A San Francisco Bay-area venture capitalist says startups that consider the bigger picture in networking have a better chance of getting funded than companies that just improve existing networks.

Mike Volpi, a general partner with Index Ventures, provides the following five funding insights for startups in the software-defined networking (SDN) world:

1. Don't be incremental. A typical approach for many startups is to look at an incumbent such as Juniper or Arista and come up with a way to do an aspect of their business better or cheaper. “That’s one mode of raising money, but that mode is getting progressively difficult,” says Volpi. “I don’t recommend it. Saying ‘I have a networking device that’s a little bit better,’ is kind of irrelevant.”

Instead, he recommends looking at the huge transformations happening in networking, cloud, and data centers and finding ways to solve new problems.

2. Know the workload. Volpi says a good starting point is to understand how the compute model is changing networking. The advent of containers and assorted orchestration schemes means workloads are becoming even more ephemeral. How does the network deal with that?

While webscale companies such as Google and Facebook solve these problems for themselves, there are thousands of large enterprises that have similar, but unique, problems. “Facebook has one app; it’s called Facebook,” says Volpi. “Whereas a company like JP Morgan has a much wider diversity of workloads. Each workload has its own needs. The enterprises of the world will have many problems that need to be solved.”

3. Do more than "security." Lots of startups have already identified one area of opportunity — security. So you could say that bell has been rung. But Volpi says as security gets more complex, there will be new problems to solve. And while traditional security is perimeter-driven, the growth of cloud gives rise to a whole new set of issues. For example, a new business segment, the cloud access security broker (CASB), has engineered reverse proxies in the cloud. It sends traffic to a device in the cloud that assesses the traffic to see if it’s appropriate.

4. Manage all the different types of security. Perhaps more interesting than a new network security product would be a product that managed other security products. Enterprises still have lots of legacy infrastructure with associated security. And they’re constantly adding new security point products. “But what gives comprehensive visibility?” asks Volpi. “It’s creating a new security problem of manageability. I think monitoring is much more interesting than in the past. Monitoring and security are ripe for startups.”

He also sees opportunities in the area of security assurance. Index Ventures has invested in a startup called AttackIQ, which is in the business of attacking its customers on a regular basis to discover vulnerabilities.

5. Be aware of the cloud. In this (somewhat strange) new networking world, what happens to the big fish (like Cisco) and all the startups that circle around them?

“It’s very tricky over the long term and moderately impactful in the shorter term,” says Volpi. Most new applications are being created for the cloud. But corporations have plenty of existing on-premises applications. Think Oracle's ERP.

“As long as that app stays where it is and there’s a replacement cycle that is natural, that business continues,” he says. But he predicts the on-premises market to slowly decline as those apps get de-commissioned. That pace is probably over a five- to 15-year cycle. “There are no new apps on that infrastructure,” says Volpi. “Developers are writing all the cool new stuff in the cloud.”