Symform nabs $1.5 million for online backup services

After 12 years at Microsoft, Praerit Garg said life started to feel a little bit like the movie "Groundhog Day." Every new day just seemed identical to the last one. So Garg, along with Microsoft engineer Bassam Tabarra, decided it was time to break that pattern and join the startup ranks.

"We wanted to go do something that would give us new experiences and new growth," said Garg. That philosophy led to Symform, a cloud computing startup that today is announcing $1.5 million from OVP Venture Partners.

Operating under the radar for more than a year, the Seattle upstart is announcing a novel way for companies to protect corporate data in the case of a natural or human-led disasters. It is doing this by creating what amounts to a co-op where customers turn over unused storage capacity on their servers in exchange for online back up services.

It works like this. If a company has 300 gigabytes of data they want backed up, they "donate" that amount of storage capacity from their internal servers.

Garg, the former senior director in Microsoft's Server and Tools division, said they came up with the idea after thinking about the massive costs it takes to run and operate "Wal-Mart sized data centers." The entrepreneurial epiphany came when Garg and Tabarra started asking why it costs $100 to buy a Terabyte hard drive, but the equivalent amount of online storage costs $500 per month.

"If local storage is so cheap, what if we aggregated all of the local storage over the Internet?" said Garg.

In a way, you can imagine Symform operating kind of like a peer-to-peer networking system where bits and pieces of unused storage from multiple computers are assembled into a functioning service.

Of course, that presents some serious security issues. And that's part of the reason why it's taken so much development time to get Symform to this stage.

But Garg said he's confident with where things stand, noting that 32 channel partners have agreed to resell the "Symform Cooperative Storage Cloud." In order to make sure data doesn't leak out, the company's software layer offers "military-grade data protection" with built in "RAID-96" redundancy and encryption.

At a flat rate of $10 to $20 per server, Garg said that Symform's flat rate is far cheaper than tape rotation systems and other online back up storage technologies. Competitors include Iron Mountain and Decho, a unit of EMC that established its headquarters in Seattle last year.

Still, despite the competition, Garg said that 58 percent of small and medium-sized businesses don't do any sort of disaster protection when it comes to data.

That's a good news-bad news statistic.

After all, in this tough economy, will small companies suddenly start paying for something that doesn't have an immediate return on investment?

The 37-year-old entrepreneur said that was a concern of his as the economy worsened over the past few months. But since rolling out free trial versions of service to channel partners, Garg said they have been pleasantly surprised with the uptake.

"It turns out that all of these guys are concerned about their data, but there is no good solution," he said. "It is a very price sensitive market, so we think we have a very competitive offering."

In fact, it was some of the excitement among channel partners that led to the investment. As former Microsoft engineers with no startup experience, Garg said they originally thought that their chances of scoring capital were pretty low.

"Honestly, we didn't think we were going to get funded so we got really focused on making the business stand on its own," said Garg, who invested some of his own savings over the past year to get the project off the ground.

Once they got some traction in the market, Garg said "money just showed up."

As a result of the investment, OVP's Mark Ashida and Lucinda Stewart have joined the board.

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