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VeloCloud Scores Telstra SD-WAN Win & Investment

Kelsey Kusterer Ziser

VeloCloud added another Tier 1 customer to its roster this week when Telstra announced it was adding the vendor to its SD-WAN technology suite available to enterprise customers in China. And as an added bonus for VeloCloud, Telstra Ventures also invested in its most recent Series D round of funding.

According to the deal, Telstra PBS -- Telstra's joint venture with Pacnet Business Solutions China -- will begin providing VeloCloud Networks Inc. SD-WAN technology as part of its product offerings in mainland China. Mark Sherman, managing director of Telstra Ventures, says Telstra is also "currently working with VeloCloud to explore other potential markets, including Australia."

"SD-WAN has begun to transform the enterprise WAN because it offers customers a lot more of what they want in terms of flexible network management and the opportunity to reduce costs," says Sherman in an email exchange with Light Reading. "With Gartner predicting SD-WAN will grow from 1% market share today to 30% in three years, it makes sense that carriers like Telstra are partnering with SD-WAN companies to capture the opportunities for our customer base."

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Telstra Ventures also invested in the most recent Series D round of funding for VeloCloud, totaling $35 million, which was led by Hermes Growth Partners and also included investments by Khazanah Nasional Berhad, New Enterprise Associates (NEA), Venrock, March Capital Partners, Cisco Investments and other undisclosed strategic investors. The latest round of funding brings the company's total funding to $84 million, according to an announcement by VeloCloud.

In Telstra's announcement, Telstra Ventures notes that the investment in VeloCloud is part of their overall network strategy with "Software Defined Networking (SDN) and Network Function Virtualization (NFV) increasingly playing a role in offering greater network flexibility and agility for enterprise customers."

Telstra Ventures has invested over A$250 million in more than 35 technology companies from the US, Asia and Australia covering cloud, networks, security, apps and more, since its establishment in 2011. The organization utilizes that technology both internally and in development of new products for business and enterprise customers, explains Sherman.

As enterprises increasingly utilize cloud applications for daily operations, challenges like loss of control and performance in the network, coupled with the expensive, slow process of deploying new branches on traditional MPLS are just a few of the reasons why service providers are looking to SD-WAN solutions for enterprise customers. VeloCloud's VP of Marketing Mike Wood tells Light Reading that carriers can use the VeloCloud orchestrator or APIs and connect into their own OSS/BSS systems and increase the speed at which new branches are installed using a zero-touch automation provisioning model.

"Whether it's five, ten, 15, maybe 20 years from now, I think there's going to be a point where SD-WAN becomes the primary wide area technology, if you will, and businesses rely on the Internet instead of private networks to carry most of their traffic -- most of their wide area networking traffic," says Wood. "A lot of it has to do with the shift to the cloud. Over time, at some point MPLS revenue is going to peak."

Established over four years ago, VeloCloud now has over 600 customers and more than 50,000 SD-WAN sites. In addition to Telstra, service providers including AT&T, TelePacific, Sprint, Windstream, Vonage, MetTel, EarthLink, MegaPath and NetOne are providing VeloCloud SD-WAN technology to their customers.

— Kelsey Kusterer Ziser, Senior Editor, Light Reading

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