Welcome back to Baby Breakerdom! This week's quest to uncover budding Rule Breakers finds cash in digital closets and hungry venture funds.
First up this week is Gear6, which claims to address what it calls the server-storage performance gap. The idea, it seems, is that as disk drives for storing data reach higher capacities, it becomes harder to retrieve information quickly. The thesis makes sense to me. No matter how fast a server operates, it's disk drives that determine data access speed. A large enough "gap" between the disk and the processor could create lots of digital idling, which, in turn, would create heat. And that's, um, bad.
Enter venture investors. InterWest Partners and U.S. Venture Partners together this week invested $10 million in a series C round of financing. Gear6 says the funds will be used to help it market its products to data centers, which traditionally suffer from heat and other performance problems that arise from increasing the size and complexity of the networks they manage.
Next up is New Enterprise Associates. With investments in nearly 400 public firms, including leaders such as Juniper Networks (Nasdaq: JNPR ) , you'd think NEA and others like it wouldn't need to be thinking creatively when it comes to future investments. You'd think. It turns out the reality is very different; VentureWire reports that NEA's newest fund is its largest, with $2.5 billion raised.
Typically, such nosebleed funds are the domain of buyout firms. Not anymore. NEA is one of several VC firms looking to larger deals to generate multibagger returns. For example, Oak Investment Partners recently closed a $2 billion fund, and the investing arms of Intel (Nasdaq: INTC ) and Motorola (NYSE: MOT ) last week combined to provide $900 million in financing to WiMax hopefulClearwire.
Why are the rules being broken now? NEA partner Peter Barris told VentureWire that he expects to see larger investments as tech and health-care firms look to buyouts or major initiatives to fund growth. Such deals could require $100 million or more, and, in lieu of big VC investments, require a trip to the public markets or a potentially draconian deal with a pure buyout firm. Until now, that is. NEA and its ilk seem poised to fill the gap.
And that's all for now. See you back here next Friday when we continue the quest to find the next ultimate growth stock.
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Fool contributorTim Beyershas never raised $2.5 billion in capital. If only. Tim didn't own shares of any of the companies mentioned in this story at the time of publication. You can find out what other stocks he owns by checking Tim's Foolprofile. Intel is a Motley Fool Inside Value recommendation. The Motley Fool has an ironcladdisclosure policy.