Service Provider Cloud

ClearPath Slashes Staff Following Investment Crisis

Cloud networking provider ClearPath has cut its staff by about 50% after a lead investor pulled back funding. The company is focusing on short-term revenues and products, and rein in its NFV and SDN initiatives.

"We're focused in the short term on revenue generation rather than longer-term investment on the technology platform," ClearPath Networks Inc. CEO Cliff Young tells Light Reading.

The company is down, but not out, Young says.

It is looking to hire new staff that would bring payroll up to about two-thirds the level it was before, with a focus on short-term objectives.

Founded in 2002, ClearPath's legacy has been serving enterprise networking, but it recently expanded in telecom with investments in NFV and SDN. The company was making investments and developing PoCs, demos and evals with service providers, as well as hiring staff to engage with ETSI, OpenDaylight, the Open Networking Foundation, OPNFV and other NFV and SDN community organizations.

"Those are the areas we've had to pull back on, which we believe are hopefully temporary," Young says.

"While we have pulled back on those areas, we are looking to increase focus on developing solutions we have, to drive more revenue opportunities," Young says. "I would characterize this as a realignment toward revenue." ClearPath's revenue-generating solutions include virtual CPE, mobile security, SD-WAN and cloud-based virtual networking.

ClearPath has been funded by a wealthy "super-angel," who established a venture fund. Changes in that individual's personal situation required drastic changes to their financial priorities, focused on short-term investments with payouts in months rather than years, Young says.

"This has nothing to do with the prospects of the company -- we've never been better," he says. "We had more PoCs and offers to do PoCs than we could handle."

If the company is doing so well, why was it so reliant on a single, outside investor, rather than living off its own revenue and profits after 14 years? "The world is changing," Young says. "Every company is investing in NFV. It's just a question of whether they have funds from their treasury or whether they need outside capital. At our size, we must have outside capital."

ClearPath's setback is a glitch in a run of good investment news for networking infrastructure startups this year. Just this week, security server provider Skyport Systems announced a $30 million funding round led by GV -- formerly Google (Nasdaq: GOOG) Ventures -- and Cisco Systems Inc. (Nasdaq: CSCO) Investments. (See Alphabet, Cisco Join $30M Skyport Security Funding Round.)

Find out more about cloud networking at our upcoming Big Communications Event in Austin, Texas, May 24-25. Register now!

Previously this year, Plexxi , Cumulus Networks , Big Switch Networks and VeloCloud Networks Inc. have all seen windfalls. (See Two SDN Startups Join 2016 Funding Parade, SDN Startup Big Switch Lands $48.5M Funding and Cisco Joins $27M Round for SD-WAN Startup VeloCloud.)

Young says he's saddened by the layoffs, all of whom were blameless "A-players," many of whom he hired personally. Likewise, he says, he doesn't blame the investor, with whom Young says he's had a long and respectful relationship.

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, West Coast Bureau Chief, Light Reading.

mendyk 3/18/2016 | 9:34:03 AM
Our appeal has become more selective "We've never been better." Those words should reassure customers more than a triviality like a 50% staff reduction.
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