Israeli VC on Sand Hill road: EMC acquires nLayers

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It's official now - nLayers is being acquired by EMC. nLayers provides an agentless appliance that automatically identifies, maps and models the relationships and inter-dependencies between applications, servers, and devices in a time-based, behavioral model.

This is one company that I know much about, since Gemini (together with Walden Israel) seeded the company over 3 years ago, and I have been an active board member since.

First of all, I wanted to congratulate Gili Raanan and his team for doing a terrific job building this company. The company secured a leadership position in the market and executed beautifully with high cash efficiency. The company *also* had a highly strategic Business Development activity, and had OEM relationships with several companies, including the acquirer (-- is that a familiar pattern???). So, again, I need to reemphasize that companies are not sold, they are acquired!

At the same time, it is difficult not to be disappointed that we could not create a $500M opportunity here. In this case (as with many other acquisitions), once an industry starts to consolidate (meaning your start-up competitors are being acquired by big players), acquisition becomes almost inevitable. This is not great insight on my part; the various analyst groups have been talking about nLayers being a prime acquisition candidate for some time. Once consolidation starts, the competitive environment becomes very challenging for a start-up. It's one thing for a CIO to decide between startupA and startupB, but if EMC comes to the table with an integrated solution, and startupB shows up,... well, there had better be a very compelling reason not to opt EMC.

Bottom line, nLayers accomplished all of the goals that it set out. The company developed a superior technology, was acknowledged by all of the major analysts as THE leader, built strong relationships with partners in the industry and recruited a top team. Congratulations all around!

....anecdotally, we closed the Series A round just as my youngest son (Ben) was born. He just turned 3... nLayers became a wonderful company, before I was able to potty train Ben. I suppose, not all babies develop in the same way :-)