Candera’s Candle Blows Out

Milpitas California-based Candera, a venture backed startup that had raised $60 million from a host of noted venture firms, shut down in early December.

The company most recently raised $12 million in funding in February 2004. Candera CEO Sundi Sundaresh told PE Week at the time that his company was helping to define a new niche for low-cost storage devices with the storage area network (SAN)/network area storage (NAS) market. In the process, the company had accumulated intellectual property for nearly two dozen patents. Sundaresh said that the company was “in active beta-testing with a number of Fortune 1000 customers” and was planning to launch product availability in the summer.

Candera was one of the most promising companies among the dozens of startups in the SAN/NAS market that had collectively attracted at least $500 million of venture funding in the last several years.

Candera had raised more than $58 million since 2000 from such investors as AsiaTech Management, Dali Hook Partners, New Enterprise Associates, Redpoint Ventures and Venture Strategy Partners, among others, according to The MoneyTree Survey from PricewaterhouseCoopers, National Venture Capital Association and Thomson Venture Economics (publisher of PE Week).

Rod Mathews, senior director of strategy for Network Appliance (Nasdaq: NTAP), told PE Week at the time of Candera’s last investment that the market for network storage was crowded with “tons of startups, perhaps 30 or 40 different companies.” He noted that while companies such as Candera represented possible M&A opportunities for Network Appliance, EMC and other large companies, most of the incumbent suppliers, including his company, had already made technology acquisitions in the space.

Sundaresh said that his company was competing with Cisco Systems, Sun Microsystems and Dell Computers, major providers to end users of storage devices. That, Mathews said, was going to be Candera’s big problem. “The big issue [for Candera] is that [a potential customer] wants to know that a SAN/NAS supplier will be stable over time” before it acquires critical equipment for data backup or storage.