Light Reading
Bell Canada's venture capital affiliate leads new $13.5 million funding round for 'deep packet inspection' gear maker

Ellacoya Finds Deep Packets Up North

Light Reading
News Analysis
Light Reading
7/18/2005
50%
50%

Broadband traffic management company Ellacoya Networks Inc. knows how to pick its friends. The Merrimack, New Hampshire-based company is on the business end of a $13.5 million round of new funding led by BCE Capital, an affiliate of Bell Canada (NYSE/Toronto: BCE).

“The reason we like those folks,” says Ellacoya CEO Jerry Wesel, “is because of their contacts and their operational experience both on the equipment side and on the service provider side, not to mention the relationship that Bell Canada has with other carriers around the world that we can leverage pretty easily.”

Is the investment a sign that Ellacoya’s deep packet inspection devices are already in, or headed for deployment in, Bell Canada’s networks? (See Bell Canada Reports Q3.)

“Bell Canada is now actively looking at this technology,” says BCE Capital managing director David McCarthy, adding he's unable to provide more detail. “Venture capitalists, unfortunately, get to hear a lot more due diligence [information] than you journalists do,” he explains.

McCarthy says the engineers at Bell Canada had a voice in BCE’s decision to sign the multi-million-dollar check to Ellacoya.

“Of course we always have that dialogue,” McCarthy says. “Of course I can’t tell you exactly what they said, but, as a standard part of our relationship with Bell Canada, we do include them in the process; we solicit their feedback.” Of course.

“We do operate independently of Bell Canada and tend to invest in things that are a little bit out in front of where Bell Canada currently is,” McCarthy says (see Nortel, Bell Canada Research Rural Divide).

If it’s not a slam dunk at Bell Canada, then what exactly is the draw for the VCs? Ellacoya says it’s now “getting traction” with Tier 1 carriers after 6 years of existence (see Ellacoya Lands Korean Deal). The company has already announced wins at Shaw Communications Inc. in Canada and @NetHome in Japan (see Ellacoya Sees Deep Packets at Shaw).

But an in at Bell Canada would do much for the company’s prospects, and perhaps the patience of its investors -- especially Lightspeed Venture Partners, which has stuck it out since 1999 (see New Startup: Ellacoya). (Disclosure: Lightspeed is an investor in Light Reading).

The other three original investors have since gotten out. They are: Bessemer Venture Partners, Centennial Ventures Inc., and Goldman Sachs & Co.

Atlas Venture and Flagship Ventures joined Lightspeed as investors in 2003 (and did a restructuring of the company). (See Is Ellacoya on the Comeback Trail?.) The three did another $7 million round last summer, Wesel says (see Ellacoya Snares $7M).

This latest round of funding, Ellacoya’s fifth, also includes money from new investor Canaan Partners.

Presidio Venture Partners LLC and Sumitomo Corp. have also invested at some point along the way, according to the Ellacoya Website. By Light Reading's calculation, Ellacoya has gone to the well for around $132 million to date.

Wesel and McCarthy are confident that a payday is on the horizon. Wesel says Ellacoya now has several unannounced wins with Tier 1 carriers, and is currently trialing and testing with multiple others. Ellacoya’s 2004 revenues tripled over its 2003 numbers and continue apace for 2005, Wesel says, but declines to give specific numbers. And Ellacoya's product, Wesel points out, now has six years and $100 million of development behind it.

Ellacoya sells a traffic management hardware and software “kit” that broadband providers use to differentiate between various types of packet traffic running over their networks. With that information providers can set up tiers of service or bandwidth usage caps, or reserve bandwidth for applications (like gaming) that require real-time user interactivity.

Ellacoya began by offering a suite of broadband service delivery products, but hit hard times after the boom years and has since focused its products on IP traffic shaping and control (see Ellacoya Cuts Staff -- Again). The company’s portfolio currently includes the e30 switch for large carriers and the smaller 4000 series switch for smaller operators (see Ellacoya Tweaks Service Control).

