Cloud startup Coraid raises $25 million

SAN FRANCISCO, US - Fresh off of its sale of storage provider 3PAR to Hewlett-Packard, Menlo Ventures last week backed Coraid Inc, a cloud-based storage solutions provider.

The Redwood City, California-based company raised a $25 million Series B investment led by Menlo Ventures with participation from Allegis Capital and Azure Capital Partners. Coraid, which develops Ethernet-based storage products, previously raised a $10 million Series A round from Azure and Allegis in late 2009.

As part of the deal, John Jarve, managing director of Menlo Ventures, joined the board of Coraid, which already includes Lara Druyan, a general partner with Allegis, and Paul Weinstein, a general partner with Azure.

Menlo was interested in taking part in Coraid's Series A round last year, but it was still an investor in 3PAR at the time and "we tend not to back companies that are competitive to others in our portfolio," Jarve said.

However, since that first round, Menlo Ventures had a hugely successful exit when HP won the bidding war for 3PAR, agreeing to pay about $2.4 billion for the publicly traded company, or about $33 a share. Menlo Ventures was the largest stockholder in 3PAR, holding 15 percent of the storage solutions provider, or about 9.4 million shares.

"The enterprise data storage sector has been big and successful, and we think Coraid, which already has hundreds of customer accounts, is ready to join the likes of 3PAR, Data Domain, EqualLogix and Spinnaker Networks to be equally as big," Jarve said.