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In January, we asked if cloud storage start-up Cirtas would be a rainmaker. Now its very survival is in doubt as funding is withdrawn and 21 staff are dismissed.

The news came from a senior engineer at Cirtas, Dave Graham, through his Twitter feed. "Well, the waiting is over. as of 3pm TODAY, i, along with 20 others are no longer employed by Cirtas Systems," he said on Monday.

Business results were not good enough and two backing venture capitalists, Bessemer Venture Partners and Shasta Ventures, reportedly pulled funding, three-and-a-half months after an January funding round that brought in $22.5m, taking total Cirtas funding to $32.5m.

The business apparently depends upon enterprise customers having longish proof of concept trials and these delay sales. It appears that cloud storage is no instant goldmine, and the VCS who piled in so enthusiastically in mid-winter are now walking away because spring isn't happening fast enough.

Suppliers like Nirvanix who sell cloud storage to small and medium businesses are not facing the same problems. Other cloud storage gateway product companies like Nasuni and StorSimple will have their business performance examined closely to see if they face similar problems

Earlier this month, Iron Mountain withdrew from most of its cloud storage operations, ditched its CEO, and is considering selling its digital storage business as it reaches an accommodation with disgruntled investors.

What's next at Cirtas? It's retreating from the market and regrouping. The sacking of engineering staff suggests that further development work is being stopped, and that a sale of assets might be being considered by CEO Gary Messiana, appointed in January. As he was a Bessemer man, his CEO role may be under question and co-founder Dan Decasper, whom he replaced, may find himself back in the hot seat. ®

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