Nutanix closed off a $25 million funding round led by investment firm Khosla Ventures, with participation from existing backers Lightspeed Venture Partners and Blumberg Capital.

The datacenter virtualization startup is one of the first to be funded by Khosla Ventures IV, the VC’s new $1.05 billion fund specifically focused on investing in early stage IT companies.  Kholsa already has a solid IT investment portfolio, having contributed to Lookout Security’s $19.5 million series C funding round earlier this year, and having also led a $16 million round in e-commerce solutions provider PayNearMe.

“Nutanix is attracting attention from blue chip VC firms in part because its unconventional virtualization architecture disrupts decades of traditional network storage dominance in datacenters.  Shirish Sathaye, general partner of Khosla Ventures, and Mark Leslie, former chairman and CEO of Veritas Software and a Nutanix advisor, will join the Nutanix board of directors.”

The company offers Nutanix Complete Cluster, a hardware/software bundle that simplfies virtualization by incorporating compute and storage into a single component, thus getting SAN out of the loop. In addition to getting attention from investors, the product also got Nutanix the Best of VMWorld 2011 title at the conference, held a couple of months ago.

Nutanix is disrupting networking with virtualization, a trend that we can observe elsewhere as well.  Wikibon’s Steward Miniman wrote up a piece about how server virtualization requirements, i.e. higher bandwidth and more flexible traffic patterns, are the driving forces behind technologies such as Juniper Networks’ QFabric. He also took a deeper look into the industry and expanded on this topic from the vendor perspective.

Virtualization companies are also adapting to new demands, especially VMware. They’ve  been pursuing new strategies in the services and cloud industries, where they’re facing its fair share of competition.