SAN Valley's Secret Sale

Fibre Channel over IP (FCIP) gateway maker SAN Valley Systems LLC was quietly sold to Silicon Valley mogul Carl Berg at the end of March 2003, Byte and Switch has learned.

SAN Valley executives declined to comment on the financial details of the deal. We are no longer SAN Valley Inc. -- we’re just SAN Valley,” says Sandy Helton, the company’s founder, president, and CEO. “We no longer have a board of directors or VCs chasing us and telling us what to do.”

And that’s a good thing, according to Helton. As SAN Valley failed to secure an anticipated funding round last October, he says, the company’s VCs started threatening to force it into bankruptcy (see SAN Valley Slips Into Ditch). At the time, the startup slashed its staff down to 15, and a former employee told Byte and Switch that it didn't have more than two to three weeks worth of cash left.

Then, in February of this year, Emulex Corp. (NYSE: ELX) called off its deal to acquire SAN Valley at the last minute, seemingly exhausting the startup's last hope of survival (see Emulex Jilts SAN Valley and SAN Startups on the Block).

SAN Valley, which Helton founded in 1999, raised $40 million in total from Agilent Ventures, Cisco Systems Inc. (Nasdaq: CSCO), Innovacom, Moore Capital Management Inc., UpStart Capital, and Vertex Management Inc. But it never even came close to profitability, despite a respectable list of customers and a reseller deal with industry giant Hewlett-Packard Co. (NYSE: HPQ).