Contact: Brenon Daly, Rachel Chalmers
Several sources, both from industry and financial circles, have indicated that server virtualization startup Virtual Iron Software is nearing a deal to sell to a strategic buyer. The name at the top of the list? Oracle, which has a Xen-based hypervisor (OVM), but lacks management tools. Virtual Iron would bring Xen management.
Another name that has surfaced is Novell. A year ago, the company handed over $205m for PlateSpin, which was its largest virtualization acquisition and one that valued eight-year-old PlateSpin at roughly 10 times its revenue. Virtual Iron would fit well with Novell’s virtualization efforts as well as with its open source leanings (Virtual Iron is based on Xen).
Sometimes viewed as a ‘down-market VMware,’ Virtual Iron sells primarily to SMEs through its channel. The Lowell, Massachusetts-based company has raised some $65m in funding since its founding in 2003. Backers include Highland Capital Partners, Matrix Partners, Goldman Sachs Group and strategic investors Intel Capital and SAP Ventures.
We understand that Virtual Iron had somewhat ‘frothy’ expectations after Citrix paid a half-billion dollars for XenSource in mid-2007. However, sources say Virtual Iron won’t get anywhere near the valuation of XenSource. In fact, most folks have doubts that the company will even sell for the amount of VC dollars that went into it.