VentureBeat

Enterprise storage is a market dominated by big companies. But Panasas has found a niche providing parallel storage systems for the biggest supercomputers. The company has raised $25 million in a fifth round of funding, VentureBeat has learned.

The Fremont, Calif.-based company declined to comment on the funding. The round was led by Focus Ventures of Palo Alto, Calif. Other investors included Mohr Davidow Ventures, Carlyle Venture Partners, Centennial Ventures, and Northgate Capital Partners.

The company’s web site says it focuses on the parallel storage market in competition with NetApp, EMC, Sun Microsystems and IBM. It can do so because it has a unique architecture to deliver the best storage performance in high-bandwidth applications such as simulations, modeling, oil and gas exploration, and product design.

Most clusters of Linux servers use an architecture dubbed a “network file system,” or NFS. But such systems with a “serial” architecture bog down when a lot of users are trying to access the same file at the same time. Panasas has a parallel file system that can accommodate all of those users in parallel. It builds a kind of “unified memory” storage system that resembles the kind of unified memory of SGI supercomputers. In fact, SGI is a major reseller of Panasas’ storage systems, as is Dell.

The architecture is the brainchild of Garth Gibson, who was one of the inventors of the popular RAID storage systems that are popular today because they can store data reliably across a bunch of disk drives. Currently chief technology officer, Gibson started Panasas in 1999. The first products shipped in 2003 and the company is now on its third generation of ActiveStor products that can store up to 200 terabytes of data per rack or up to 100 petabytes in a single file system. (Our description: That’s a lot of data).

Among start-ups, the competition included Cluster File Systems, but Sun Microsystems acquired that company in October. Panasas’ storage system was part of Roadrunner, the Los Alamos National Laboratory’s supercomputer with a petaflop of computing performance. The supercomputer, announced a few weeks ago, will have 12,900 microprocessors, including the Cell chips that serve as the brains of Sony PlayStation 3 video game consoles.

Corrected

Mimosa Systems, a startup that helps companies archive emails and other files, has raised a $17 million fourth round of funding. Mimosa calls the latest financing a “mezzanine round,” meaning it should be the last round before an IPO.

The kind of comprehensive archiving that Mimosa offers is necessary for the “eDiscovery” process — namely, the process of searching through a company’s electronic records. With the growing number of legal requirements for corporate record-keeping, including the Sarbanes-Oxley Act, there’s been a lot of money entering this field. Last June, for example, Automatic acquired market leader Zantaz for $375 million (although the startup’s founder and early investors didn’t see much of a payoff). Correction: The company that acquired Zantaz was Autonomy.

When we wrote about Mimosa a year ago, we portrayed the company as playing second fiddle to Zantaz, but the Santa Clara, Calif. startup seems to be doing pretty well for itself. It has raised a total of $51 million and has offices in Germany, the United Kingdom, Japan, China, Australia and India. Mimosa recently moved beyond emails, attachments, instant messages and backup tapes and now says it can archive any file. Even more interesting, chief executive T.M. Ravi says Mimosa will make its application programming interfaces (APIs) available to third-party applications later this year.

The recent funding was led by Focus Ventures, with participation from existing backers August Capital, Clearstone Venture Partners, JAFCO Ventures and the Mayfield Fund.

Dell just announced the planned acquisition of EqualLogic, a supplier of data storage for large companies, for about $1.4 billion in cash.

The deal is the largest ever cash purchase of a private venture backed technology company, according to data from VentureSource. See table below.

This could be painful for EMC. Dell it the largest distribution partner of Clariion, EMC’s product that competes with EqualLogic’s. “I’m sure [EMC Chief Executive] Joe Tucci woke up with headache,” said Greg Gretsch, managing partner at Sigma, an early investor at EqualLogic.

EqualLogic, based in Nashua, New Hampshire, is hot because it bet early on a new standard for storage systems called ISCSI, which allowed the building of so-called Storage Area Networks (SANs) on Ethernet. The technology, which makes storage Internet based and locally available, makes storage for large companies more efficient and less costly than alternative technologies.

