Zambeel Lands $52.6M

Virtualization startup Zambeel Inc. has won $52.6 million in second-round funding, which it says will see it safely through 2002, including the release of its storage appliance by year's end 2001. The round, which includes a surprise investment from Juniper Networks Inc. (Nasdaq: JNPR), brings Zambeel's total funding to $65 million (see Zambeel Cops $52.6 Million).

Zambeel plans to use the funds to bulk-up its sales and marketing operations, increasing its total headcount from 120 today to 160 by the end of 2002.

Amerindo Investment Advisors Inc. and Aurora Technology Fund

jointly led this round, which includes investments from Armada Venture Group, Integral Capital Partners, Juniper Networks, Merrill Lynch & Co. Inc., Mitsui Corp., Morgan Keegan & Company Inc., and Sands Brothers & Co. Ltd. Kleiner Perkins Caufield & Byers and New Enterprise Associates (NEA), the two venture capital companies that participated in the first funding round for Zambeel, also participated in this one.

Investors continue to back companies with a strong product in a real marketplace,” says Darren Thomas, president and CEO of Zambeel. “Even though the storage sector is subdued right now, it continues to outperform all the other technology markets.”

The most newsworthy element of this investment round, apart from the obvious Who’s Who list of top-tier VCs, is Juniper’s participation. According to Thomas, Juniper has big plans to target the storage-over-IP market, particularly as gigabit Ethernet gains traction in the sector (see Gigabit Ethernet: Hope vs. Hype).”Caching and load balancing storage on a network is a different kettle of fish from controlling regular IP traffic,” says Thomas. “The packets are much bigger, for a start. Juniper wants to get close to us to understand this and be ready for the market.”

According to Thomas, Cisco Systems Inc. (Nasdaq: CSCO) has similar hopes that its Andiamo spinoff will help it address a changing market. Several analysts believe that a Cisco/Andiamo switch will include caching and content delivery capabilities as well as routing. Cisco has said nothing publicly about Andiamo (see Unknown Document 9405).

Zambeel expects to ship the beta version of its modular virtualization software and hardware appliance at the end of 2001. The NAS appliance will receive software upgrades every four months after that, throughout 2002, the vendor says.

— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.com