InterSAN Puts $17M Into Storage

Like many venture capitalists, Colin Savage of Worldview Technology Partners maintains a so-called “tickler file” where he sticks companies that seem to be treading a few steps beyond reasonable ambition. Most of these “ticklers” never get a second shot, but on Monday one of them is expected to announce that it raised $17.86 million in third-round funding led by Worldview.

The company is InterSAN Inc. It is part of a new category of storage area networks (SANs) companies known as storage area managers (SAM), which makes software to manage SANs. It first approached Savage about a Series B offering in early 2001.

“I did a lot of homework on the company… but there was just a sense of disbelief among the people I talked to that anyone could actually pull off what InterSAN was saying it planned to do,” Savage explains.

Specifically, InterSAN was proposing a SAM solution that would do more than simply provide customers with a topographical view of their heterogeneous storage networks. Instead, the InterSAN software would include application-oriented features that could enable network administrators to create and enforce such policies as desired capacity and security thresholds.

And with a first customer signed and product deployment expected to begin later this week, Savage was more than willing to bite when the Series C offering came around.

“The bottom line is that the product is real, the customers are real and they’ve formed real partnerships,” Savage says.

The third round deal was originally marketed with a $15 million target, but quickly grew to an oversubscribed $17.86 million. Worldview made anl an $8 million investment, and was joined by new investor Fidelity Ventures. Previous investors exercising pro rata rights included SoundView Ventures, Alliance Ventures, Morgan Keegan & Co. and individuals like Kumar Malavalli, co-founder of Brocade Communications.

The deal also marks Worldview’s second recent foray into the SAM space, as in March it led a Series B deal for Agile Storage Inc. (see PEW 3/18/02). Both Savage and InterSAN CEO Chris Melville say that the Agile technology – which is still in alpha stage – complements, rather than competes with InterSAN’s offering. This is probably a good thing for Agile, because industry analysts believe that InterSAN has a legitimate first-mover advantage over other SAM start-ups.

“I think they’ve got quite a head start because they had a real early understanding that management by application or business process is where everyone would want to be,” says Randy Kearns, a senior partner with storage market research firm Evaluator Group.

For now, Scotts Valley, Calif.-based InterSAN believes its sweet spot is the financial services space. It has already signed Northern Trust Corp., and is in discussions with such firms as Fidelity Investments, Credit Suisse First Boston, Morgan Stanley and J.P. Morgan Chase. It also eventually hopes to attract some insurance sector clients.

Proceeds from the Series C funding will be used to support sales and marketing efforts. To date, InterSAN has raised a total of $28.16 million, including a $2.5 million Series A deal in April 2000 and a $7.8 million second-round funding in 2001.

Last month Network Magazine named InterSAN’s PATHLINE software solution product of the year in the category of storage management.

Contact Dan Primack at