September 27, 2010

Boston Business Journal

Actifio investors look to next wave of data storage

Netezza Corp. this week became the latest in a wave of billion-dollar-plus data storage company acquisitions, selling to IBM Corp. for $1.7 billion. VCs, convinced the deals are only the first stage of a paradigm shift in IT, are putting money into related areas they hope big acquirers will turn to next.

The latest is ActiFio Inc., a 50-person Waltham startup selling software it calls “storage management virtualization.” Investors put a $16 million Series B round together for the company, which has some significant connections to the world of M&A-minded tech giants. Founder and CEO Ash Ashutosh is a serial entrepreneur who led R&D in a data storage division at Hewlett-Packard Corp. (NYSE: HPQ) for three years, after HP bought his previous company, AppIQ. Netezza (NYSE: NZ) co-founder and chairman Jit Saxena is on ActiFio’s board.

Earlier this month, HP sealed a $2.4 billion deal to buy another data storage company, 3Par Inc. (NYSE: PAR) of Fremont, Calif. Deals like this are driven by tech giants’ need to get ahead of a shift toward cloud computing — a broad term that encompasses many ways organizations are shifting IT resources off traditional computers and onto web-based or virtual machines. ActiFio’s investors are hoping similar frontiers will open up in ActiFio’s sector, storage management.

“I don’t know that we’re counting on the cloud tomorrow,” said Bob Hower, East Coast lead partner for Advanced Technology Ventures, a Palo Alto, Calif. VC firm that is ActiFio’s newest backer, joining Series A investors Greylock Partners of Menlo Park, Calif., and North Bridge Venture Partners of Waltham. “Companies need to walk before they run. Being able to virtualize their secondary storage environment even within their own facility is what they need to do before they can leverage the cloud.”