Network Storage Co. Snags Sprout Group For Funding

by Vipal Monga

Corporate Financing WeekApril 16, 2003

LeftHand Networks, a network storage company based in Boulder, Colo., has brought in the Sprout Group, Credit Suisse First Boston's venture capital arm, as an investor in its series B funding round. The latest funding round totaled $20 million and was led by Sprout, with participation from the company's existing investors, who had provided capital totaling $19 million in 2001.

The company will use the money to take itself to the break-even point by 2004, said Bill Chambers, ceo, who noted that the company had been looking to raise $10 million when it started seeking another round of funding but increased the amount because the deal was oversubscribed.

Chambers said the company did not ask for more money because it did not need any more. David Bangs, v.p. of marketing, added that LeftHand did not want to dilute its ownership stake by taking funding it did not need.

LeftHand had informal conversations with Sprout during the 2001 funding round, but approached the company only in recent months to invest, said Wayne Nemeth, a partner at Sprout. He noted that Sprout is hoping for "venture-like" returns from the company, but declined to specify numbers.

Chambers added that, if the company does reach break-even in 2004, it is unlikely, although not out of the question, that it will need another round of funding. Nemeth, noted, however, that the company's investors could provide LeftHand with additional capital if it needs money for acquisitions.

LeftHand's other investors are Boulder Ventures, Garage Technology Ventures, Ironside Ventures, Portage Venture Partners, Sequel Venture Partners, Vista Ventures, Wasatch Venture Fund and William Blair New World Ventures.

Chambers declined to say how much each investor had provided in the latest funding round.