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The Valley's venture capitalists fall into and out of love with enterprise software. Today, with Facebook and other social networks the talk of the town, it's hard for the makers of boring IT products to get attention. But not, it seems, money. Splunk, in a lightning-fast fundraising effort, has pulled in $25 million in a third round of financing, bringing the company's valuation up to $120 million. Splunk's software analyzes server logs, and in a nod to the collaborative aspects of Web 2.0, lets sysadmins share and discuss the results to figure out if odd patterns are signs of system failures or security breaches. Think of it as a Google for hardcore nerds, but one they're actually willing to pay for. And that, in turn, made Ignition Venture Partners, a Seattle-area venture-capital firm, willing to pay for a stake in the San Francisco company. In every investment, there are winners and losers, though.

The obvious winner is Splunk, which has commanded one of the highest valuations assigned to a software startup in recent times. Splunk also wins the services of John Connors, right, the former Microsoft CFO who's now a partner at Ignition, who's joining the company as a board member.

And the losers? Rory O'Driscoll, left, of Scale Venture Partners, whom Splunk turned down despite bidding to invest at a higher valuation. O'Driscoll indiscreetly complained last week of his disappointment at losing the deal — and no wonder, since Splunks fits in several areas Scale likes to invest in. Also shut out, with a lowball bid: Famed angel investor Ron Conway. Could this be what preoccupied him at last Thursday's party for iLike?

Splunk CEO Michael Baum, though, seems to be celebrating a bit overmuch. In a blog entry last week, in which he alludes to his company's fundraising, Baum writes:

It's a privilege not a right for investors to take a look and consider partnering up with you.

How privileged Connors must feel. How gratified he must feel to be serving on a board with Baum, who signs his blog posts "thebaum." It must be just a little bit of a comedown to go from managing multibillion-dollar budgets at Microsoft to having terms dictated by a cocky startup CEO.