Riverbed Scores $20M

Riverbed Technology Inc., which makes wide-area file services (WAFS) appliances, announced $20 million in third-round funding today, bringing its total to $38 million (see Riverbed Gets $20M More).

The news highlights growing interest in WAFS products and vendors, which deploy caching and other mechanisms to overcome lags encountered when sending files to remote sites using traditional file protocols, such as NFS for Unix and CIFS for Windows. Players include DiskSites Inc., Signiant Corp., Tacit Networks Inc., and Cisco Systems Inc. (Nasdaq: CSCO), thanks to its acquisition of Actona for $82 million last year (see Cisco Acts on Actona).

Notably, Cisco's WAFS product is a major factor in Cisco's alliance with EMC Corp. (NYSE: EMC), also announced today (see Cisco & EMC Close NAS Deal).

For its part, San Francisco-based Riverbed is confident its launch in the WAFS arena will continue to gain momentum. CEO Jerry M. Kennelly, formerly an executive VP at Inktomi Corp. (Nasdaq: INKT), says that since shipping started eight months ago, Riverbed has gained 72 paying customers, who are using over 500 of its Steelhead units. Another 100 customers are in trials with the vendor's WAFS kit.

Riverbed's customer ramp-up includes firms with lots of large files to move, including engineering and architectural firms, as well as manufacturers (see Riverbed Claims 30 Customers ). Kennelly claims Steelhead can go beyond streamlining files alone, and can also work with email, streaming data, and Web traffic -- a broader range of data-handling capabilities than other WAFS gear, the CEO says.Riverbed's differentiators could help it fight not only Cisco, but Tacit, whose claim to fame is performance and partnerships (see Top Ten Private Companies: Winter 2004). Still, Riverbed's actually got more customers at this point than Tacit, which claims to have grown from about 21 to 40 customers this year. Tacit's also about the size of Riverbed: Tacit has about 60 employees; Riverbed 75.

Will one of the firms be acquired this year? Kennelly's not focused on it. Instead, he plans ongoing business, a range of new OEM and reseller partnerships, and profitability by "sometime in 2006."

"The company has had a very robust year, and customer acquisition and revenue are growing much faster than is typical for a company in our position," he says.

Goldman Sachs & Co. led the round, with input from Accel Partners, Lightspeed Venture Partners (disclosure: an investor in Light Reading, this site's parent company), and UV Partners.

For the short term, Riverbed will use its new funding to expand its sales force, distribution, and marketing.Mary Jander, Site Editor, Byte and Switch