Several niche players in the storage market have managed to attract venture capital investments in recent days and weeks, despite the down economy.
LiveVault Corp., Marlborough, Mass., an online backup and recovery service provider, recently announced that it has secured $10 million in Series B equity financing, which brings the company through to profitability. The new funding brings the total raised by LiveVault since 2001 to $20 million.
The lure of LiveVault, according to Robert Cramer, president and CEO, is its focus on a single part of the overall storage picture.
Cramer admitted that today's economic climate is not conducive to raising cash. "Storage is a huge opportunity, and it's also a very crowded space right now," he said.
"We're very focused on one niche segment of the market," he added. "Every business today sticks a tape in a machine. We're [trying] to fully automate and eliminate that."
The LiveVault Online Backup and Recovery Service automatically backs up server data, protects it off site at a remote Iron Mountain facility, and then makes it immediately available for recovery.
LiveVault said that proceeds from this investment will be used for channel development and marketing, as well as continued investment in technology leadership and general operations.
LiveVault isn't the only niche vendor pulling in cash.
Aristos Logic Corp., a Foothill Ranch, Calif.-based maker of storage processors, bagged $20 million this week
Boulder, Colo.-based LeftHand Networks Inc., a provider of IP SAN products raised $20 million in funding, bringing the company's total equity investment to $39 million. The company said it will use its newfound funds to expand sales, support and business operations to meet market demand for its Network Storage Module (NSM) and Distributed Storage Matrix (DSM) product lines, both of which are used to build IP SANs.
Funds are flying to small storage specialists, but why?
Doug Chandler, director of the Storage and Data Management Services research program for International Data Corp., Framingham, Mass., said storage software is still getting some funding, along with some storage network technologies.
According to Chandler, the interesting thing is that LiveVault is essentially a pure services firm.
"Among other things, I think Bob Cramer is good at raising VC funds," he said. "The other is that LiveVault has a very well-thought out strategy, particularly regarding partners and indirect channel distribution. Finally, they appear to have very low costs. The software has already been developed that powers their service, and the hardware is getting cheaper and cheaper on a per-megabyte basis."
Signs of recovery in the overall storage market abound. The most recent sign of success in storage came last week, when IDC issued its quarterly report on storage systems revenues. The report showed a 12% increase in overall revenues since December 2002.
According to IDC, worldwide disk storage systems factory revenue was $5.4 billion in the fourth quarter of 2002, up 12% compared with the third quarter of 2002, with sequential growth. Revenue for the entire year was better than expected in 2002.
Let us know what you think about the story. E-mail Kevin Komiega, News Writer
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