winning multiple industry awards—and the company itself was winning business with major customers. Its accounts include Akamai, Microsoft, Qualcomm, Petrobras, Harris, Lockheed Martin, NASA, and others. But “having to service that debt got incredibly expensive as the credit markets got sort of tied up,” Driggers said. “The business model was too expensive, the debt service was crushing the company’s [profit] margins, and manufacturing was becoming very daunting.”
“We had a choice of either taking on additional investors or more debt,” Driggers added. But Verari’s VCs weren’t interested and neither was its chief lender, Silicon Valley Bank.
Driggers founded the company in 1991 as Computer Parts Plus, a storefront retailer which developed a strong business selling components to local companies like Cubic (NYSE: [[ticker:CUB]]), the San Diego defense contractor, and helping them understand their computer needs. “We evolved over time, as the company went from a retail store to a hardcore B2B that put servers into racks to help customers save space,” Driggers said.
He confirmed that Verari had raised more than $59 million in three rounds of venture funding from the Carlyle Group, Celerity Partners, Sierra Ventures, and Voyager Capital. He said CitiGroup also was a strategic investor.
As a relatively small company, Verari competed with varying success against much bigger server makers, including Hewlett-Packard, IBM, and Dell. The company’s name also changed several times. Computer Parts Plus became CPP, and later RackSaver. Driggers said the business became Verari Systems in 2004, when it acquired a software business and took in more venture capital. Driggers, who had been CEO, became the CTO in 2006 when Verari’s venture investors decided to bring in a new chairman and CEO, former EMC executive vice president David B. Wright.
In the days following
