- because the startup announced a $1.5 million investment from SAP AG (NYSE/Frankfurt: SAP) today (see SAP Invests in Sistina).

Now, $1.5 million isn't a huge amount for a 6-year-old startup that has raised $22 million. But this investment came when Sistina claims it wasn't even looking for money. SAP Ventures, the venture capital arm of the German enterprise applications vendor, wants to invest in companies that might enhance its overall software solutions business and identified Sistina as one.

Joaquin Ruiz, Sistina's VP of marketing, says his company will fold the $1.5 million into the $10 million Series B round of funding raised this past February (see Sistina Seeds Growth).

"This is a strategically important investment for us," he says. "SAP invested in us because we were winning accounts in the enterprise. SAP is placing bets, and we're a bet they placed."

Elizabeth Reeves, senior VP at SAP Ventures, says the company bet on Sistina because of its Linux capabilities. Sistina makes a clustered file system based on the open-source Linux kernel. Sistina's Logical Volume Manager (LVM) has been baked into the Linux kernel and has been distributed to tens of thousands of Linux users. Sistina also sells Global File System (GFS) software for Linux."Sistina's first-mover advantage and its ability to deliver proven data-sharing and protection technology to the enterprise will continue to drive Linux deeper into the data center," Reeves says. "As Linux continues to gain momentum in mission-critical enterprise environments, we've noticed a shift where companies are quickly adopting an incremental, Intel-based approach to computing. Sistina is in the right place at the right time."

Ruiz says Sistina is on course to become profitable in 2004. The Minneapolis-based company has grown from 30 employees a year ago to 45, and has more than 100 customers.

"We're in the eye of a perfect storm," Ruiz says, referring to the growth of Linux, storage, and clustered computing. [Ed. note: In an interview with Byte and Switch last month, new Sistina CEO Ian Bonner described the company's technology as being "right in the eye of the perfect storm." Is this catchphrase tattooed on the arm of every Sistina employee or something?!] (See Sistina Taps Bonner.)

Sistina's partnerships include storage vendors Hewlett-Packard Co. (NYSE: HPQ) and Fujitsu Systems Europe, Linux vendors SuSE Inc. and Red Hat Inc. (Nasdaq: RHAT), and backup and recovery software company CommVault Systems Inc..

Dave Raffo, Senior Editor, Byte and Switch