VIEO Vamps Up $5.5M

InfiniBand-turned-application-management startup VIEO Inc. announced today that it has received an additional $5.5 million in funding from two brand-new investors (see VIEO Gets $5.5M Investment and VIEO Goes Vanilla).

The cash, which tops off the $15 million B round VIEO landed in January, brings the company's total funding to $45 million (see VIEO Closes $15M). The latest funding comes from private equity investor Invesco and Avocent Corp., a vendor of KVM (keyboard, video, and mouse) switches for remotely managing data-center devices.

Avocent, according to the startup, opens up some interesting possibilities for VIEO down the road. "They would not have invested if there weren't the possibility for a strategic relationship," says Steve Harriman, VIEO's VP of marketing. He says Avocent sees the startup's application management appliance, currently in beta, as an opportunity to augment its data-center offerings.

A tighter relationship with Avocent also benefits VIEO, because the startup may get access to the switch vendor's numerous customers, OEM partners, and strategic alliances, Harriman says. "That could open doors that otherwise wouldn't be open to us," he says.

Neither Invesco nor Avocent could be reached for comment by press time.Potential alliances aside, VIEO says it's happy to have some additional cash in its pocket as it gears up to launch its Adaptive Application Infrastructure Management (AAIM) appliance by the end of this quarter, especially since it didn't have to go out looking for the funds. "We feel very blessed. Not one executive got on an airplane," Harriman says. "But we thought it wouldn't hurt to have more cash on hand to strengthen the balance sheet."

The new cash injection will help VIEO ramp up its distribution, support, manufacturing, marketing, and sales, Harriman says, adding that the company is now actively looking to increase its headcount of approximately 60 employees.

The startup, which expects to break even in the first half of 2005, currently has nine beta customers in various industries, including financial services, healthcare, and higher education, testing its new appliance. Harriman says he expects most, if not all, of them to convert to paying customers once the box hits the general market.

So what exactly is VIEO working on? The VIEO 1000 AAIM appliance doesn't bear much resemblance to the InfiniBand management software the company phased out last May [ed. note: making them an UnfiniBand company?] (see VIEO Sidelines InfiniBand).

The startup, which formed as a consulting firm in 1994 and relaunched as an InfiniBand player in May 2000, says its network-based appliance aims at improving application management by measuring, analyzing, and automating the reallocation of resources. While Harriman says that VIEO has used some of its InfiniBand know-how inside the appliance, the company no longer considers itself a member of the slow-starting, if not outright dormant, InfiniBand market (see InfiniBand: The Battle for I/O Hill).Instead, it's calling itself an application management company, putting itself in the company of the industry bigshots like Computer Associates International Inc. (CA) (NYSE: CA), Hewlett-Packard Co. (NYSE: HPQ), IBM Corp. (NYSE: IBM), Sun Microsystems Inc. (Nasdaq: SUNW), and Veritas Software Corp. (Nasdaq: VRTS).

Harriman says the company isn't worried about entering such a crowded space: "We're thrilled that so much money is being invested by these large companies. We're very happy to ride on those advertising coattails."

Eugénie Larson, Senior Editor, Byte and Switch