Force10 Rakes In $41M
The venture capital environment still has some life left. Today, Gigabit Ethernet switch startup Force10 Networks Inc. announced it has closed a $41 million C round of funding, bringing its total to date to $209 million (see Force10 Puts $41M in the Bank).
Impressive? In this environment, it’s definitely something to brag about. While many startups of the same size and age are cutting staff and struggling to keep their doors open, Force10 has been ramping up its sales force and announcing new customers (see Force10 Wins in Amsterdam and Headcount: Meet My Shareholders?).
The company has done well selling to universities and research facilities and is now making a push into large enterprises and Asian service providers. Steve Mullaney, vice president of marketing for the company, says the newly banked $41 million will be used to ramp up production of its 10-Gigabit Ethernet E1200 switch.
No new investors contributed to this round of funding. But all the previous investors participated, including New Enterprise Associates (NEA), U.S. Venture Partners, WorldView Technology Partners, Amerindo Investment Advisors Inc., and Pacesetter Capital.
The last time the company received funding was in July 2001 when it got $95 million. This latest round will fully fund the 225-person company, which is expected to reach cash-flow break-even by the end of year, says Mullaney. But he also adds that the company, which now has 20 paying customers, would have been able to achieve its financial goals with only $25 million in additional funding.
“If you can get money in this kind of environment, you take it,” he says. “It’s nice to have a buffer. You just don’t know what’s going to happen to the market and the economy in general. It’s better to be safe than sorry.”
Although he wouldn’t discuss details, Mullaney says that the company’s valuation has taken some hits. But he is encouraged that it has maintained its value as much as it has over the past year and a half.
Force10’s Ethernet switches go head to head with gear from Cisco Systems Inc. (Nasdaq: CSCO), Extreme Networks Inc. (Nasdaq: EXTR), and Foundry Networks Inc. (Nasdaq: FDRY). Just last month Force10 challenged its competitors to a pricing war when it announced it was slashing prices on its 10-Gbit/s Ethernet interfaces by as much as 44 percent (see Force10 Slashes 10-GigE Pricing).
— Marguerite Reardon, Senior Editor, Light Reading