Buoyed by Success of 3PAR, Menlo Leads Round for Cloud-Based Storage Company Coraid

Fresh off of its sale of storage provider 3PAR to Hewlett-Packard, Menlo Ventures is backing Coraid Inc., a cloud-based storage solutions provider.

The Redwood City, Calif.-based company announced this morning that it has raised a $25 million Series B investment led by Menlo Ventures with participation from Allegis Capital and Azure Capital Partners. Coraid, which develops Ethernet-based storage products, previously raised a $10 million Series A round from Azure and Allegis in late 2009.

As part of the deal, John Jarve (pictured), managing director of Menlo Ventures, has joined the board of Coraid, which already includes Lara Druyan, a GP with Allegis, and Paul Weinstein, a GP with Azure.

Menlo was interested in taking part in Coraid’s Series A round, but it was still an investor in 3PAR at the time and “we tend not to back companies that are competitive to others in our portfolio,” Jarve says.

However, since that first round, Menlo Ventures had a hugely successful exit when HP won the bidding war for 3PAR, agreeing to pay about $2.4 billion for the publicly traded company, or about $33 a share. Menlo Ventures was the largest stockholder in 3PAR, holding 15% of the storage solutions provider, or about 9.4 million shares.

“The enterprise data storage sector has been big and successful, and we think Coraid, which already has hundreds of customer accounts, is ready to join the likes of 3PAR, Data Domain, EqualLogix and Spinnaker Networks to be equally as big,” says Jarve.

Meanwhile, Coraid is at least the third cloud-related and storage company to raise funding in the last week, following Gluster and Zetta.