Storigen Clinches $15M in Funding

Storigen Systems Inc. has secured $15 million in second-round funding, indicating its VCs believe the stealthy startups game plan is on track.

The round was led by Pilot House Ventures and included investments from initial backers Battery Ventures, Charles River Ventures, and OneLiberty Ventures.

The 64-employee Lowell, Mass., firm is developing a distributed network storage device, slated for delivery in January or early February 2002. Dennis Hoffman, Storigen’s co-founder and president, says the new financing -- which brings the company’s total funding to $24 million -- will be used to build out marketing operations, including a direct sales force.

But what exactly is in Storigen’s secret box? Hoffman is still cagey on details, but he says it will be an application-independent device for storing and delivering data closer to users.

“It’s our very firm belief that the vast majority of bits that are going to be stored are going to need to be stored not only at the data center, but in the network itself,” he says. “Our system stores and delivers data from within the network.”Hoffman's happy to outline what his product isn’t: Storigen's server isn't a fixed-function Web caching appliance like gear from CacheFlow Inc. (Nasdaq: CFLO) or Network Appliance Inc. (Nasdaq: NTAP). And Storigen is not building a massive network-attached storage (NAS) box for the data center à la Surgient Networks (see Cisco Surges 'Round Surgient).

“It’s not just another scaleable NAS appliance or NetApp or EMC Corp. [NYSE: EMC] competitor,” Hoffman says. Also, he says it won’t "exactly" use iSCSI (SCSI over IP), an emerging standard for network storage, but it is “definitely [based on] a form of iSCSI.” Clear as mud, you say?

Another startup, Seattle-based Isilon Systems, is developing a distributed storage system (see Isilon Snags $8.4M). But Hoffman says unlike Isilon, which is focusing on distributing streaming media content, Storigen will cover a broad range of applications and hopes to line up partnerships with enterprise software vendors in the coming year.

Initially, Storigen was aiming its system at service storage providers (SSPs) (see Storigen: Echoes of Akamai). But since many SSPs have gone belly-up or have discarded their original business plans in recent months, Storigen has repositioned the product as a scaleable storage offering for either enterprise or service provider customers in general.

Jamie Gruener, senior storage analyst at The Yankee Group, says Storigen is repositioning itself to best attack shifting market conditions.“The first SSP attempts didn’t work, and the SSPs that have survived are choosing best-of-breed products -- which means they’re looking to play with a lot of brand names,” he says. “If [Storigen’s] technology is solid, they’ll have a flicker of interest from the former SSPs.”

Chris Baldwin, a partner at Charles River Ventures, says Storigen is clearly not aiming at SSPs. "They've been gaining traction with enterprise beta-test sites," he says, noting that the SSP concept is still open to question.

Storigen says its servers have been in beta testing since this summer at several sites; Hoffman would not provide the names of his beta testers, nor would he disclose pricing.

Hoffman concedes that Storigen’s main hurdle is to convince prospective customers to embrace the idea of storing data in the network fabric.

“Our business challenge is to tap markets that are actually buying and will open their wallets in 2002."— Todd Spangler, special to Byte and Switch
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