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VCs pour $80m into Violin, hope for shower of gold later

Flashy upstart poised for float

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Venture capitalists have been fighting to get a slice of hot flash startup Violin Memory, which announced a $50m D-round of funding in March. That turned into an $80m injection because GE Asset Management Fund and other VCs wanted a piece of the action. Why this VC frenzy?

At the time of the D-round we were told that Violin was valued at $800m. Does the extra $30 million bunged Violin's way imply the upstart is actually worth more? We don't know. Any VCs that do have a chunk of Violin stand to get a huge pay-off if the biz's IPO is successful.

Violin told us: "GE Asset Management Fund … is a very strategic fund for us. GE was not responsible for all of the [extra funding] but they are significant – both investment and the doors they open for us."

Other prominent investors include SAP, Juniper, and Toshiba as well as other assorted VC firms.

Violin CEO Don Basile is now talking about an IPO. All Things Digital report four banks will be involved: JP Morgan, Deutsche Bank, Bank of America Merrill-Lynch and Barclays. Basile said the offering should formally happen before the end of October, at the end of a 180-day period during which it will go public.

There will also be an investors' roadshow in the summer. I'm told though that: "An S1 has not been filed yet."

We're told that Violin has signed up eight channel partners in Europe, with another eight more likely to be announced with five weeks. There are some 40 employees in Europe, 20 in the UK where there are offices in Camberley and now the centre of London. Basile said Violin will probably triple in size in the next 12months, meaning it should have 120 people in Europe by then.

He said the main storage incumbent, EMC, was falling back on the "buy from a trusted advisor" line because it had no directly equivalent product to Violin's memory array, and that, with service on Violin products available from IBM, Violin was also a trustworthy supplier as well as one that could deliver data to applications faster by orders of magnitude and cheaper than EMC's products.

Commenting on competitor Texas Memory Systems and its search for a buyer or investing partner he asked: "Has it got a bank?" judging the answer to be no and consigning TMS into an implied "also ran" category.

There's a crack that the size of the dog in a fight to win doesn't matter so much as the size of the fight in the dog. Basile wants Violin to have both advantages: to fight harder and more determinedly than any other flash storage array supplier, and to be the biggest flash startup dog in the fight judging by invested capital, prominent partners, customers and technology differentiation. At the moment and judging on those overall criteria, there's no other flash startup even in the same ballpark. ®

The smart choice: opportunity from uncertainty

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