Valhalla Partners
News from Valhalla December, 2008 - Volume 4

From the Partnership

This issue of our newsletter comes at a very difficult time for the global economy, for many in and around the private-equity business, and especially for startup companies and their customers.

We are fortunate in having been able to conclude an exit for one of our companies, LeftHand Networks, who was purchased by Hewlett-Packard for $360 million cash in a transcation which closed this November. In this newsletter, we offer some analysis of why the company was well-positioned for a sale and, more generally, what blend of prudence and seizing opportunities is important in a downturn.

As always, please send your thoughts and comments to

Partners' Viewpoint:
Gene Riechers on company-building in a challenging environment

We are very pleased with the sale of LeftHand to long-time partner HP, and proud of the hard work Bill Chambers and his team have put in building the company.  LeftHand has a revolutionary product which has made networked storage easier for thousands of customers, and we hope to extend the product’s reach as part of HP to hundreds of thousands of customers.

LeftHand’s story exemplifies a lot of our thinking in founding Valhalla Partners six years ago.  We wanted a firm that would pay as much attention to “nurture” – to building our companies – as to “nature” – picking the best companies to build.  We wanted a firm where our experience as company-builders and operators who understood what it was like to build a business from scratch would be helpful to our entrepreneurs, and where we would have fewer, carefully-chosen board seats in order to be more helpful.

LeftHand was “bird-dogged” for some years by one of our General Partners, Charles Curran, who got us to take a stake in a non-local company because they were a great team doing great things.  We were fortunate to be able to help the company with some important strategic decisions that led to a market footprint and product set that was a “must-have” for HP, even in the most difficult of macroeconomic circumstances.

We bet on falling server costs driving storage away from custom hardware as part of a larger evolution toward commodity hardware, and were pleased that an unanticipated benefit of our software-enabled storage was that it allowed the company to ride the wave of virtualized server environments with a simple and easy-to-deploy networked storage solution.

Valhalla CEOs: Bill Chambers

Position: CEO of LeftHand Networks, a manufacturer of iSCSI-based storage solutions.

How did you initially get involved with LeftHand?  Where did the founding vision of the company come from?

I was part of the founding team. John Spiers, our technology founder, and I had a vision of simplifying storage and storage management. I actually met John trying to recruit him to a software services company I was running. During his interview, John told me what was essentially the idea for LeftHand: ride the same wave in storage that had just occurred in server technology, a wave of hardware commodization and software that could take advantage of inexpensive scale-out hardware. It was a very new idea for the storage business at the time.

We’ve heard a number of stories about the LeftHand name.  Can all now be told?  What does it mean?

It's true that I'm left-handed, but that has nothing to do with the name! When we started, everyone was working on their own out of their respective homes all night. We would meet at 5 pm every day at the LeftHand Brewery to sync up, hand out assignments, and so forth. It was the initial conference room for the company.

Obviously the HP partnership has meant a lot to LeftHand.  How did you get started with HP?  How did you build the partnership?

We've had a delicate balancing act with HP, in the sense that the server side of HP got what we were trying to do and loved us because we used standard server components to build a storage network.  The HP storage business, on the other hand, thought of us as competition, and in fact we did compete with them on some business, which made growing and fostering a partnership very hard.  But HP had a shift where they began to recognize the importance of our solution to the mid-market, and because we had never given up trying to work with them and cultivate champions within the HP organization, they eventually began to embrace a partnership with us, after which things developed rapidly.

What will the partnership with HP look like going forward?  What do you see as the challenges of continuing to build the LeftHand business from within HP?

The partnership is very exciting. We have helped to pioneer a new category of storage, in some ways the fastest-growing category, and now we have a global platform to grow the business.  HP has embraced the project whole-heartedly and they plan to turn on worldwide distribution immediately.

What’s the future of iSCSI and Ethernet-based storage networking?  What will some of the “next big things” be?

Ethernet-based storage, and iSCSI in particular, will continue to grow. It will gain leadership over FC (Fibre Channel-based storage) at some point.  FCoE (Fibre Channel-over-Ethernet, a rival protocol) is "too little/too late." Over time, especially with the deployment of 10 gigabit Ethernet, there will be one infrastructure for both compute and storage.

What advice would you give to entrepreneurs starting out now?

Don't be discouraged by the economic environment, all the doom and gloom.  Now is the best time to be starting an innovative and disruptive business, because many of your incumbent larger companies will be scaling back innovation plans. Hard times give an opportunity for a startup to get well out in front.

It won't be easy. The next two or three years are going to be tough, with all kinds of secondary tremors.

We're lucky here. HP is very well positioned -- their depth of portfolio, global reach. They are very smart to merge with companies and continue to grow during a tough environment. Investing through the downturn is the right thing to do.

Seed financing: Greg McNiff, Valhalla Partners Finance

While seed financing has been around for decades, it has mainly been the province of angel investors.  Recently, however, a number of venture-capital firms have announced their intention to step up their pace of seed investment or even to set up formal seed investing programs.

A VC seed investment can offer an entrepreneur several advantages over its angel-based cousin.

