Egenera Generates $30 Million

The server virtualization market that has been so much in play lately brought about another deal today, when Egenera Inc. announced it had secured $30 million in a fourth round of equity financing.

The Marlborough, Mass.-based startup has raised $124 million in venture capital funding since its 2000 inception, and CFO Tom Sheehan says the company is on track to look at an IPO this year. Egeneras fourth round was led by Technology Crossover Ventures (TCV), whose general partner Rick Kimball will sit on Egenera’s board of directors.

Egenera’s blade servers and server virtualization software is complementary to the technology of recently acquired VMware and Ejasent. EMC Corp. (NYSE: EMC) purchased VMware for $635 million in December; and Veritas Software Corp. (Nasdaq: VRTS) announced plans to buy Ejansent for $59 million last week (see EMC Gobbles VMware and Veritas Nabs Ejasent). Egenera bundles VMware GSX Server software with its BladeFrame system.

Sheehan says the funding reflects the energy in the segment. “This is further validation of this whole virtualization space we’re playing in,” Sheehan says.

Sheehan says Egenera will use the funding on global expansion and product development. He says the company will likely add 50 people over the next year -- mostly in sales, service, and support -- to its current 225 employees. Egenera is targeting expansion into the London, Tokyo, and Hong Kong markets where it has been selling, along with Germany and other locations in the Asia/Pacific region.“We’re growing in leaps and bounds and expanding quite aggressively,” Sheehan says.

Last year Egenera launched the entry-level BladeFrame ES platform and added support for Windows Server 2003, Enterprise Edition. The BladeFrame system is a combination of blade servers in a purpose-built chassis with integrated high-speed connection and Egenera’s software.

Egenera targets its servers to high-end data centers, where it looks to displace IBM Corp. (NYSE: IBM), Hewlett-Packard Co. (NYSE: HPQ), and Sun Microsystems Inc. (Nasdaq: SUNW) Unix systems. Of course, IBM, HP, and Sun have their own offerings and aren't likely to cede space gladly to any startup (see Grid Networking). But Egenera claims it's distinct from the pack because its virtual server is diskless, consisting of only processor and memory.

So far, the diskless differentiator seems to be working. Egenera's got a few influential customers, including AOL, Cambridge Health Alliance, Credit Suisse First Boston Corp., Goldman Sachs & Co., and J.P. Morgan Chase & Co.

— Dave Raffo, Senior Editor, Byte and Switch