Virtualization consulting and services firm CRI Technologies Inc. has raised $10 million in a Series A round led by Commonwealth Capital Management LLC and Sigma + Partners. A portion of that money went to acquiring more virtualization expertise through the purchase of Computer Resolutions Inc., a privately held consulting firm that has partnerships with sector darling VMware Inc.

Virtualization allows users to run several applications on a single server and enables more efficient usage of the server's resources. This saves space, energy and money for companies that manage hundreds and thousands of servers. For the financial sector, virtualization has become particularly exciting after EMC Corp. spun out its virtualization subsidiary in an IPO that was valued at $19 billion. A day later, Citrix Systems Inc. said it would acquire open source virtualization startup XenSource Inc. for $500 million.

Valuations like that are noteworthy, but the CRI deal is a little unusual in that it is a services play rather than a product company. Justin Perreault, a general partner with Commonwealth, tells Tech Confidential that a virtualization services company could generate venture returns.

"A huge part of our thesis is the size and duration of the virtualization trend," Perreault says. "In our view it is the umbrella term to allow IT people to re-architect their computing infrastructure. That shift to the new architecture is as profound in our view as all of the big platform shifts in the computer industry were." The platform shifts he's talking about were those like the shift from a mainframe to the mini-PC and the rise of client-server computing.

Whatever the excitement surrounding the sector, Perrault acknowledges that CRI's valuation isn't as exalted as one might think, given the excitement surrounding virtualization these days. "It's priced more along historical norms and rules of thumb for A rounds," said Perrault. —Stacey Higginbotham

See press release from CRI Technologies Inc.
See Aug. 31story from TheDeal.com
See Aug. 15 story from The Deal.com

Tags: vc, venture+capital