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Data-storage firm lands EMC, others as new funding sources
By Daniel Golden
THE WALL STREET JOURNAL
September 28 — Closely held ManagedStorage International Inc. attracted more than $50 million in a second round of venture funding, further evidence of the exploding interest in the fast-growing data-storage sector.
SECOND-ROUND INVESTORS include the venture-capital firm of Providence Equity Partners Inc., contributing more than $30 million, and the dominant company in big-scale storage, EMC Corp.
While EMC didn’t specify the amount of its investment, people familiar with the deal said it was $5 million. Other investors are First Union Corp. and J.P. Morgan & Co.
The interest in ManagedStorage reflects the rapid growth of outsourced storage services, which were almost unknown before 1998 but now amount to $100 million a year. As the need for storage for Internet-driven content surges and companies become reluctant to maintain the staff and infrastructure to handle it themselves, some see the outsourcing market mushrooming to as much as $8 billion by 2003.
Another start-up in the field, StorageNetworks Inc., went public in early July at $27 a share. At 4 p.m. in Nasdaq Stock Market trading Wednesday, shares of StorageNetworks were at $97.88, down 88 cents. Earlier this week, International Business Machines Corp. said it was launching an outsourcing storage service.
A spinoff of Storage Technology Corp., which maintains a minority ownership in the company, ManagedStorage International sells storage on a pay-as-you-go or monthly fee basis, tailored to video, audio and other nontext media. Its customers primarily are large companies with large electronic-business operations.
The capital will be used to finance expansion in both the U.S. and Europe. Chairman Patrick Curran says ManagedStorage expects revenue between $10 million and $20 million this year. He said its major competitor in the storage-rental business is StorageNetworks Inc., based in Waltham, Mass. “We now have relationships with StorageTek, the best in tape, and EMC, the best in disk,” Mr. Curran said.
ManagedStorage, based in Westminster, Colo., received a $50 million equity commitment from Great Hill Equity Partners L.P. of Boston earlier this year. Mr. Curran is a partner in Great Hill, which owns about 45% of ManagedStorage. |
