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Start-Up’s Profile: Virsto, Just Raising $12 Million

And acquiring VMware storage developer EvoStor

Virsto Software, a software company transforming storage for virtual machines, announced $12 million in Series B venture capital funding. The funding will be used to drive new growth, product development and expand industry partnerships.

In addition, Virsto announced its acquisition of EvoStor, a company specializing in storage virtualization technology for VMware environments, to further deliver on the vision of multi-hypervisor support for reliable, heterogeneous, high-performance and low-cost storage.

The funding was led by InterWest Partners, a diversified venture capital firm in Silicon Valley, which has invested in successful companies such as Marketo, Silicon Graphics (SGI) and Stratacom (STRM, acquired by Cisco). Khaled Nasr, a partner at InterWest who focuses on enterprise IT and data center infrastructure, will join Virsto’s board of directors. Previous investors August Capital and Canaan Partners also participated in the round.

Founded in 2007, Virsto has developed a hypervisor-based storage solution built for virtual machines. A close partner of Citrix and Microsoft, the company has a track record of advancing storage virtualization in the enterprise. Virsto’s software lets all organizations, including enterprise, private and public cloud customers reap the benefits of server and desktop virtualization, increasing performance while lowering storage costs.

This news also includes the acquisition of intellectual property and team members from EvoStor, deepening Virsto’s bench of talent and technology. EvoStor was an early innovator in the VMware storage market. The partnership between EvoStor and VMware will benefit Virsto as it readies its software solutions for additional hypervisor platforms. This is a critical market need, as recent surveys show 70% of customers have or are considering multi-hypervisor data centers.

Addressing the Next Wave in Virtualization
Swift enterprise adoption of server virtualization has created unexpected consequences and increases in associated storage costs. Yet with just half of companies today running virtualized servers, the first wave of virtualization is expected to continue driving storage costs even higher.

The next wave of virtualization will be in storage. Because current storage architectures have not fundamentally changed in 15 years, they are not suited to meet the storage demands created by modern virtualized environments. Virsto takes a software-only approach to addressing the storage performance, utilization, and management challenges in virtualized server and desktop environments. Its technology is proven with enterprise storage systems as well as low-cost commodity hardware, giving customers the opportunity to improve the effectiveness and return of any installed storage infrastructure.

Corporate Milestones

  • $12 million in Series B financing follows a $7 million Series A round in June 2009, with more than $20 million raised to date.
  • Virsto recently acquired EvoStor’s assets and development team. The new Virsto R&D team in Melbourne, Australia is working on near-term products that will be launched in coming months, as well as next-generation technology to be released in 2012.
  • Virsto has partnerships in place with Microsoft and Citrix among others, with plans to expand the partner ecosystem this year.
  • The company has experienced consecutive 100% quarter over quarter growth since launching in February 2010.
  • Company revenues and new customers in Q1 2011 exceeded all of 2010.
  • This year, Virsto expanded the executive team with two key hires, and introduced a global partner network to support resellers from around the world.

"Storage virtualization is a $30 billion market that is ripe for disruption. My partners and I have evaluated hundreds of opportunities in the enterprise sector. Virsto stands out because the company takes a differentiated technical approach to tackling a thorny problem – an approach that has already shown traction with customer and partner validation. The promise of the core technology combined with the management team’s track record make this a compelling investment opportunity", said Khaled Nasr, partner, InterWest Partners.

"Virsto has shown the potential to reenergize virtual server and desktop projects that were stopped cold when the proposals started rolling in and storage costs became known. While many companies are emerging to try solving the problem of VM storage, Virsto has not only a first mover advantage but also a truly unique approach that’s been proven to reduce costs for enterprise and cloud data centers", said George Crump, lead analyst, Storage Switzerland.

"The market still lacks a holistic approach to the problems borne of the virtualization era. Continuing investor confidence, as well as the ongoing validation from our partners and customers, underscores the work we’ve done to date to disrupt storage in the new virtual paradigm. With the acquisition of EvoStor, we accelerate delivery of Virsto’s promise of multi-hypervisor support, with significant milestones still to come this year", said Mark Davis, CEO, Virsto.

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Start-Up's Profile

Company
Virsto Software

Headquarters
Sunnyvale, CA

Year founded
2007

Financial funding
$7 million series A in 2009 and $12 million series B in 2011. More than $20 million raised to date. Investors include InterWest Partners, August Capital and Canaan Partners.

Acquisition
EvoStor, Campbell, CA, start-up with $5 million in funding and born in 2007, in VM-level storage that eliminates the need to manage LUNs or file systems.

Revenues and profitability
Doesn't disclose revenue. Have grown over 100% sequentially every quarter since launching, and did more revenue in 1Q11 than all of 2010.

