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Technology Stocks : Son of SAN - Storage Networking Technologies -- Ignore unavailable to you. Want to Upgrade?

To: Douglas Nordgren who wrote (3749)	8/2/2001 3:46:18 PM
From: Douglas Nordgren	Respond to of 4808

Byte and Switch: Venture Capital Survey byteandswitch.com Introduction Recent developments in the storage networking market have demonstrated that companies in this field aren't immune to the gloomy general economic climate. One of the big players, EMC Corp. (NYSE: EMC - message board), has already announced a big fall in profits (see EMC Hammered), while service provider StorageNetworks Inc. (Nasdaq: STOR - message board) last week was forced to lay off one third of its staff (see StorageNetworks: Big Layoff). But while sentiment may be turning sour, venture capital companies are continuing to plow money into storage networking startups. Earlier this month, for instance, 3PARdata Inc. scored a whopping big $100 million in third-round financing (see 3PARdata Snags $100M). And a couple of weeks prior to that, Storability Inc., a service provider competing with StorageNetworks, won a $30 million second round (see Storability Lands $30M Second Round). So, why are VCs so upbeat about storage networking? Is it because they still believe that the technology has a very promising future? Or is it because they've got a stack of money to invest and putting it into storage networking simply sounds like a better bet than other areas of hitech? And that raises other questions: Is too much VC money being plowed into storage networking startups; and, if so, can we expect a shakeout sooner or later? In order to shed some light on these issues, Byte and Switch has put funding for storage networking startups under the microscope. We've collected data on who's getting funding and who's giving it, and then analyzed it to figure out what's going on. Here are the key conclusions: - The current crop of 60 or so startups has secured funding totaling close to $2 billion. - A lot of that money has gone into storage service providers. This market segment has far more startups - 14 - than others, and $542 million worth of venture capital has gone to them. The next most popular sector is next-generation SAN and NAS appliances, with 12 startups. - The startups garnering the biggest rounds of funding are developing high-performance storage systems. Four startups in this field have a total of $303 million in funding, an average of more than $75 million apiece. - About 60 venture capital companies have already invested in storage startups. - Established VCs think that too many startups are getting funded, and a shakeout is inevitable. - The VC companies with the most storage startups in their portfolios are Battery Ventures, with five storage investments under its belt, and New Enterprise Associates (NEA) and OneLiberty Ventures, which have four apiece. Lightspeed Venture Partners (an investor in Byte and Switch's parent company, Light Reading Inc.), WorldView Technology Partners, and Charles River Ventures have three each. For the details, please read on. Who's Getting It: byteandswitch.com Who's Giving It: byteandswitch.com