Neoscale, storage security company shuts down after eating through $44M

December 12, 2007 | Matt Marshall

NeoScale Systems, a Silicon valley provider of data storage security products that ate through $44 million in venture backing, has shuttered.

NCipher, a “management specialist” company, has acquired the Milpitas, Calif.’ company’s assets for $1.95 million. The assets include NeoScale’s CryptoStor tape encryption product and KeyVault key management technology, but did not include the company’s disk encryption technology.

VentureBeat first heard about the closure of NeoScale from a source three weeks ago, and had been trying to confirm details with investors. The company’s representatives weren’t returning phone calls. Lead investors, including Atul Kapadia of Bay Partners, Wes Raffel from ATV, declined to comment. Lightspeed Venture Partners and Seven Rosen, the company’s two other investors, did not respond to a request for comment. The company faced plenty of competition, including from Decru, now owned by Network Appliance.

The sale to nCipher was made by Hercules Technology Growth Capital, which owned the assets after having offering a loan the company with preferential terms.

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Tags: deal

About the Author, Matt Marshall

Matt launched VentureBeat in September of 2006, with the realization that no one else was covering the entrepreneurial and tech innovation scene with the velocity or depth that he was. Prior to founding VentureBeat, he covered venture capital for the San Jose Mercury News from 2001 to 2006. In 2002, Matt was awarded "Journalist of the Year" by the Northern California Society of Professional Journalists. Prior to working at the Merc, he was a correspondent for the Wall Street Journal in Bonn, Germany from 1995 to 1998, and a writer for the Washington Post in 1994. Matt holds a PhD in Government and an MA in German and European Studies from Georgetown University. In addition to VentureBeat, Matt is also the Executive Producer of DEMO, the leading launchpad event for emerging technologies.