Friday, October 31, 2008

Dataupia draws $10M in Series B-1 funding

By Galen Moore

Fast-growing Cambridge data warehouse startup Dataupia Corp. has secured $10 million in a Series B-1 round of venture capital investing, according to a regulatory filing.

The cash infusion brings Dataupia’s total venture backing to $41 million. The company, headed by Netezza Corp. founder Foster Hinshaw, launched in June 2006 with a $15 million Series A round from Waltham-based Polaris Venture Partners and Virginia-based Valhalla Partners. Cambridge-based Fairhaven Capital joined the company’s $16 million Series B round in November 2007.

In spite of increasingly grim forecasts in the enterprise software market, Dataupia president and CEO Hinshaw said he expects the company will do well in a downturn. As companies look for ways to stay competitive in tightening markets, there is a growing demand for enterprise solutions that provide an edge for short money, Hinshaw said.

“We can now go in against the big guys with a straight face,” he said. “(Potential customers) have enough pain that they’re more cautious, but they’re more receptive to new technology.”

A Citigroup analyst yesterday cut price targets and estimates on Oracle Corp. (Nasdaq: ORCL), which is widely seen as a business software bellwether. Dataupia’s data warehousing appliance, the Satori Server, is designed to enable an Oracle, Microsoft SQL Server or IBM DB2 server to easily deal in hundreds of terabytes worth of data.

Fairhaven principal Paul Ciriello said Dataupia fits the venture capital firm’s portfolio profile of companies that deliver high levels of service at low cost.

Potential enterprise software clients are cost-focused, he said. “Whatever they want to buy they want to buy at a lower cost. What Dataupia does is it allows you to manage high volumes of data at low cost.”

Satori is a low-cost product because it passes “the TiVo test,” Hinshaw said, referring to the digital video recorder. TiVo is designed for use in the home, without technical assistance. Similarly, Dataupia’s Satori Server does not require a company to increase its IT operating budget, he said.

Hinshaw said he expects to use the new funding “to expand our customer base and add functionality to our product.” He declined to elaborate on what future improvements to Satori might look like.

According to the company’s filing with the U.S. Securities and Exchange Commission, $1 million of the new funds will go to pay down debt. The remaining $9 million is listed as working capital.