Venture capitalists are betting that blade servers will slice through the fast-growing Asian market. Walden International said earlier this month that it plans to invest $100 million in companies that build products around IBM’s blade server technology.

Walden, based in San Francisco, will work with IBM’s venture capital group, which doesn’t make investments but helps VCs find deals. The corporate venture arm also coaches startups whose products will expand IBM’s reach globally. The pairing isn’t unusual. Walden is part of an IBM advisory committee, and its VCs talk to IBM about business opportunities for its portfolio companies.

Blade servers are slim computers that can slide into shelves, like books in a bookcase, saving space. They are popular among companies that need lots of computing power in a small space, such as financial institutions and hospitals.

IBM, of course, isn’t the only player in the server market, which is expected to grow from $2.2 billion in 2005 to $10 billion in 2010, according to IDC. Big Blue, based in Armonk, New York, competes with Hewlett-Packard and Sun Microsystems. To beat the competition, the company needs a better strategy to expand into Asia, where growing economies and consumers’ spending power will create a greater demand for blade servers.

IBM hopes Walden’s investments will spur more companies in that region to join its Blade.org, a consortium and an effort by IBM to provide technical assistance to companies that want to build software and hardware for or around IBM products. Walden already has invested in nearly a dozen companies in the blade server market, including Clovis Solutions and Teak Technologies.

The conversation with Walden to start a fund began this spring, says Juan-Antonio Carballo, a partner at IBM’s venture capital group. “I remembered we were sitting around at the blade server summit, and we said we needed to expand [Blade.org], especially in Asia,” Mr. Carballo says. He expects the blade server market will grow fivefold or more between 2005 and 2010.

Contact the writer:UWang@RedHerring.com