Azul Systems, a hard-charging Silicon Valley company that wants to knock Sun off its perch by providing a more efficient server processor to run popular Java applications, has raised $40 million in financing.
This company rivals football player Terrell Owens in generating controversy, though. It got sued by Sun last year (see coverage; scroll down) for not properly licensing some technology, after already tense relations caused by Azul's hiring of about a dozen former Sun employees.
Over the past year, Azul has laid off a good chunk of its sales force, after its sales didn't ramp as quickly as expected. It is now at 125 employees, down from a reported 207 last year when BusinessWeek did a notable look at the company. And its CEO, Stephen DeWitt (at left, courtesy of BW) is experiencing some "personal issues," according to a source close to the company, forcing co-founder Scott Sellers to take over the "President" title so that he can represent the company temporarily. DeWitt had earlier sold Cobalt to Sun for $2 billion in 2000, and that company required a big write-off in 2003, which some people said has caused resentment.
VentureBeat talked with two other Azul representatives this morning, Sellers and Michael Rolnick, a partner at ComVentures and an original backer of Azul. They both said the company is doing "great," is adding customers and is focused, but they conceded that the company had ramped up too quickly beginning two years ago. They said changes of course are normal for young ambitious companies. Selling the product required more focus on key accounts than they'd expected. But the market direction remains in their favor, they said. Large companies are increasingly using java applications such as those offered by Oracle, BEA, IBM and Jboss, all of which run better on servers with a dedicated processor such as the one supplied by Azul, says Sellers. "We're bullish," says Sellers.
The round latest round led by JVax Investment Group, which invested $15 million. JVax had requested the staff cut before investing, seeing it as a way to lower burn and make the money go further. The rest of the round came from existing investors Accel Partners, Austin Ventures, ComVentures, Credit Suisse, Meritech Partners, Redpoint Ventures and Worldview Technology Partners.
Sellers would not comment on the valuation of the company.
The company previously raised at least $60 million.