SD-WAN provider Cato Networks secured $55 million in a new round of funding led by Lightspeed Venture Partners. Its current investors — Aspect Ventures, Greylock Partners, Singtel Innov8, USVP, and Cato co-founders Shlomo Kramer and Gur Shatz — also contributed. This brings Cato’s total funding to $125 million.
CEO and co-founder Kramer told SDxCentral that the funding will further the startup’s service infrastructure as well as boost its engineering and support organizations, and its sales and marketing efforts.
Kramer and Shatz founded the Israel-based Cato in 2015 to build a converged cloud-based architecture that acts as a replacement to traditional connectivity options like MPLS. Cato has been positioning itself as “the uncarrier” of the SD-WAN world.
Following the new round, Kramer told SDxCentral that “Cato is building a new type of carrier, one that evolves at cloud speed and provides a managed network experience addressing global, SD-WAN, security, cloud, and mobility needs,” he said. “It is a multi-billion dollar opportunity that is aligned with the general trend to move away from do-it-yourself products to cloud services as a way to optimize spend and accelerate business growth.”
Since its founding, Cato has seen significant growth. The company claims that during 2018, its customer base exceeded 300 enterprises, its bookings grew by 352 percent year over year, and it added several enterprise customers with more than 30,000 employees to its base. And it was recently ranked as a visionary — alongside CloudGenix and Versa Networks — in Gartner’s inaugural Magic Quadrant for WAN Edge Infrastructure. And
Taking on Legacy Telcos
Cato says that what differentiates it from other providers is that it delivers its SD-WAN service, called Cato Cloud, using a global private network with built-in security and its channel. It recently added a threat hunting system and self-healing capabilities to the platform.
The startup is building out its platform to take on traditional telco operators. “Cato Cloud already offers the features and capabilities enterprises require for a WAN transformation,” said Kramer. “We are rounding out our managed services offerings in both networking and security, introducing additional enterprise-grade security layers and network optimization features at cloud pace, and investing in scaling our global network footprint.”
Rather than an un-carrier, Kramer is now referring to this new type of carrier as a “cloud-native carrier.” While legacy telcos integrate third-party appliances to build their services, “the cloud-native carrier avoids proprietary hardware and converges networking and security functions into a multi-tenant, cloud-native, software stack,” he said.
SD-WAN Market Consolidation
As the SD-WAN market continues to grow rapidly, there has been a lot of chatter about whether SD-WAN is headed toward market consolidation. This has been fueled by Cisco’s purchase of Viptela, VMware’s purchase of VeloCloud, and Oracle’s recent purchase of Talari Networks.
While this new funding round certainly could make Cato an appealing acquisition target, this doesn’t seem to be on Kramer’s mind. “Right now we’re focused on the growth and rapid adoption of Cato’s complete WAN transformation solution,” he said, adding that Cato’s offering, “makes us very attractive to partners and customers across the globe versus legacy telco bundle solutions.”