Three data storage start-ups buck trend, grab $28 million in venture capital

Three data storage start-ups have landed more than $28 million in first-round funding from venture capitalists, a rare feat in an economy that has punished new vendors looking to obtain financing.

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The multi-million dollar financing rounds went to Avere Systems, a Pittsburgh-based network-attached storage (NAS)  company; GreenBytes, a de-duplication vendor in Ashaway, R.I.; and Sonian of Needham, Mass., maker of a cloud-based e-mail archiving and disaster-recovery service.

Venture capitalists have dramatically reduced spending on computer networking companies in the past couple years. Early stage vendors have suffered as much as anyone, because a lack of successful IPOs and acquisitions has forced investors to put resources into existing companies longer than expected, leaving little left over for true start-ups.

There seems to be good reason to lower investments in storage companies: Storage software revenue is down worldwide compared to last year and storage hardware revenue is down 18%.

But Avere, GreenBytes and Sonian were able to secure Series A financing in funding rounds announced this week: $15 million went to Avere, $8 million went to GreenBytes and $5.6 million went to Sonian.

"In the current economy, the bar on new investments is extremely high," says John Jarve, Menlo Ventures managing director, in the Avere announcement.

All three start-ups are focused on making storage use more efficient, a key concern for enterprises grappling with expanding data volumes.

Avere was founded in January 2008 and is led by CEO Ronald Bianchini, a former senior vice president at NetApp and co-founder of Spinnaker Networks, a storage grid company acquired by NetApp. Avere calls its technology "Demand-Driven Storage" and says it will consist of NAS products that let customers "scale storage network performance independently of capacity," reducing costs and space and power requirements.

Avere, which received its funding from Menlo and Norwest Venture Partners, says it will release its technology in the fall of this year.

GreenBytes, featured in Network World's Companies to Watch series last year, makes de-duplication storage appliances designed for both primary and secondary storage tiers. The company, founded by CEO Robert Petrocelli in 2007, says its GB-X Series appliances allow "real-time, on-the-fly de-duplication of file blocks as they are stored, expanding the scope of applications into primary storage, as well as backup."

GreenBytes' funding round was led by Battery Ventures.

Sonian, founded in 2007 by CTO Greg Arnette, built its hosted e-mail archive platform with a grid computing architecture designed to eliminate single points of failure. The company offers a 99.99% data retention service-level agreement.

Sonian, which received funding from Prism VentureWorks and Summerhill Venture Partners, was named a "cool vendor" in archiving by Gartner this year.

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