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Violin Memory plays at $400 million valuation

June 7, 2011: 8:17 AM ET

Violin Memory wants to be the Stradivarius of flash-storage companies, and just raised some big money to help make it happen.

Don Basile doesn't want to get ahead of himself. He's only been running Violin Memory for a couple of years, taking over when the Silicon Valley flash memory company had no revenue and a similar valuation. But he can't quite help himself, particularly as Violin rival Fusion-io -- which Basile used to run -- is planning to go public this week at a valuation in excess of $1 billion.

"We're going to watch the IPO very carefully, particularly to see how Wall Street likes the story," Basile says. "We understand they told Wall Street that they're soon moving to $50 million quarters, which is something we plan to hit by Q4. If the market gives Fusion-IO the type of multiple it's expecting, then we'll probably conclude our own banker selection by late summer."

Violin Memory is part of the burgeoning world of flash memory, which Oracle (ORCL) boss Larry Ellison boosted last December by announcing a SuperCluster system that would include 246 terabytes of flash storage. Violin doesn't do whole systems, but does sell arrays into corporate data centers and has major partnerships with companies like HP (HPQ). It's a fairly similar company to Fusion-IO, without the former's over-reliance on a single large client (Facebook).

Today, Violin is announcing that it has raised $40 million in new VC funding -- just four months after announcing a $35 million funding. The new deal comes at a pre-money valuation of $400 million, and is coupled with up to $100 million in new debt availability. The company isn't identifying its new investors, except to say they are "cross-over public market investors." In other words, the types of big public equity funds that would hold onto stock in an IPO. Return backers include Toshiba and Juniper Networks (JNPR).

Part of Basile's push to take Violin public may be rooted in his former career as a venture capitalist -- and the knowledge that IPO windows can close almost as fast as they can open. "Market conditions are obviously a factor in our decisions," he says, adding that Fusion-IO isn't the only new issuer he'll be watching: "I'm also interested in how Groupon is treated, because it's had such a fast ramp-up. Is it okay to have a short track record, if that track record is strong?"

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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