Startup Blends VPNs, SANs

Startup NeoScale Systems Inc. is looking to tap growing enterprise demand for both security and storage with its new CryptoStor SAN/VPN combo.

With the advent of Sarbanes-Oxley and the Health Insurance Portability and Accountability Act (HIPAA), users are coming under increasing pressure to secure data across metropolitan area networks (MANs). Specialized appliances that work with existing storage devices to secure that traffic are a new development.

This is the first one that I know of,” says Jon Oltsik, senior analyst at Enterprise Strategy Group Inc. “The market that needs this are the biggest companies in the world. With all the privacy regulations, there is definitely call for this in both Europe and the U.S.”

The 2-rack-unit appliance connects to switch or storage devices on the SAN and edge devices or dark fiber on the MAN. It then uses the AES-256 encryption standard to secure the data traveling on Fibre Channel links between the devices.

NeoScale execs say that CryptoStor offers full-duplex encrypted throughput at 1 or 2 Gbit/s, although this figure is based on internal benchmarking.So, what’s the story behind NeoScale? The company was founded back in 2000 by Aseem Vaid and Sanjay Sawhney, the former CTO and vice president of engineering at network traffic management specialist Ukiah Software. The third co-founder, Soummya Mallick, had previously served as lead architect for IBM Corp.’s (NYSE: IBM) PowerPC-AS gigahertz processor.

But there have been a number of management changes at NeoScale since 2000. The company is now headed up by Barbara Nelson, the former executive VP of corporate marketing and strategy at tape vendor Quantum Corp. (NYSE: DSS).

From Milpitas, Calif., the company has amassed over $30 million in three separate funding rounds. The most recent round took place last summer and was led by Lightspeed Venture Partners, Bay Partners, and Sevin Rosen Funds. [Disclosure: Lightspeed was an early investor in Light Reading Inc., the owner of this Website.]

NeoScale may have the money, but does it have the profile? The next major hurdle for the startup is one of customer awareness, according to Enterprise Strategy's Oltsik. The analyst warns that the significant marketing required will bite into the corporate coffers. “There is a lot of training and evangelizing that needs to happen, and that costs money,” he says.

”$30 million is fine for now but it’s a matter of finding the right partners, the right applications, and building awareness."— James Rogers, Site Editor, Next-Gen Data Center Forum