3Leaf Systems Secures $20 Million in Series B Funding, Adds Former... -- re> SANTA CLARA, Calif., May 1 /PRNewswire/ --
3Leaf Systems Secures $20 Million in Series B Funding, Adds Former McData Executive to Board of Directors
Intel Capital Leads Investment Round to Fund Product Launch and Accelerate
Server Virtualization Technology Development
SANTA CLARA, Calif., May 1 /PRNewswire/ -- 3Leaf Systems, provider of next-generation virtualization solutions for enterprise data centers, today announced the close of its Series B round of private equity financing. The $20 million round was led by Intel Capital; existing investors Enterprise Partners, Storm Ventures, and Alloy Ventures also participated. This latest round, which raises 3Leaf Systems' total funding to $32.5 million, will be used to accelerate product development and expand marketing and sales in advance of the launch of the company's products. "Next-generation data centers demand more flexibility and efficiency in order to accommodate evolving business and operational requirements," said Bryan Wolf, managing director, Digital Enterprise Sector, Intel Capital. "The server virtualization solutions offered by 3Leaf Systems support key corporate data center initiatives such as improved power management, optimized scale-out architectures, and architectural support for on-demand computing initiatives. "     3Leaf's Virtual Compute Environment (VCE) architecture delivers system- level virtualization to enable mainframe-class capabilities for commodity servers. With 3Leaf Systems' server virtualization solutions, organizations can significantly reduce their investments in infrastructure and operations, and rapidly deploy and provision data center resources while ensuring their availability to meet the business requirements of today's applications. Former McData President and CEO John Kelley Joins Board     3Leaf Systems also announced the addition of John Kelley to its board of directors. Kelley was named president and chief operating officer of McData in 2001, became CEO a year later, and was Chairman of the Board until the company was purchased by Brocade Communications in a deal announced last August and completed earlier this year. Before McData, Kelley served as executive vice president of Qwest Networks and president of wholesale and interconnect markets for US West. Earlier in his career, he held senior positions at Mead Corporation's Zellerbach division, NBI, and Annatech. Kelley has served on the board of directors of Polycom, a provider of voice, video and wireless technologies, since 2000. "I look forward to serving on 3Leaf Systems' board of directors," said Kelley. "This is an exciting company that is well positioned for a successful future, and I'm thrilled to have the opportunity to be involved at this level and to help guide 3Leaf's evolution into a successful leader of server virtualization solutions for next-generation data centers. "     "The additional financing and expansion of our board of directors mark a significant milestone as we enter the next phase of company growth," said Bob Quinn, CEO of 3Leaf Systems. "The support of Intel Capital; the continued commitment of Enterprise Partners, Storm Ventures, and Alloy Ventures; and the deep corporate expertise provided by board members such as John Kelley will be key as we enter a period of rapid growth and innovation, delivering our server virtualization solutions to Fortune 500 global customers. "     About 3Leaf Systems     3Leaf Systems provides next-generation server virtualization solutions to support both scale-up and scale-out virtual servers in enterprise data centers. 3Leaf technology simplifies operations by increasing the utilization and availability of large-scale data center resources. A private company based in Santa Clara, California, 3Leaf Systems is backed by investors including Alloy Ventures, Enterprise Partners, Intel Capital, and Storm Ventures. For more information, visit http://www.3leafsystems.com or call 408-572-5900. About Intel Capital     Intel Capital, Intel's venture capital organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software, and services targeting enterprise, home, mobility, health, consumer Internet, and semiconductor manufacturing. Since 1991, Intel Capital has invested more than US$6 billion in nearly 1,000 companies in more than 40 countries. In that time, about 180 portfolio companies have been acquired and another 155 have gone public on various exchanges around the world. In 2006, Intel Capital invested about US$1.07 billion in about 163 deals with approximately 60 percent of funds invested outside the United States. For more information on Intel Capital and its differentiated advantages, visit http://www.intelcapital.com. SOURCE 3Leaf Systems


3Leaf Systems Secures $20 Million in Series B Funding, Adds Former.. -- re> SANTA CLARA, Calif., May 1 /PRNewswire/ --

02.28.11
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When you're the second-largest supplier of communications infrastructure in the world and your president is an ex-member of the Chinese military, suspicions of espionage -- warranted or not -- are pretty much a foregone conclusion. Indeed, Huawei has suffered a couple of high-profile business setbacks in the past year over vague concerns that the company could be some sort of Trojan horse for Chinese intelligence, and they're fed up: after being pressured into shelving a planned acquisition of server virtualization firm 3Leaf Systems' intellectual property by the Committee on Foreign Investment in the US, they've published a lengthy open letter that implores the government to fully vet the company to put to rest any concerns or fears it has. The gist of the letter is that Huawei is owned by its employees, not the Chinese government, its loans are commercial, its products are continually audited by third-party companies for security, and the tax breaks it gets from the government are consistent with what private corporations in other countries receive. Huawei also manages to quote both Obama and Lincoln in the letter -- just to make sure it has both Democrats and Republicans covered, we suppose -- and concludes by saying it believes that "any thorough government investigation will prove that Huawei is a normal commercial institution and nothing more. " Sounds like a challenge to us.


