Data can be a painful chapter in any company’s textbook especially when it comes to storing it. Tons of data are generated everyday and companies find it hard to store it, sometimes as hardware developed to store it can just give away. Stored data, which has been growing at 30 to 50 percent per year earlier, is now reaching levels of 60 to 80 percent each year.

Some industries are experiencing 100 percent data growth. Data is the lifeblood of any organization and critical to the smooth functioning.

VCs had given up on investing in the storage segment as the industry was fragmented and any device that made its debut in the market was just not enough to handle the amount of data being generated. In the two-year period between mid 2001 and mid 2003, VCs invested in more than 200 storage companies and burned their fingers - badly. Most of these companies just downed their shutters.

Cut to the present. Venture capitalists have renewed their interest in this industry as the survivors of the bust period and a crop of new companies have shown promise of containing uncertainties of the storage space. Gary Gretsch, managing director Sigma Venture Partners says, “In terms of new storage investment in 2005 investing had slowed down a bit in 2005.” However Sandeep Aneja, Principal, Outlook Ventures differs. He says, “2005 was a year that the storage space started to see some level of renewed interest on the VC side as companies have made some good progress in the storage space.”

The reason for the relook of the VCs in this space is hardly surprising. Stored information was more vulnerable to havocs than ever before. Added to this is the compliance cost, litigation discovery, and business value pressures that are increasing the real storage cost beyond one’s means. These pressures are threatening the existence and recovery of fast-growing voluminous data. Storage hardware costs have fallen but storage management costs are moving north.