Sequoia keeps it in the family with Cast Iron

Cast Iron Systems, a Mountain View, Calif. company that sells “application integration appliances,” has raised $16 million in a fifth round of capital.

The funding is notable because it continues a surprising trend of co-investing between Sequoia Capital — one of the most respected, but secretive venture firms in Silicon Valley — and an obscure hedge fund called Artis Capital.

The two companies have declined comment on the relationship. But it’s widely known that David Lamond, the son of a well-known Sequoia partner Pierre Lamond has worked at Artis. Artis was allowed to invest alongside Sequoia in video-sharing company YouTube, and went on to make a killing when YouTube was sold to Google for $1.6 billion. Normally, you’d chalk this up to coincidence, because family ties exist in every industry. However, Artis’ involvement is unusual because hedge funds rarely participate in early-stage investments of technology start-ups. Most firms would consider it a big privilege to invest alongside Sequoia, because it sees some of the best deals. Indeed, one of Artis’ partners, Stuart Peterson raised eyebrows shortly after the YouTube sale by paying $20 million to buy Andre Agassi’s Tiburon, Calif. estate after the YouTube sale.

The Cast Iron funding was first reported by PEHub two weeks ago.

Lehman Brothers Venture Capital led the round, which included return backers Sequoia Capital, Artis Capital Management, Norwest Venture Partners and Invesco Private Capital.

Cast Iron has now raised about $60 million in funding since 2001.

VentureWire followed up with a story this morning. Here’s a good description of what Cast Iron does:

Cast Iron Systems’ appliances integrate information from one application into another, saving its customers the time and expense of developing a homegrown solution or entering the information manually…

Although its products work with a wide range of applications, Cast Iron Systems works closely with certain software vendors such as Salesforce.com Inc., SAP AG and Oracle Corp. to make products geared at integrating software from those companies, in an effort to get people to begin using the product to integrate those applications and then up-selling later when a customer wants to expand the number of endpoints the appliance connects…Cast Iron faces competition from software-based application integration products such as Red Hat Inc.’s JBoss and Tibco Software Inc.