Tapeless backup developer Sepaton Inc. recently completed a $6 million add-on round of investment that company officials say is designed to fund the marketing of the Marlborough-based company’s latest software products.
The funding came in July, one month after Sepaton released an upgraded virtual tape library appliance and version 5 of its DeltaStor deduplication software, COO Bob Iacono said.
“We felt we should expand our sales force and marketing activities to make a big push to drive higher revenue volume,” he said.
Sepaton reported the financing as an addition to its $22 million Series E round of funding that closed in April 2007. The latest funding increases total investment in Sepaton to $96.6 million, and $66.5 million since a 2004 recapitalization.
Boston-based HarbourVest Partners LLC led the add-on financing, just as it did during the initial Series E as a new investor, Iacono said.
The July funding was Sepaton’s second consecutive add-on financing. In 2005, it completed a $15 million add-on to a $23.5 million Series D round of funding. The two add-ons were completed to avoid the time-consuming process of reaching terms on entirely new financing rounds, said Iacono, who was also Sepaton’s CFO until last month.
“Sometimes it’s easier to use the existing investment that’s in place,” he said.
In July, Sepaton named former Sonus Networks Inc. chief accounting officer Paul McDermott as its CFO, taking over for Iacono, who previously held both the COO and CFO positions.
Sepaton has attracted 14 investors, according to a July filing with the U.S. Securities and Exchange Commission. They include Israel-based Jerusalem Venture Partners, California-based Menlo Partners and Virginia-based Valhalla Partners.
HarbourVest vice president Ian Lane said Sepaton fits the firm’s investment model, a growth equity company. Also, the growing storage market combined with the quality of its deduplication technology were important factors in the funding, he said.
Seventy-three percent of enterprises surveyed by the Milford-based Enterprise Strategy Group reported in January that they back up data with both tape and disk, analyst Lauren Whitehouse said.
Major players in the virtual tape library (VTL) sector include Framingham-based Diligent Technologies Corp., which was acquired by IBM Corp. (NYSE: IBM) in April; Data Domain Inc. of California; and FalconStor Software of New York.
Sepaton’s VTL technology is sold through Hewlett-Packard Co. (NYSE: HPQ), while FalconStor’s is sold through EMC Corp. (NYSE: EMC), the Hopkinton-based company that Iacono considers Sepaton’s chief competitor.
Sepaton was founded in 2001 as SANgate Systems Inc. When the recap was completed in 2004, company officials changed the name to “no tapes” spelled backward.
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