Wesel says cable companies were the first to adopt Ellacoya’s solution, and they still comprise about two thirds of the company’s 75 customers (see Ellacoya Demos Cable VOIP Stuff). The cable companies, however, will contribute only about half of Ellacoya’s revenues this year.

Ellacoya’s headcount is now “just north of 72,” Wesel says, but that the new investment money will pay for "significant hiring" of engineering and sales and marketing staff.

— Mark Sullivan, Reporter, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Documentaries
The Rise of Virtual CPE

1|27|15   |   01:38   |   (3) comments


As NFV strategies evolve from tests and trials to production telco networks, expect to hear a lot about virtual CPE (customer premises equipment) rollouts during 2015.
LRTV Documentaries
Optical Is Hot in 2015

1|23|15   |   01:56   |   (2) comments


Optical comms technology underpins the whole communications sector and there are some really hot trends set for 2015.
LRTV Custom TV
Policy Control in the Fast Lane

1|22|15   |   2:57   |   (0) comments


What's making policy control strategic in 2015 and beyond? Amdocs talks with Heavy Reading's Graham Finnie about the key factors driving change in the data services landscape. Find out what his policy management research reveals about the road ahead for policy control – and sign up for
LRTV Documentaries
Highlights From the 2020 Vision Executive Summit

1|21|15   |   4:33   |   (2) comments


In December 2014, Light Reading brought together telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Cisco's Doug Webster shared his company's ...
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Harmonic, Helping Carriers Accelerate 4K Video Deployment with Huawei

1|20|15   |   5:42   |   (1) comment


At IBC, Peter Alexander, Senior Vice President & CMO at Harmonic, speaks about the growing interest in pay-TV service and its branching into multiple devices.
LRTV Huawei Video Resource Center
Sony Marketing Director Olivier Bovis Discusses the Outlook for 4K and Cooperation With Huawei at IBC 2014

1|20|15   |   6:50   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Envivio, Helping Carriers Accelerate 4K Video Deployment

1|20|15   |   2:57   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Pay-TV's Networked Future

1|20|15   |   6:29   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about the future of the pay-TV industry and its transition.
LRTV Huawei Video Resource Center
Jeff Heynen: Distributed Access Will Help MSOs Compete in the Future

1|20|15   |   2:26   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about moving to distributed access and the future trend of cable business.
LRTV Interviews
Cisco Talks Transformation

1|20|15   |   13:02   |   (0) comments


In December 2014, Steve Saunders sat down with Cisco VP of Products & Solutions Marketing Doug Webster at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Cisco's approach to network virtualization as well as how service providers can begin to monetize high-capacity networks through the end of the decade.
LRTV Interviews
Bob Wilson, Arsenal Legend: The Light Reading Interview

1|16|15   |   35:36   |   (3) comments


Arsenal goalkeeping legend Bob Wilson was Light Reading's guest interviewee at the 2020 Vision Executive Summit in December. See what the former soccer star and sports broadcaster had to say when he took to the stage in Iceland.
LRTV Custom TV
What MEF Third Network Initiative Means for SDN & NFV

1|14|15   |   6:13   |   (0) comments


Vitesse Semiconductor CTO Martin Nuss discusses the importance of the MEF Third Network initiative and why it's good news for SDN/NFV industry initiatives.
Upcoming Live Events
February 5, 2015, Washington, DC
February 19, 2015, The Fairmont San Jose, San Jose, CA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
September 9-10, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
December 1, 2015, The Westin Times Square, New York City
December 2-3, 2015, The Westin Times Square, New York City
Infographics
Hot Topics
Google Continues Gigabit Expansion
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/27/2015
BlackBerry Wants Net Neutrality Protection – That's Just Sad
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/22/2015
Verizon Ready for Google MVNO Challenge
Dan Jones, Mobile Editor, 1/22/2015
FiOS Picks Up Pace Again
Alan Breznick, Cable/Video Practice Leader, 1/22/2015
Indiana Carrier Takes Fiber to the Farm
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/22/2015
Like Us on Facebook
Twitter Feed
Webinar Archive