NetScaler Weighs $20M

Networking startup NetScaler Inc. has bagged another $20 million from the investment community, taking its funding to more than $80 million (see NetScaler Bags $20M From VCs).

Experts see the company, which makes switches that speed up and secure the delivery of data center traffic, helping define the new data center switching and security market. The new money could make it tasty acquisition bait -- or allow it to build on its existing customer base.

Growing demand for traffic management products with security has made the company a likely candidate for an acquisition, according to a recent report from Heavy Reading (see Heavy Reading: Startups on the Rebound). Report author and chief analyst Scott Clavenna believes NetScaler is defining an emerging market known as "application networking," with a successful track record in the security and VPN equipment markets.

It doesn't hurt that NetScaler has already made significant inroads with large users, such as Google and Amazon.com, whose business depends on the management of large volumes of Web traffic (see NetScaler Optimizes Google). Now it plans to use its latest funding to further expand its customer base.

NetScaler also performed well in a number of Light Reading product tests, expanded its product range, and claims its 2003 revenues were up by 400 per cent year on year (see Shocking Results in LR's SSL VPN Test, NetScaler Scores in Content Switch Test, NetScaler Reveals High End Kit, and NetScaler Adds SSL to VPN).Mark Fabbi at Gartner Inc. says the company "has made a lot of progress in the past year. It has continued to round out its portfolio, expand into related areas, and, most importantly, learn how to better target the enterprise audience better." A key element in NetScaler's technology is that it has been designed specifically to minimize the impact of traffic volumes on data center servers and, ultimately, end-user performance.

The new, oversubscribed round of funding is led by Focus Ventures, and also includes Granite Ventures LLC, Bay Partners, Goldman Sachs & Co., and Sequoia Capital. NetScaler's previous round was in January 2003 (see Netscaler Raises $13M).

The secure data delivery market has already seen one major and one minor acquisition this year (see Juniper Buys NetScreen, Cisco: It Takes Two to Twingo, and The Lowdown on SSL VPNs ).

Ray Le Maistre, International Editor, Boardwatch