The Software Defined WAN (SD-WAN) players are tanking up for what is likely to be an epic fight. CloudGenix today announced that it has closed $25 million in Series B funding led by Bain Capital and accompanied by cash from Charles River Ventures and the Mayfield Fund
CloudGenix says it will use the money to scale its sales force and product pipeline. The company has now raised $34 million total. It’s one of many players profiled in my recent report, “The Future of Cloud WAN.” That report revealed that more than $360 million has been invested in a number of startups looking to produce virtual networking and Software Defined Networking gear for WAN networking.
The market for SD-WAN gear — which will replace legacy WAN connectivity hardware for a more software-driven solution — could be huge. In “The Future of Cloud WAN” we predict it will be at least $7.5 billion over the next five years.
CloudGenix CEO Kumar Ramachandran told me last week at the Interop show in Las Vegas that he expects a boom in SD-WAN demand, some of it driven by changes in the Payment Card Industry Data Security Standard (PCI DSS). An emerging standard called PCI 3 has come to market in 2015.
What does data security have to do with the WAN? Many of the cloud WAN vendors, including CloudGenix, are going after the branch-office market, in which offices must maintain secure connectivity to a corporate network or data center. The goal of SD-WAN is to put more of the connectivity functions in the cloud, obviating the need for a branch-office router or hardware devices. This means that more of your data goes directly into the cloud.
“The retail rules are changing, and they also need big data — so their connection needs to go to their data center,” says Ramachandran.
That boils down to more security and connectivity needs in the WAN.
Of course CloudGenix isn’t the only startup in this market. “The Future of Cloud WAN” profiled at least a dozen of them, ranging from more mature players such as Aryaka and Silver Peak to startups such as VeloCloud, Pertino, and Viptela.
Many of the newer SD-WAN players, including CloudGenix, are trying to decrease the cost of WAN connections by using a combination of networking resources, including Internet, wireless LTE, and cable connections — an approach known as “hybrid WAN.” By using software algorithms to optimize how traffic is sent over connections, as well as to prioritize data flows, they can enable businesses to use the WAN bandwidth more efficiently.
CloudGenix says its edge is in focusing on applications in the cloud, targeting industries that heavily rely on data-center connectivity, including financial services, legal, retail, and technology organizations with multiple branch offices.
It all makes for an interesting market — and a certain dogfight among the startups that are trying to eat into Cisco’s dominance as a WAN hardware provider. CloudGenix’s closest rivals are VeloCloud and Pertino, which got their products out to market a little earlier, in 2014. CloudGenix just went into general availability a couple weeks ago, according to Ramachandran.
“The Future of Cloud WAN” report is available today for $650 per single-user license on our Premium Research site. For special enterprise license offerings, please contact sales at firstname.lastname@example.org