Pica8, a Palo Alto, Calif.-based startup developing “white box” switching systems using Software Defined Networking (SDN) technology, today announced a $12.5M Series B funding round from a group of investors led by VantagePoint Capital Partners, Cross Head and Pacific Venture Partners (PVP), bringing its total funding to date to over $20 million.
The funding as the SDN market heads into its next phase of development, as the “hype”cycle has passed and many startups are getting into the nitty-gritty of customer deployments. Many of the early market leaders are now going back for Series B or C rounds. Some will raise even larger rounds than Pica8, and some won’t raise any money at all.
In short, 2014-2015 will be “make it or break it” time for many SDN startups.
This is good news for Pica8, which has so far operated as a lean and mean startup in a modest office in East Palo Alto. Pica8 builds development kids for Open Flow and Open vSwitch deployments on commodity hardware, know commonly as white-box switching. It also markets its own SDN operating system, PicOS.
Marketing VP Steve Garrison, an industry veteran who teamed with Co-founder and CEO James Liao to lead the funding process, said that “80% of the money will go toward engineering.”
Pica8 intends to accelerate software development and further developing its customer base, said Garrison.
“We were able to take one or two customers and show the results, which was demonstrated by the fact that we got $12.5M. We could have raised more but we wanted to raise just enough. Now we want to double or triple our customer base.”
VantagePoint was an early investor in Pica8, and is also known for game-changing investments in Tesla Motors and BrightSource Energy. “We believe software-defined networking will soon be the new standard for enterprise operations,” said Patricia Splinter, Chief Operating Officer and Managing Director at VantagePoint, in a statement.
Cross Head provides business investment, training and system integration expertise. Taiwan-based Pacific Venture Partners was also attracted to Pica8’s moves in the SDN market.
Garrison believes the funding is important because SDN will be a “long marathon,” and Pica8 wants to be equipped for a long battle against incumbents such as VMware’s NSX and Cisco’s ACI (Application Centric Infrastructure) technology.
“Incumbents have first mover advantage,” said Garrison. “Shouting a lot is not the right equation, right now. We know that Cisco and things like Contrail [Juniper’s SDN technology] are not going to solve everybody else’s problems because they are still based on hardware.”