Startups zero in on Microsoft backup, storage

Startups zero in on Microsoft backup, storage

A new breed of companies is focused on protecting Microsoft servers running at small and midsize businesses.

The companies, such as Idera, Meridio and XOsoft, specialize in backing up, archiving or otherwise protecting systems running programs such as Exchange, SQL Server or SharePoint that are increasingly critical for SMBs.

"Microsoft is low-hanging fruit, because people in the past never considered the desktop or the e-mail server (as mission-critical," says Sonja Hoel, managing director for Menlo Ventures, whose investments include Asempra, a start-up that makes business-continuity software for Microsoft Exchange, Windows file servers and SQL database applications. "Typically, businesses have not had a very good backup and recovery solution for that."

In February, Asempra raised US$20 million from Menlo Ventures, Polaris Venture Partners and US Venture Partners to bring its total funding to US$29 million. Teneros, which makes business-continuity appliances for Exchange, announced last month that it had received an additional US$20 million from Goldman Sachs, New Enterprise Associates, Sevin Rosen Fund and Star Ventures, bringing its total to $44.5 million.

"The area that got us interested was how to provide enterprise-level services to small and midsize businesses," says Simon Clark, a partner with Fidelity Ventures in London.

"Big enterprises get all of the services and all of the quality," Clark says. "Small and midsize businesses don't - they don't have a lot of IT staff like big enterprises who can tweak and tune technologies to make them work. Further, they don't have the budget to buy that infrastructure."

Fidelity Ventures has invested US$10 million in server-recovery specialist Neverfail Group, which offers its software for Exchange, SQL Server, SharePoint and Windows file and print servers, among other applications.

Sumant Mandel, managing director for Clearstone Ventures, says Exchange wasn't built to withstand the loads and reliability requirements placed on it today, leaving the door open for ventures that address such shortcomings. "If there is a technology that makes Exchange more reliable and robust, it needs to be done," says Mandel, whose firm joined Jafco Ventures, August Capital and Lighthouse Capital Partners in putting US$17.5 million into Mimosa Systems, which provides software to back up and archive e-mail on Exchange servers.

Such start-ups are not alone in attacking the Microsoft protection market. EMC has made efforts in this area, recently announcing its Insignia group of products and last year introducing its Solution Suite for Microsoft Exchange and SQL Server. This year, it announced the buyout of Interlink Group and Internosis, both of which focus on Microsoft application integration and deployment.

"The Windows-specific data protection and server recovery market is going up-market [into the data center] very fast," says William Hurley, senior analyst for the Data Mobility Group.

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