Storage startup Copan gets $18.5 million investment

Investors have poured an additional $18.5 million into Copan Systems, a storage startup that sells cheap disks to reduce the cost of storing copies of data.

Founded in 2002, Copan is on the verge of reaching profitability, with 160 enterprise customers such as Comcast, Facebook, the New York Stock Exchange and the U.S. government, according to CEO Mark Ward. The additional funding round led by new investor Westbury Partners will help build out distribution channels and bolster the company’s engineering organization to ensure key products are delivered later this year.

“We’re currently an unprofitable company that will be profitable in mid-year of this year,” Ward says. “This cash will get us through to profitability and beyond.”

Copan, based in Colorado, cut about 15% of its workforce in December, bringing its head count down to 110 employees, Ward says.

This is Copan’s fifth round of financing since the company was founded in 2002. The fourth round of $32.4 million was announced in September 2007, and at the time brought Copan up to a total of $87.5 million. Additional investors in the latest round, which was announced Tuesday, include Austin Ventures, Globespan Capital Partners, Firstmark Capital, and Credit Suisse. Copan sells MAID storage systems, or massive arrays of idle disks, with SAS and SATA drives to store persistent, infrequently-accessed data. Ward says Copan’s architecture eliminates some of the component parts that go into high-performance, mission-critical transactional storage systems built by EMC or NetApp, resulting in a cheaper, denser platform. (Compare storage products)

“What we do is build and deliver a new storage platform, specifically for copies of data, backup and archive,” Ward says. “By focusing only on that data type, we’re able to dramatically reduce the overall cost.”

Copan plans to deliver two new products in the second quarter, including an application that archives inactive file data, and a “next generation platform” that will improve power and cooling and provide more cost savings, Ward says. Delivery of new products to the current installed base should be sufficient to take the company into profitability, he says.

Copan is a private company, but Ward says “if the IPO markets ever come back, the board will look at potentially taking the company public.”

Networking companies, particularly seed-phase startups, have struggled to gain venture capital investment in recent months. With the economy in turmoil, investors have been unable to gain liquidity either through IPOs or acquisitions, and thus have been forced to devote additional money to existing investments rather than fund brand new companies. Ward says he doesn’t expect to need any more outside funding for Copan.