Fusion-io Inc., which has developed a next-generation enterprise storage device, announced Tuesday, April 7, a $47.5 million Series B round led by new investor Lightspeed Venture Partners.
The funding brought back investors from the startup's $19 million Series A round, which closed a little more than a year ago. They include New Enterprise Associates, Dell Inc.'s venture arm Dell Ventures and Sumitomo Ventures. Fusion-io also said Lightspeed managing director Chris Schaepe and the company's chief marketing officer Rick White have joined its board.
Fusion-io founder and chief technology officer David Flynn said other strategic investors were involved in the round, but he declined to identify them.
The Salt Lake City-based company, which was founded in 2006, has developed a device called the ioDrive that plugs into a server slot using PCI Express interconnect technology and employs NAND flash memory — the same kind used in MP3 players and, increasingly, cell phones.
The technology is small, fast, simple to install and gaining acceptance among major server and storage companies, including Hewlett-Packard Co., which last month inked an original equipment manufacturer agreement with Fusion-io to use its storage technology in HP blade servers.
The latest funding round represented an increase in valuation for Fusion-io and was oversubscribed, Flynn said. The size of the investment and the fact that it followed the first round so closely stemmed not only from the high cost of developing storage componentry, but also from the speed with which the market for solid-state enterprise storage is expanding, he said.
"The market forces that are driving the adoption of this technology are accelerating; there's going to be a land grab," he said. "We have a leadership position now, and we want to capitalize on it by expanding in the market. It seemed like a good risk to take."
Other companies are attempting to emulate Fusion-io's take on enterprise storage, Flynn added. Texas Memory Systems Inc., a 31-year-old Houston memory chipmaker, recently changed its business model to offer plug-in, Flash-based drives, Flynn said. However, he argued that most competitors are bundling many traditional components onto one plug-in card, and therefore can't achieve the speed or simplicity of Fusion-io's product.
"They are missing the main point of getting rid of the disk controller and other infrastructure," Flynn said. "That requires rethinking the technology from start to end."
Along with announcing new backing, the company said that it has tapped David Bradford to be its new CEO, replacing Donald Basile after just a year in that position. Basile was brought on as Fusion-io's founding chairman and subsequently tapped to take the reins of the company during its rapid expansion between its first and second venture rounds, Flynn said. Bradford was hired to "drive us through a new stage," he said.
"Different stages of expansion require different personalities and skill sets," Flynn said.
Bradford most recently has been working in an advisory role with a variety of startups, but from 1985 through 2000 he was senior vice president and general counsel at Novell Inc. During his last three years at the Waltham, Mass.-based enterprise software company, he reported to then-CEO Eric Schmidt, who is now at the helm of Google Inc. of Mountain View, Calif.
Bradford played a critical role in hiring Apple Inc. co-founder Steve Wozniak as Fusion-io's chief scientist in February, Flynn said.
For legal counsel on the round, Fusion-io retained O'Melveny & Meyers LLP's Warren Lazarow.
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