Where Will Innovation Come from in '03?

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Can storage managers expect new companies to bring innovative approaches to the market in the near future? That's the question we put to two seasoned storage venture capitalists. Jo Tango, general partner at Highland Capital Partners in Lexington, MA, is best known for backing HighGround before the SAN management startup was sold to Sun Microsystems. Chris Baldwin, general partner at the Waltham, MA-based Charles River Ventures, is a veteran of many networking and storage ventures, including Pirus Networks, the intelligent switch firm, also acquired by Sun. Both are still continuing to invest in storage startups, although more selectively.

Between the two, we came up with this list of product categories that you're likely to see startups get funding and be successful in:

  • Consolidation, particularly bringing together technologies like iSCSI and blade servers
  • Higher I/O systems like 3GIO
  • Management and integration, and not just for software companies. Baldwin believes that new companies will apply concepts from the networking equipment world to managing storage devices
  • Storage provisioning, reducing the complexity of configuring new storage and feeding storage-hungry applications
  • Data protection, including everything from software and hardware to do data backups, as well as snapshots, mirrors and replication
Tango sees little hope for small companies to succeed with low-cost, high-volume sales - he encourages

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entrepreneurs to seek a smaller number of higher-margin six-figure sales. But Baldwin believes new companies need to be more pragmatic. Given their lack of track record, they should aim at products below $75,000 in the enterprise storage market.

Both acknowledge that acquisition is a likely outcome for today's startups, as more and more businesses turn to a single large IT vendor for all their technology needs.

What about you? Have you considered making a purchase from a startup? How can you be sure you're making a good investment? In a nutshell, here's what Tango suggests you look for: veteran management and products based on extensive feedback from IT managers.

This was first published in January 2003

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