Startups Score in Funding Uptick

It's not quite mid-January, and 2005 already looks like a good year for startups in storage networking. Since New Year's Day, three startups have scored $44.5 million in new funding. And word has it at least two more are set to get nearly that much before the end of the month.

The latest vendor to announce new investment is backup software maker Bocada Inc., which has scored $9.5 million in a third round led by Partech International (see Bocada Scores $9.5M). Bocada, which claims 150 customers and has about 60 employees, will use the new funds to expand sales and marketing. The round brings Bocada's venture funding total to about $20 million since the firm's founding in 2000.

Bocada's news was preceded by two other funding announcements last week:

Besides these fundings in 2005, the last month of December 2004 saw two sizeable awards (see Funding Cheer for Two): MaXXan Systems Inc., which makes intelligent storage switches, received $29 million in a fourth round led by BA Venture Partners, bringing its total funding to $113 million. Archivas Inc., which makes an object-based filing system, got $10 million in a second round that included North Bridge Venture Partners and Polaris Venture Partners. Archivas has gotten $16 million to date.

Industry sources say a couple more startups are set to get double-digit funding in the next weeks. One of these is said to be Aarohi Inc., the storage component maker in which McData Corp. (Nasdaq: MCDTA) has a stake. Aarohi will get $10 million or so shortly, sources claim, which is earlier than their execs have publicly anticipated (see Aarohi Advances Action Plan). It's not clear whether McData will reinvest.

All this activity shows a clear interest by investors in new storage networking companies. That interest has held for a couple of years now, and 2004 was significantly better than 2003 (see Storage Startups Top $500M).

For the first half of 2004, venture funding in storage networking was $225.8 million, according to Ernst & Young and Venture One. At the present rate, funding could easily top that by mid 2005.

Mary Jander, Site Editor, Byte and Switch0