Panasas Stores $25M Series B

Network storage firm Panasas Inc. is expected to announce today that it has closed its Series B round of funding. The Fremont, Calif.-based company has harvested $25.4 million, bringing its total venture funding to date to $36.5 million.

Carlyle Venture Partners led the round, with additional investments from Goldman Sachs and Mohr Davidow Ventures (MDV), the latter of which financed Panasas’ $10 million initial round.

Carlyle Venture Partners Managing Director Bob Grady joined Panasas’ board of directors as part of the deal.

The proceeds of the up round will be used to complete the development of the company’s systems and move its product into the beta stage, said Panasas CEO Rod Schrock, who is the former chief executive of Internet portal Alta Vista Co.

“We’re projecting to be functional by the end of this year,” he said. “And we have made a conscious decision to do a very heavy-duty six-month period of integration testing, which is unique because many start-ups rush their products out the door. We’ll be in beta by [early] next year and shipping to customers by the middle of next year.”

The company’s revenue and profitability models coincide with its shipping goals. Schrock expects to see revenue by the second half of next year and profits by the end of 2003. Its potential customers will likely span a wide range of businesses, from electronic circuits makers to oil and gas companies.

MDV brought Carlyle on board in this round partly because its strength lies in later stage investments, said Michael Sheridan, a general partner with MDV who also holds a seat on Panasas’ board.

Schrock agreed with that sentiment, adding that Carlyle has “great cross-country relationships and will balance our presence outside of California so we can build our product across America.”

Schrock doesn’t expect sales to come easy, of course, but he believes the company has better-than-average odds of forging ahead because one of its main focuses is building a lower-cost network storage company, certainly a perk for potential Panasas customers during these difficult financial times.

Panasas will likely shop for another round of private funding right around the same time it begins its sales efforts in earnest, Schrock said.

“We anticipate one more round late next year to give us the working capital we need to grow,” he added.

Panasas also will eventually consider making a play for the public markets as well, Sheridan added.

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