Xiotech Secures $10 Million in New Equity Financing

Xiotech Corporation has completed a private placement of $10 million in financing.

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The proceeds are to be used to build on the company’s successful Emprise product line and Intelligent Storage Element (ISE) technology by bringing complementary new products to market in early 2010. The company also secured a new $10 million line of credit.

Xiotech announced a round of financing in November 2007, shortly after the company’s acquisition of Seagate Technology’s Advanced Storage Architecture (ASA) Group, and used those funds to bring the Emprise product line and ISE technology to market.

The value-leading, self-healing, self-managing and easy-to-expand Emprise products began shipping in mid-2008 and quickly became Xiotech’s signature storage offering. The company has shipped more than 1,000 ISE units in less than 10 months, has implemented a robust indirect sales model through its Channel Partner Program and has certified a wide range of industry storage products that work with Xiotech’s ISE technology through the ISE-Powered Alliance Program.

The new financing is designed to build on the company’s vision for the next generation of storage architectures, in which organizations can more easily increase storage capacity or storage management functionality without being locked into the closed storage systems sold by most large IT vendors today.

“In the current business environment, only the most promising companies and ideas get new funding, so we’re obviously encouraged by the investor support we’ve received,” said Xiotech President and CEO Casey Powell. “We believe the positive reception the marketplace has given the Emprise product line indicates that customers recognize storage systems should be able to largely manage themselves, and should be expandable in increments. They should not require expensive and disruptive ‘forklift upgrades.’ That’s why we’re going to continue to advocate for our storage vision, and this additional funding will help us realize these goals.”

Comments

Born in 1995 and based in based in Eden Prairie, MN, Xiotech is an old start-up with a long story with Seagate.

Including this $10 million in new equity financing, the company has raised a total of $87.5 million.

The former Seagate Technology's subsidiary raised $40 million in capital in 2007 from a group of investors led by Stephen Luczo, current Seagate CEO, president and chairman, becoming director of the board of Xiotech.

This deal was announced less than a month after Xiotech reached an agreement to license Seagate technology ASA (Advanced Storage Architecture), and was followed by the announcement of the innovative Emprise 5000 and 7000 and then patented ISE, allowing to offer five-year hardware warranty on its storage arrays

Seagate bought Xiotech in 2000 in a deal worth $360 million; in 2003, it sold the company to an investment firm, Oak Investment Partners, getting a 80% ownership of Xiotech. The HDD manufacturer wanted to diversify into the storage subsystem business, but was not really successful trying to compete with storage giants. Then its executives, including founder Phil Soran, started successful competitor Compellent.

Xiotech is based in Eden Prairie, MN, with facilities in Colorado Springs, CO, and Hyderabad, India.