Riverbed Reels in $20M

Application acceleration vendor Riverbed Technology Inc. is the latest startup to rake in the cash, netting $20 million worth of Series C funding earlier today (see Riverbed Gets $20M More).

The Series C is Riverbeds largest funding round to date, after pulling in $10 million last January and $6.6 million in 2003, back when the company was called NBT Technology (see Riverbed Secures $10M and NBT Raises $6.6M).

Goldman Sachs & Co. led the latest round, with Accel Partners, Lightspeed Venture Partners, and UV Partners also participating. (Disclosure: Lightspeed was an early investor in Light Reading Inc.)

Riverbed’s flagship offering is its Steelhead application acceleration device, unveiled last April. Fly fishermen will notice a common line running through the vendor’s marketing strategy -- the Steelhead is a type of fish well known to the waders brigade. Apparently, the company’s cofounder and CTO, Dr. Steve McCanne, is a keen fisherman, hence the decision to rename the firm Riverbed.

So what will the $20 million be used for? The company’s president and CEO Jerry M.Kennelly told NDCF the money will be spent on product development, worldwide marketing, and expanding the Riverbed sales force. The San Francisco-based vendor currently has 75 employees around the world, he says, although this number will reach 150 by the end of this year.Kennelly is playing Riverbed’s technology cards close to his chest, although he confirmed that the company will be developing some more application-specific blades for the Steelhead this year. So, will future hardware be named after other forms of aquatic life? “That’s to be decided. Right now we’re sticking with Steelhead,” he says.

He claims the company has 72 revenue customers and another 100 in the early "pilot stage."

Building up a solid user base of paying customers will be critical to Riverbed’s survival in a market that already includes vendors such as Expand Networks Inc. and Tacit Networks Inc.

Nonetheless, Kennelly anticipates that his company will reach breakeven sometime in 2006, although he says, at this stage, the firm is more interested in growth.

So, who are the guys behind Riverbed? The firm was founded in 2002 by Kennelly and McCanne, former executives at Inktomi Corp. (Nasdaq: INKT). McCanne also cofounded FastForward Networks, which he sold to Inktomi in October 2000 for a cool $1.3 billion.Improving performance across wide area networks has been steady business in recent years. Last year Cisco Systems Inc. (Nasdaq: CSCO) stumped up $82 million for software startup Actona Technologies Inc. in an effort to strengthen its data center strategy (see Cisco Acts on Actona).

— James Rogers, Site Editor, Next-Gen Data Center Forum