The scrappy startup that wants nothing less than to upend the traditional networking supply chain has just landed another $12.5 million in its second round of funding. Pica8, which produces software for white box switches (also called bare-metal switches), has raised more than $20 million counting the Series B financing being announced today.
The company plans to use the funding to further push its current two-pronged strategy: 1) creating a new supply chain model based on open, bare-metal networking; and 2) expanding its presence in the Japanese market, which provides more than 30 percent of Pica8’s revenue.
The investor faith in Pica8 gives a boost to the nascent, rapidly evolving bare metal switch market. So far, white boxes have mostly been the province of large operators with an abundance of expertise — Amazon and Google love ’em, for instance — but Pica8 claims attitudes are shifting as open networking gains toeholds in the industry.
In Pica8’s early days, its entire business came from preloading its PicOS operating system onto white box switches from Asian ODMs. Now, the company says more people are willing to take on the task of loading the software themselves as components such as bare-metal servers have begun to appear in data centers.
“Last year less than 1 percent of our revenue was software-based. This year it’s more like 10 percent, and next year we’re hoping for 30 to 40 percent,” says Pica8 VP of Marketing Steve Garrison. “We sell both preloaded systems and software-only models because we want the market to understand the open networking model works.”
Pica8 recognizes much of the challenge facing its category lies in achieving critical mass, and it is working with industry groups and other startups to bang the drum for bare-metal switches. “The challenge is, we’re changing technology and changing behavior at the same time. That’s why this will be a long transition,” Garrison says.
Pica8 competitor Cumulus Networks raised $15 million as of last year and is tackling the critical-mass question with help from Dell. Rather than push a purely white-box agenda, Dell is offering Cumulus’ software — or that of Big Switch Networks, another recently announced partner — on its own systems.
Pica8 has more than 300 customers, with about 20 in production, and it has partnerships with major service providers including NTT in Japan.
The funding round was led by VantagePoint Capital Partners, Japan-based Cross Head, and Taiwan-based Pacific Venture Partners.