Smooth-Stone Gets $48M for ARM Servers

Smooth-Stone, an Austin, Texas-based company building servers using the chips found inside cell phones, has raised a $48 million initial round of funding from ARM, Advanced Technology Investment Company, Battery Ventures, Flybridge Capital Partners, Highland Capital Partners and Texas Instruments. The news is a big deal, not only because Smooth Stone is attempting to solve the power problems plaguing IT by building a server that uses an ARM-based processor more likely found inside of a cell phone, as opposed to the x86 processor found inside most computers, but it’s also a systems company that’s managed to raise a chunk of money in a capital-constrained environment.

Smooth-Stone CEO Barry Evans has been courting his investors for a long time, but it wasn’t until enough investors came on board with sufficient money that folks like Battery Ventures, which is leading co-led the round, or Highland Capital Partners and Flybridge, felt comfortable joining. Ken Lawler, a general partner with Battery, said that for Battery, the large number of investors and their willingness to fund Smooth-Stone all the way to customer wins, eliminated some of the risk associated with investing in chip firms. In recent years, several chip and systems companies have been forced to close their doors because they couldn’t raise their next round of financing.

Evans is taking the money and plans to detail the specifics of his firm’s product later this year, but it’s expected to be a full server using ARM chips as the brains, and a specially designed chip to help manage the networking. Smooth-Stone will go up against commodity hardware that uses Intel chips, as well as some of the servers like SeaMicro’s, which uses Intel’s low-power Atom chips. Other chip makers, such as Marvell, are planning to use the ARM architecture to build chips for servers, although ARM has said Smooth-Stone will be its bet to bring the architecture into the data center. The race is on to see what company and which architecture will win over the next generation data center.