A seed investment from a venture capital firm can offer the entrepreneur a better opportunity to receive industry-level expertise and valuable contacts in real time.  Having an investor who sits on the boards of several other technology companies can be a significant benefit, especially crucial in the technology sector where the competitive landscape can change rapidly and therefore requires constant monitoring. 

Another advantage to receiving seed financing from one VC firm means only having to serve one master compared to a board potentially composed of several angels, each of whom may want frequent status reports or prefer contradictory strategic initiatives.  As the cost of running a start-up becomes cheaper, time and good advice become scarce resources from the entrepreneur’s perspective.  A good VC partner gives an entrepreneur the opportunity to optimize both.

VCs are attracted to seed financing because it allows us to get a first look at an idea or market and therefore offers a competitive advantage in terms of deal flow.  Should the seed company prove a success, a seed-stage VC investor has the option to participate in the next round of financing. 

Valhalla Partners has made several seed stage investments in the past 12 months and expects to complete more such transactions in the future.  In our own seed deals, we try to partner with angel investors with industry expertise from past operating roles, who can serve as excellent partners capable of providing a different perspective which complements our own knowledge and skills. 

Portfolio News


LeftHand Networks

LeftHand logoLeftHand Networks, Inc., Boulder, CO

On November 14, 2008, the sale of LeftHand Networks to Hewlett-Packard closed. Consistent with the terms of the definitive agreement dated September 30, 2008, HP paid $360M for the storage solutions leader.

"All of us at Valhalla are proud of our affiliation with CEO Bill Chambers and the entire team at LeftHand Networks," said Gene Riechers, General Partner of Valhalla Partners and a LeftHand Networks board member. "They built a great company that delivers real value to their customers. LeftHand's pioneering work in both iSCSI SAN technology and virtualized storage solutions created a leadership position for the company."

Valhalla Partners was the second-largest shareholder in LeftHand Networks and had worked with management across many facets of the business during the period of the Company's explosive growth.

New Investments


B-Side logoB-Side Entertainment, Inc., Austin, TX

Valhalla invested $3.3 million of a $4.7 Series B round in B-Side Entertainment with existing investors. B-Side is an entertainment technology company that captures audience opinions to discover great films and deliver them to viewers around the world. B-Side discovers files through audience feedback from its community of hundreds of film festival websites representing the world's largest film focus group. B-Side delivers these films globally through and partners with distributors including Netflix, and the Independent Film Channel.

Follow-on Investments


Geomagic logoGeomagic, Inc., Research Triangle Park, NC

Valhalla invested $8.0 million in the Series C financing for Geomagic.  Valhalla joins Franklin Street Partners, who provided the Series A and B financing, as an investor.

Geomagic develops digital shape sampling and processing (DSSP) software.  Their software recreates fully functional intelligent 3D CAD models from scanned physical objects for the purpose of design analysis and rapid prototyping.  The applications are in industries such as aerospace, automotive, manufacturing and dental.


VisualCV logoVisualCV, Inc., Reston, VA

Valhalla invested $3.1 million of a $5.2 million Series B round in VisualCV.  Existing investors, including Heidrick and Struggles, provided the remaining financing. is a new approach to creating and sharing resumes over the Internet that takes advantage of Web 2.0 capabilities such as video, pictures, and social networking.   The company’s goal is to build a platform that becomes a place for individuals’ long-term career management, a source for companies to identify strong candidates and a service for recruiting firms to evolve into talent agents. 


Dataupia logoDataupia, Inc., Cambridge, MA

Valhalla participated with existing investors and invested $2.7 million in a $10.0 million extension of the Series B round.

Dataupia’s Satori Server “offers a non-disruptive, continuously scalable, and highly cost-effective means to expand data management capabilities across a broad range of mixed workload environments.”  The appliance is designed to fit transparently into virtually any database environment and has the potential to reduce the total cost of ownership for such systems.


Rivermine logoRivermine Software, Inc., Fairfax, VA

Valhalla provided $0.3 million of a $1.0 million convertible note along with the existing investors, who provided the remaining financing.

Rivermine provides Telecom Expense Management (TEM) software and services that assist large companies and government agencies in managing their telecommunications assets and reduce the cost of operating their voice and data networks through automation.

Q & A

We want, as much as possible, to open up our newsletter to questions, opinions, and suggestions from our readers. The great magic of our newest medium for communication is its interactivity.

Please click here to submit feedback. We will undertake to respond to every submission, and to print those of general interest in this section. The partnership is happy to address topics such as hot technologies, exit strategies, or due diligence. We look forward to hearing from you.

The Valhalla Team

Investment Team:

Art Marks
General Partner
Gene Riechers
General Partner
Hooks Johnston
General Partner
Scott Frederick
General Partner
Charles Curran
General Partner
Kiran Hebbar
Saj Cherian
Kevin Greene

Finance Team:

Harry D'Andrea
General Partner
Danielle Brogan
Gregory McNiff
Financial Analyst

Research Team:

Dan Gordon
Director of Research
Leon Zilber
Research Analyst

Administrative Assistants:

Claudia Bartz
Executive Assistant,
Office Manager
Sara Endicott
Executive Assistant

We want, as much as we can, to open up our newsletter to questions, opinions, and suggestions from our readers. The great magic of our newest medium for communication is its interactivity.

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