[Posted on April 1, 2008 - 5:35 PM]
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DiggVirtualization software developer ScaleMP Inc. on Tuesday announced that it has raised $8 million in a Series D round of venture capital.
The Herzliya, Israel- and Cupertino, Calif.-based company will use funding to try to boost sales of its high-performance clustered computing technology and expand into lower-end systems for core business applications. ScaleMP turned to insiders Sequoia Capital and Lightspeed Venture Partners, both of Menlo Park, Calif., TL Ventures of Wayne, Pa., and ABS Ventures of Waltham, Mass., for the additional funding. ScaleMP founder and CEO Shai Fultheim, who said the funding will be the company's final private round, noted that the technology maker won an increase in valuation from its Series C round last year and opted not to take the deal to new investors.
"We had a pretty nice subscription for this round, and see it as a measure of strength," Fultheim said. "For these investors, $8 million is not that significant, and keeping it with existing investors can significantly reduce overhead. We were very happy with the terms."
ScaleMP was formed in 2003 with $5 million in seed funding from Sequoia and Lightspeed, when computer virtualization remained a largely undefined concept. The company's approach to high-performance virtualization is fundamentally the opposite of what has come to be called server virtualization in that ScaleMP's architecture allows multiple physical servers to act as one virtual machine. By contrast, server virtualization allows a single server to partition computing resources to act as multiple machines. As a result, the company's technology allows demanding computing functions, such as those used in oil and gas exploration, scientific applications and financial services, to harness the memory and processing power of multiple clustered computers, while operating them on a single management platform.
"When you go into a cluster, the main disadvantage is the cost of management," Fultheim said. "If you aggregate to one virtual machine you have a single point of management, reducing IT costs."
ScaleMP launched its first products 18 months ago, selling embedded technology to server manufacturers including Flextronics International of Singapore and the St. Laurent, Quebec-based VXTech unit of Ciara Technologies Inc., which used it to create computing systems of high-end servers. Coinciding with the funding announcement, the company also said that it is introducing standalone products to allow resellers to create clustered systems for lower end servers and less demanding applications.
Fultheim said the new capital will allow the company to expand sales channels for its new product, as well as to continue developing aggregation products for lower end computing.
Barry Eggers, a general partner with Lightspeed, said ScaleMP's technology has made it a leader in clustered systems for the most demanding computer applications. He also said the opportunity to expand into new markets was attractive enough to existing investors to preclude seeking other offers.
ScaleMP did not use an outside financial adviser in putting the round together and had legal work on the deal from Barry Levenfeld of Yigal Arnon & Co. in Tel Aviv. Investors had legal work from Paul Sieben of O'Melveny & Myers LLP in Menlo Park. -- Clifford Carlsen
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