Beleaguered Huawei encourages US government to investigate it, quotes two presidents in the process

Huawei Drops U.S. Deal Amid Opposition
By
Andrew Dowell
Updated Feb. 22, 2011 12:01 a.m. ET
Huawei Technologies Co. reversed course and withdrew its attempt to win U.S. approval for a small but controversial acquisition it completed last summer. The Committee on Foreign Investment in the United States recommended against the deal to acquire assets and technology from 3Leaf Systems, but the Chinese maker of telecom equipment said as recently as Monday that it would push ahead and seek a yes or no from President Barack Obama, who has the final decision. In a brief statement, Huawei said the controversy surrounding the issue led it to change its mind. "This was a difficult decision, however we have decided to accept the recommendation of CFIUS to withdraw our application to acquire specific assets of 3Leaf," the company said. "The significant impact and attention that this transaction has caused were not what we intended. "
Huawei's withdrawal relieves the White House of the need to make a call on a deal that has already become an issue in U.S.-Chinese relations. A spokesman for China's Commerce Ministry said Thursday the U.S. needed to make its national-security reviews more transparent. A spokeswoman for the U.S. Treasury Department, which typically takes the lead on CFIUS issues, said, "We strongly support the longstanding bipartisan U.S. commitment to welcoming foreign investment, consistent with national security. This includes investment from China. Foreign investment creates significant economic benefits, including millions of well-paying jobs, for Americans here at home. "
Chinese regulators lashed out at the U.S. on Monday, issuing a statement saying it regrets Huawei's withdrawal of its plan to buy assets from 3Leaf Systems following a recommendation from a U.S. panel. China's Ministry of Commerce said in a statement on its website that it hopes "relevant parties" in the U.S. would "abandon prejudice, avoid adopting protectionist measures and treat properly investments from China and other countries" with a fair and open attitude. "Some relevant parties in the U.S." have used various reasons such as national security to hinder Chinese firms' trade and investment activities, the statement cited an unnamed spokesman from the ministry as saying. Huawei's plan to buy 3Leaf assets and technology was a "normal commercial move based on its own development needs and market economy rules. "
CFIUS reviews U.S. acquisitions by foreign companies that may have national-security implications. It typically reviews deals before they are completed, but Huawei didn't seek approval to buy the 3Leaf assets, saying it didn't think it needed to because it wasn't acquiring the company outright. When Pentagon officials found out about the deal, they took the unusual step of asking the company to file retroactively for a review. After examining a transaction, CFIUS makes a recommendation to the president to accept or reject the deal. It is standard practice for companies to withdraw their applications once they get an indication the committee will recommend against a deal. Huawei's original decision earlier this month to press on and seek a ruling by the president was unusual. Huawei executives said that they shifted position because of the unwanted controversy it stirred. Bill Plummer, vice president of government affairs for Huawei USA, said that the company continued its dialogue with the U.S. government even after it made its initial decision not to withdraw the 3Leaf application. But it was made increasingly clear to the company that failing to withdraw the application would place President Barack Obama in a difficult position. "None of that was our intent," Mr. Plummer said. The Treasury Department and Huawei are working on a divestiture agreement, although Mr. Plummer said he cannot speak about the details of that agreement. "As a part of the withdrawal process we have achieved an agreement with the U.S. government," he said. "We can't talk about the details of the agreement other than its mutually acceptable and an opportunity to build a trust based relationship. "
In reaction to the statements by China's Ministry of Commerce, Mr. Plummer said that it was entirely normal for a country to express concern about "unfair treatment" of a company headquartered in its borders. 3Leaf created technology that allows groups of computers to work together like a more-powerful machine. Huawei paid $2 million in May to acquire 3Leaf intellectual property, other assets and some staff. Huawei is the world's second-largest maker of telecom equipment behind Telefon AB L.M. Ericsson, yet it has struggled to establish a presence in the U.S. market. The company has repeatedly denied ties to China's military and has offered to open its technology to third-party inspection, but security concerns persist. Such concerns contributed to the company's failure last year to win part of a big network upgrade by Sprint Nextel Corp.
A handful of U.S. congressmen wrote to the secretaries of Treasury and Commerce on Feb. 10 to call for close scrutiny of the 3Leaf deal, saying that it would likely transfer advanced computing technology to China. —Loretta Chao and Victoria Ruan contributed to this article. Write to Andrew Dowell at andrew.dowell@dowjones.com
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Huawei Ends Bid to Win U.S. Approval for 3Leaf Deal

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Founded in June 2004 by a team with years of experience in server, storage, microprocessor, kernel, ASIC, and overall system design, 3Leaf Systems provides server virtualization solutions that simplify IT operations by increasing the utilization and availability of data center resources.

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