Main executives

  • Mark Davis, CEO and co-founder: Launched the first FC disk array in 1994, and was instrumental in growing Sun Microsystems from a non-player to the largest Unix storage vendor within five years. After a stint as VP of marketing at $2 billion storage vendor StorageTek, repositioned ConvergeNet as inventor of SAN-based storage virtualization, resulting in a $340 million acquisition by Dell. After an instrumental role in the IPO of Evolve Software, returned to the storage industry, working on multiple virtualization projects. Before Virsto, was CEO of SRM vendor Creekpath Systems, where he engineered its acquisition by Opsware (now HP).
  • Alex Miroshnichenko, CTO and co-founder: Creating innovation in virtualization and storage dates from the early 1990s, when he joined a tiny company of storage pioneers called Veritas Software. In a dozen years there, established himself as a technologist at the core of innovations ranging from the Veritas File System and Database Edition for Oracle, to the industry's first viable storage software appliance technology and early explorations of a then-nascent virtualization technology called Xen. Was one of the backbone engineers as Veritas (now Symantec) that grew from an inconsequential startup to a $2 billion  company. After Veritas, became VP of engineering and CTO of PowerFile, then served as CTO at Acronis.
  • Serge Pashenkov, VP engineering and co-founder:  Most recently at PowerFile, where he hired the team, led the design, and managed delivery of three major releases of on-spec and on-time system software for a sophisticated data archive appliance. Also innovated at Veritas, where his technology teams delivered a patented fault-tolerant software platform, a content-aware storage system, and new levels of application scalability for modular computing. Also at Veritas, ran engineering for the industry's first software-only, NAS platform.
  • Rafael Santini, VP sales: Outcomes with four start-ups and nearly twenty years of sales. Was instrumental in Citrix' $500 million acquisition of XenSource. Prior to XenSource, was a significant factor in Marimba's IPO and acquisition by BMC. Also contributor to Compuware's acquisition of EcoSystems, and Demax Software's purchase by OpenVision (now Symantec).
  • Eric Burgener, VP product management: Early stints at companies such as Tandem, Pyramid, Sun, Veritas, ConvergeNet, Mendocino, and Topio, among others, on fault tolerance and high availability, replication, backup, continuous data protection and server virtualization technologies. Also spent time as an executive in Residence with Mayfield and a storage industry analyst at Taneja Group.  Before joining Virsto, was VP marketing at InMage.
  • Gregg Holzrichter, VP marketing: Worked with several companies in server virtualization (VMware), CRM (Siebel Systems), ERP (PeopleSoft), customer experience management (Medallia), and consumer packaged goods (Robert Mondavi/Caliterra). 
  • Claude Robinson, senior director business development: Drives partnerships which led to EMC's $2.4 billion acquisition of Data Domain. Prior to that at Rhapsody Networks acquired by Brocade. Also served at Cisco, Symantec, 3Com, and Cypress Semiconductor.
Number of employees:
33

Technology
Virtual storage

Products description
Virsto VSI (virtual server infrastructure) is a virtual storage optimization solution designed for use in virtual server environments that are primarily handling server consolidation projects. Benefits:
  • Improve storage performance by 3x - 5x (IO/s/spindle)
  • Reduce storage capacity consumption by 90% or more
  • Leverage enterprise-class snapshot/clone technology that runs on existing hardware
  • Gain management benefits not available in other native hypervisor-based virtual disk options
  • Low cost/virtual server
VSI uses the Virsto Virtual Storage Engine (VSE) to achieve these performance from a pure software-based solution that supports heterogeneous, block-based storage.

Virsto VDI (virtual desktop infrastructure) is a virtual storage solution for desktop environments. Virtual desktop environments differ from virtual server environments in that their I/O patterns tend to be even more random and even more write-intensive, there is more variability between peak and average IO/s requirements, and they demand scalable management and provisioning for many more objects (virtual desktops, clones, etc. that number in the thousands).

Released dates
VSI was released Feb 15, 2010, VDI April 5, 2011

Price range
$2,800 per license, 1 per physical host

Roadmap
Virsto VSI for Hyper-V, Virsto VDI for Hyper-V - shipping today. Virsto VSI for vSphere, Virsto VDI for vSphere - launching 2H2011

Partners
Microsoft and Citrix

Distributors and OEMs
Sells direct and through the channel and is in discussions with distributors and OEMs.

Number of customers
Several dozen

Main customers
Sieena, Systems Solutions, Inc., West Gastroenterology Medical Group, Millard Lumber, Mako Surgical, and Crutchfield

Applications
Support virtualized workloads including SQL Server, Sharepoint, MS Exchange.

Target market
Enterprise, SMBs, government , private and public cloud initiatives, hosting companies

Competitors include
Tintri, Atlantis Computing, DataCore, Veeam, Acronis, Ardeao Logic, Arkeia, Quest/BakBone, EMC/VMware, IBM, STORserver, Symantec, Vizioncore.

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