SD-WAN Startup Aryaka Raises $45M From DT, Others

An SD-WAN startup called Aryaka has snagged a juicy $45 million in a Series D round of funding, attracting investment from German telecom incumbent Deutsche Telekom, among others.

While the funding was led by Third Point Ventures, the participation of a major European service provider in the latest round points to the growing interest among telcos in SD-WAN technology.

Aryaka claims this is also the first time that a telco has made an investment in a global SD-WAN provider.

As the name implies, SD-WAN technology is a subset of software-defined networking (SDN) in which wide area network connections are essentially "cloudified" and made less dependent on proprietary hardware.

The technology is increasingly regarded as one to watch in 2017, and recent research from Heavy Reading suggests the telecom market is poised for an SD-WAN boom. (See Getting Hotter: Fog, LTE-A Pro, MANO, NB-IoT & SD-WAN and SD-WAN Boom Coming in Next 2 Years.)

Nevertheless, the proliferation of vendors targeting the SD-WAN opportunity has also prompted speculation that a round of consolidation may be imminent.

So what makes Aryaka so special?

For one thing, according to the company's own publicity materials, sales have more than doubled -- on a year-on-year basis -- in each of the last five quarters. Aryaka's customer base has also been growing at an impressive clip and now includes 500 enterprises spread across 63 countries.

It is this success in the enterprise sector that has partly drawn the interest of Deutsche Telekom AG (NYSE: DT)'s investment arm.

"Aryaka... addresses the connectivity needs of modern global enterprises as they require fast and stable performance for their mission-critical applications anywhere in the world," said Jack Young, the head of venture capital at Deutsche Telekom Capital Partners, in a prepared statement. "The company's ability to deploy connectivity within days, and deliver significantly faster application performance in global locations, uniquely addresses the shortcomings of other connectivity solutions, such as MPLS, and Internet-based SD-WANs."

Despite its enterprise focus, Aryaka counts at least one major telco as a customer in the form of China Mobile.

That raises the possibility that Deutsche Telekom becomes a customer, besides an investor, as it looks to reap the benefits of SD-WAN technology.

The German operator has already made some SD-WAN moves. Last June, for example, it struck a deal with another SD-WAN provider called VeloCloud Networks to connect research facilities in Berlin with an innovation center in California.

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Based in Milpitas in Silicon Valley, Aryaka was founded in 2009 and claims to have designed the world's very first SD-WAN. It sells network-as-a-service offerings that take advantage of its global points of presence.

The $45 million it has just received means Aryaka has now received about $120 million in funding altogether. It plans to use the latest funds to expand its "global reach."

In a recent Heavy Reading survey, 84% of telco respondents rated SD-WAN technology as either critical or important for service providers looking to automate operations and reduce costs.

Some two thirds of the 121 respondents also reckoned that wide-scale SD-WAN rollouts would occur over the next 24 months.

— Iain Morris, , News Editor, Light Reading

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