Zambeel Inc. Reels In $52M

After spending a year on the venture capital campaign trail, data storage provider Zambeel Inc., is expected to announce today that it has nabbed a whopping $52.6 million worth of fresh capital in its Series B round of financing.

Jointly led by Amerindo Investment Advisors and Aurora Technology Funds, the deal was an up-round for the company, which received a post-money valuation of $22.4 million following its Series A financing.

Armada Venture Group, Integral Capital Partners, Juniper Networks, Merrill Lynch, Mitsui, Morgan Keegan and Sands Brothers came in as new participants, and first round backers Kleiner Perkins Caufield & Byers and New Enterprise Associates also came back for more this time around.

There were no additional board seats given as a result of the financing, which brings the company’s total VC take to slightly more than $65 million.

The Fremont, Calif.-based data management and storage company plans to use the cash for production and to get its product, slated to enter beta testing this week, to the shipment stage.

Furthermore, the company’s latest venture windfall is expected to carry Zambeel through to profitability in 2003, said Darren Thomas, president and chief executive at Zambeel.

“Obviously, fund-raising conditions are tougher, but it is clear that investors are willing to invest in companies that are meeting the customers’ needs,” he said.

To ensure that Zambeel remains on top of its spending habits, it has taken a pencil to its plan and made some changes because “that is the wise thing to do right now,” Thomas said.

However, Zambeel has no plans to cut any expenses that would cost the company its leadership position in the highly competitive data storage space, he added.

The company claims its solution can lower the costs associated with managing the growing amount of data businesses have to deal with. The product can supposedly be used by any company, from a government agency to an Internet site.

“Zambeel’s approach is a manageable system that is highly automated. It has a simple appearance no matter how large the companies’ needs get. With other systems, the more storage needed, the more unmanageable the system gets,” Thomas said.

The company may not want to err too far on the conservative side, however, as many of it competitors have also recently received funding. Panasas Inc. secured $25.4 million from venture capitalists last month, and YottaYotta also picked up $26 million.

Zambeel also faces off against rivals such as Sunnyvale, Calif. based Network Appliance Inc., Sun Microsystems Inc., Left Hand Networks Inc. of Boulder, Colo., and 3ParData Inc. of Fremont.

Regardless of the competition, when Zambeel’s profits start flowing, it will look to reevaluate its position and then determine its next move.

“What will happen with the economy is not clear to anyone but, in 2002, we will decide what we need and maybe do another round. Our business plan really depends on the economy and the opportunities that are present at the time,” Thomas said.

Whatever the decision, Thomas said he is confident that Zambeel’s investors are behind it.

Kleiner Perkins General Partner Vinod Khosla agreed. “Zambeel’s approach and strong management team made this round an easy decision [for us],” he said.

Danielle Fugazy can be contacted at Danielle.Fugazy@tfn.com

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