Engineering Capital unveiled a $32 million seed fund on Tuesday that will target data center infrastructure investments at a time of great disruption.
Engineering Capital Fund I expects to make 12 to 18 investments with first checks of $500,000 to $1 million.
What differentiates the fund is its tight focus on data center transformation. Managing Partner Ashmeet Sidana points out that top data centers no longer rely on servers from IBM, Hewlett-Packard or Dell, or switches from Cisco Systems or Juniper Networks. They don’t use Oracle’s database software or operating systems from Microsoft.
“The leading IT companies do not power the best data centers in the world,” he said. Instead a new class of data center is being built with a new wave of technology innovation. It is here that opportunities lie.
“New companies are going to be created in the gap left between the two” data centers, he said.
Sidana, a former general partner at Foundation Capital and a onetime director of product management at VMware, argues that the differing pace of technology development in such areas as storage, networking and computing help create this data-center dislocation. The areas of technology go out of sync with each other.
“The enterprise data center will not go away,” he said. Companies will keep them for a variety of reasons, including to host implementations of SAP and Oracle applications. But they will build new-era data centers for other needs, such as advertising.
These data centers will be physically separated but semantically connected, and companies will be created to fill needs in the areas of storage, networking, computing, management and security.
Engineering Capital Fund I is made up of $31.4 million of capital from 25 LPs, including Cendana Capital, according to a filing with the SEC. The rest coming from its GP.
Sidana said he is happy to lead rounds or be the only money in. Overall market valuations are ebullient, but not at the seed stage, he added: “I am very comfortable participating here.”
Photo courtesy of Shutterstock.DON'T MISS IT! After two successful conferences on the East Coast, we’re bringing our LPs and fund managers to San Francisco for the first annual Emerging Manager Connect West on May 11. Don’t miss out on insightful panels and great networking! CLICK HERE for details.