EqualLogic is focused entirely on this market, while larger competitors EMC and Network Appliance have continued to serve older technologies, even if they’ve focused more aggressively on ISCSI of late.

This ends a long ride for EqualLogic, which almost accepted a $35 million offer in 2002, when the market turned downward and the outlook was bleak. Sigma’s Gretsch tells me that Sigma and CRV encouraged the company to slog on.

The company’s momentum developed in recent years, however, and in July it filed for an IPO. It was ready to proceed with the offering as of last week, but the company decided to postpone the IPO until tomorrow to see if Dell would make its offer — and it did.

EqualLogic opted for the purchase because of the risks inherent in being a public company. The investors were willing to take it public, but the management team decided the $1.4 billion in cash wasn’t such a bad thing. The company was profitable for the last year, and had $37 million in revenue for the most recent quarter. It signed up 500 customers last quarter, said Gretsch.

Sigma Partners and Charles River Ventures invested in EqualLogic in 2001, when the company was just a business plan and three people. So those firms did very well. Total invested was $50 million, which included money from Fairhaven Capital and Focus Ventures.

CRV owned 29.9 percent and Sigma owned 29 percent of the company, when it filed its IPO filing in July. Fairhaven had 16.1 percent and Focus Ventures had 9.5 percent.

Videoegg, a video advertising network, has raised $15 million from Focus Ventures and returning investors.

The San Francisco company offers Web sites technology to help them publish videos, and ways to run advertising within those videos.

It has been in the news recently, and competes with several companies, including Fliqz, a relative newcomer, and several more established players, such as Brightcove. It’s a crucial time for it to grab market share, so the funding makes sense. Fliqz has raised less money, at $2.5 million, but is proving scrappy (see its easy toolbar, for example; scroll down). Brightcove raised $59 million earlier this year, and reportedly won a whopping value of $220 million.

When YouTube began inserting contextually relevant ads into its videos a couple of weeks ago, Videoegg claimed to have been doing the same thing since a year earlier, and pointed to the patents it’d already been granted for its service.

Earlier in August, Videoegg introduced its own Facebook advertising platform, which allows third-party applications on Facebook to insert Videoegg’s video ads and take a cut of revenue from it.

Facebook ads (screenshot below) are bringing in “north of $10″ CPM in many cases, according to Troy Young, Videoegg’s chief marketing officer. The “ad market is broken” and the promise of online banner advertising is “unfulfilled,” with the effectiveness for banners undervalued by advertisers, Young told us. He says Videoegg is aiming to make banner advertising more relevant through more appealing video-based ads, and better targeting.

Previous investors (our coverage) include WPP, Maveron and August.

Pure Digital, the San Francisco maker of low-cost camcorders, releases tomorrow (Tuesday) a new line of devices that let you upload video directly to YouTube.

Called Flip Video camcorders, they are the first that easily let you upload directly to YouTube. We reviewed Pure Digital in October, when it released a device that let you upload video to Grouper and Google in an easy way. YouTube, at the time, was too distracted with its explosive growth to consider partnering with Pure Digital.

Pure Digital boasts momentum, with its pocket-sized camcorders now rated among the best-selling camcorders in the U.S. They have double-digit percentage market share, the company says. The private company won’t release any more specifics. But the growth is enough, says chief executive Jonathan Kaplan, to justify raising $40 million more in venture backing, which the company also announces tomorrow. He said demand for the company’s initial Grouper/Google-sharing camcorders exceeded expectations, with more than half of buyers reporting using the camcorders to upload and share video. Kaplan said an IPO isn’t in the works yet. The goal is first to boost the company’s branding, he said.

The new camcorders will be available tomorrow (Tuesday) at major retailers nationwide. They retail at $119.99 for the 30-minute model and $149.99 for the 60-minute model.

The funding was co-led by AllianceBernstein L.P. and Morgan Stanley Principal Investments (MSPI). Heights Capital Management and existing Pure Digital investors Sequoia Capital, Benchmark Capital, Focus Ventures, Crescendo Ventures, Steamboat Ventures, VantagePoint Venture Partners, and Samsung participated in the round.