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Intel and VC friends kick cash to IT startups

Windfall for Adaptive Computing, Joyent

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Intel is spreading some of its cash around to help prop up a number of companies that will help it take on its foes in the data center and on the desktop. The company's Intel Capital venture funding unit today announced that it has filled the coffers of four small companies hoping to make a big impact in IT with over $30m.

Most of that money seems to have gone to two players – Adaptive Computing and Joyent – who could soon be acquisition targets themselves. That would make Intel's some fast cash, considering the stupidly high premiums that some IT vendors are willing to pay to flesh out their wares in the data center for the Cloud Wars.

Back in February, you will recall, Paul Otellini was in Washington badmouthing government policies relating to the education of techies and investment in the tech sector (or the lack thereof). At the time, Otellini announced a little stimulus package of his own, called the Invest in America Alliance, which paired Intel Capital and 24 of its VC peers together to make some $3.5bn in investments in digital and energy technology startups over the next two years.

Intel kicked $200m into the fund, and drew down more than $30m of that today. It is unclear how much other money Intel's partners kicked into the four companies. The four companies include Adaptive Computing, which is behind the Moab cluster management tools that have been extended out to control cloudy infrastructure; Joyent, which has created a software abstraction layer for server clusters to create a platform-as-a-service cloud; Ciranova, which sells software tools for creating mixed analog-digital circuits; and Nexant, a maker of software for controlling power grids and other energy production utilities.

Neither Ciranova nor Nexant revealed how much funding they received from Intel and its friends, but Adaptive Computing said it brought in $14m in its first round of venture funding, which Joyent said it received $15m in its third round.

Michael Jackson, president and chief operating officer at Adaptive Computing, told El Reg that his company had grown organically for the past nine years since it was founded - and had done so while bringing profits down to the bottom line all nine years. That is quite a feat for any software startup. The company now has 70 people, but Jackson said that the new cloudy extensions for the Moab tool have created such demand at Adaptive Computing that the company needed more feet on the street and more integration techies than it could fund organically.

"It feels like an inflection point in the market, and we really needed to resources not to miss this opportunity," Jackson said. And so it went looking for VC cashish, and landed it pretty fast, too. Intel Capital was joined by Tudor Ventures and EPIC Ventures in its first round of funding. By early next year, Adaptive Computing expects to have more than 100 employees, thanks in part to the funding.

Intel Capital was joined by Greycroft Partners and Liberty Global in the $15m Series C kitty that was handed to Joyent. Intel invested $8.5m in Joyent in its second round last November, and partner Dell is rumored to have a stake in Joyent as well. The company has not revealed its total funding to date. Joyent doesn't just make software for creating IaaS and PaaS clouds, but also runs five data centers around the globe and is used by a number of big service providers as well. Business networking site LinkedIn is a big customer. The company does not reveal its revenues, but says that they have more than doubled over 2009 levels.

If Dell had any brains money, it would have bought both of these companies by now. For all we know, HP, Dell, and any number of other companies have tried to do just that, and the companies are just trying to hold out for a while longer to sell at a very big premium. Or, heaven forbid, maybe their owners like running their own companies and want nothing to do with this big sloppy IT behemoths. ®

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