Cloud startup Igneous is looking to blur the line between cloud and on-premises IT by offering cloud storage running on hardware located inside the enterprise.

While the storage servers are physically located on enterprise premises, they're owned by Igneous Systems of Seattle, which leases the servers to the enterprise customer and manages them over the cloud. That gives the enterprise the best of both worlds -- security, regulatory compliance, and network performance of on-premises hardware, with the flexibility and reduced hassle of the cloud, the company says.

Enterprises are seeing storage needs explode, driven by large volumes of unstructured data, including video, financial information, and instrumentation from Internet of Things devices such as vehicles and medical device, Igneous says.

One problem with storing that data on the cloud is that the public Internet can't move it. "If you're generating data at terabytes per hour, you can't push it over the Internet, Kiran Bhageshphur, Igneous CEO and founder, tells Light Reading.

Igneous CMO Steve Pao said that the public cloud is also problematic because it's beyond the enterprise's control, leading to security and regulatory concerns.

"The response to that is the private cloud. But the private cloud isn't the cloud at all," Pao says. "You have to buy and manage the equipment."

Igneous says it offers a solution -- purpose-built network storage equipment that Igneous owns and operates over the cloud, and installs behind the customer firewall.

"Our fleet of inventory is not in our data center," Pao said. "The fleet of equipment where the data actually lives is dispersed across customer premises."

Igneous's servers are available immediately, priced under $40,000 per year for 212 terabyte increments. The products are already in use with early customers.

The company, which comes out of stealth mode Tuesday, received $26.7 million Series A funding led by New Enterprise Associates (NEA) with Madrona Venture Group LLC and Redpoint Ventures . It expects to do another round of funding in early 2017.

Bhageshphur moved to Seattle in 2008, where he went to work for Isilon Systems, a network-attached storage vendor acquired by EMC in 2010 for about $2.5 billion, which is today a $2 billion business unit within Dell Technologies (Nasdaq: DELL) Bhageshphur left EMC in July 2013 to found Igneous.

Igneous's approach is a twist on the concept of private or hybrid clouds. Private clouds use modular, flexible cloud architecture for on-premises infrastructure. They're often based on the open source OpenStack platform.

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Oracle Corp. (Nasdaq: ORCL) offers Oracle Cloud@Customer, its own private cloud servers based on the same architecture used in its public cloud, and Microsoft Corp. (Nasdaq: MSFT) has released a developer preview of Azure Stack, Azure servers that can be operated behind the enterprise firewall. (See Oracle Takes On Amazon in Cloud Infrastructure,

A startup called CloudZero takes a similar approach to Igneous, running cloud servers inside the enterprise firewall. Unlike the Igneous servers, CloudZero's are general-purpose compute servers, but like Igneous, they're managed over the cloud.

The company name, Igneous is the geological name for a kind of rock, appropriate to Seattle, which is located on the volcanically active Ring of Fire around the Pacific Ocean. Igneous rock is long-lasting, Bhageshphur says. "It is our mission to build a long-lasting anchor tenant company here in Seattle," he says.

— Mitch Wagner, , Editor, Light Reading Enterprise Cloud