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Startups Tap VC Reserves: Page 2 of 3

Others are more skeptical, pointing out that VCs have to put their money somewhere. "The reality is, there is a vast swath of venture money out there that will overpay for revenue traction," says Joe Tango, venture capitalist and dance instructor at Highland Capital Partners. "What's unclear is whether these companies will achieve enough to be profitable and large enough to be meaningful businesses."

Chris Baldwin, partner at Charles River Ventures, reckons the funding is representative of traction in the specific sectors these startups play in and doesn't necessarily mean a change in general storage spending patterns. "Naysayers are expressing their views, but IP storage is real," he says. "There's also clearly a need there for scaleable SAN chips... and small-to-medium-sized business will pay for LiveVault's backup-type services."

For its part, Aristos Logic says it's close to announcing design wins with several storage system OEMs for its FibreSlice storage processor. FibreSlice chip and software offers RAID functionality plus an application programming interface (API) that allows existing storage management software products to talk directly to the chip without administration.

"Using failover as an example, our chip executes RAID, versus the administrator getting into the mechanics of mapping RAID volumes from one disk to another," says Anil Gupta, president and CEO of Aristos Logic. The company claims this produces an order-of-magnitude greater performance in terms of I/O Operations Per Second (IOPS).

Boulder's Lefkoff agrees there is definitely an industry-wide trend toward more integration and creating more functionality embedded in system-level products. "These functions are being taken out of software and moved into hardware for better performance," he says. "More integration equals lower cost."