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

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.