VCs Pump Cash Into Solid-state Storage

Data center managers aren’t the only ones suddenly charmed by solid-state drives (SSDs) for computing storage needs. A growing number of VCs are also warming to the green, high-performance potential of the storage technology (GigaOM Pro Research, subscription required).

With no moving parts to speak of, a solid-state drive is far and away more energy efficient than its disk-based counterpart, the hard drive. Generally speaking, it also delivers better performance, resulting in a combination that’s proving increasingly attractive to data center operators. That edge helps IT shops overlook storage capacities that fall short of hard drives and helps justify the lofty price tags attached to SSD-based storage systems. It’s also an edge that’s attracting VC investment.

The latest news comes from XtremIO. This week the company announced that it had scored a Series A funding of an undisclosed amount from two Israeli venture firms, Giza and JVP. Heading up this early-stage storage player is CEO Rokach Ehud, with over a decade of experience in the telecommunications industry, including a stint as the CEO of Corrigent Systems, a carrier Ethernet switching provider. Details are scarce (the companies web site says it’s in stealth), but the company’s announcement makes clear that XtremIO has enterprise IT ambitions for its storage systems.

XtremIO is just the latest in what’s been a string of SSD-related funding activity. Also this week, Cupertino, Calif.-based SandForce, a maker of SSD control chips that boost SSD performance, scored $21 million in funding from TransLink Capital, UMC Capital, Darwin Ventures and others. Founded in 2006, SandForce is banking on SSD controllers that can coax 30,000 IOPS (which stands for input, output operations per second, and is a benchmark for storage — 30,000 is high) out of NAND flash memory and can reach both read and write speeds of 250 MB per second. Typically with SSDs, data is fetched (read) faster than it can be stored (write).

And earlier this month, Santa Clara, Calif.-based Link_A_Media Devices (yes, underscores and all), a system-on-a-chip producer for storage devices, secured $18 million in Series C funding led by Lightspeed Venture Partners. Chris Schaepe, managing director of Lightspeed, singled out one of the technologies that makes the company an attractive investment, specifically “error correction technologies which can now be applied to flash memory.”

Last month SSD chip and drive maker Samsung poured millions into Fusion-io, a company that’s no stranger to soaking up funds despite operating in one of the tightest VC environments in recent history. Prior to Samsung’s investment, Fusion-io cashed a $47.5 million check from Lightspeed and Dell Ventures, among others. Fusion-io manufactures PCI Express-based storage modules that slot into standard servers. The company counts MySpace and among its high-profile customers.

If you’ve noticed Lightspeed pop up more than once in these SSD fundings, there’s a reason. The VC firm seems to be making a concerted effort to back SSD startups. Apart from Fusion-io and Link_A_Media, Lightspeed also backs Pilant Technology, a maker of enterprise-grade SSDs, and Unity Semiconductor, a startup working on high-density flash memory storage chips.