Arsenal Loads $23M

Arsenal Digital Solutions Worldwide Inc. has scored $23 million
in third-round funding, giving the company high confidence it can survive as a storage service provider (SSP), though others have bailed on the model.

Geoff Sinn, Arsenals CEO, sees the funding as validation of its
approach, despite a slew of other SSPs that have fled the market or otherwise rejiggered their
operations (see StorageAlliance Steps on Gas).

“We stuck to our business model, and at times we got beat up for it, but now people are saying, ‘Hey, that’s great foresight, guys,’ ” Sinn says.

With the new funding, Arsenal’s expansion will be cautious. Currently at a
headcount of 65, Arsenal plans to hire fewer than a dozen additional staffers in
the next few months. Sinn expects the company to be cash-flow positive around
the beginning of the second quarter of 2002 and profitable sometime later in the
year.

But Sinn says he won’t be changing Arsenal’s basic strategy, which is to be the
sole provider of storage services to its two distribution partners, AT&T Corp. (NYSE: T) and Verio Inc.. “One
of our biggest assets is that we’ve got two very strong and stable partners,” he
says.