Former Intel and Alteon execs bring total funding to $90 million for new data center startup

September 25, 2000

3 Min Read
Nexsi Nets $75 Million

Nexsi Corporation, a startup developing a services switch for data center applications, announced today that it has raised $75 million in its third round of funding, bringing its total equity financing to nearly $90 million.

Amerindo Investment Advisors led the round, with additional investors including Capital Research Group, Presidio Venture Partners, Mitsui Corp., and Soros Investments. Previous investors Sequoia Capital and Raza Ventures also participated in the round.

Such a large investment in one round shows that investors are confident about Nexsi’s potential. One reason could be its topnotch management team, which includes executives from Intel Corp., Alteon Websystems Inc. (Nasdaq: ATON), Cisco Systems (Nasdaq: CSCO), Extreme Networks Inc. (Nasdaq: EXTR), and Sun Microsystems Inc. (Nasdaq: SUNW).

“Seventy-five million is definitely impressive,” says Michael Kennedy, a managing partner for Network Strategy Partners LLC, a management consulting firm. "I think it shows a real confidence in their management. The list of credentials are impressive, and they seem to really bring together the right mix of skills.”

The company has a strong combination of software and hardware switching expertise. Ramesh Panwar, CEO and CTO of Nexsi, spent eight years in the microprocessor industry, first at Sun Microsystems and then at Intel. The company’s president and COO, Nazar Zaidi was the Chief Architect of the Itanium iA32 for Intel. And Mark Bryers, VP and chief scientist for Nexsi, was the founding CEO and CTO of Alteon Websystems, an intelligent load-balancing switch maker that was acquired by Nortel Networks Corp. (NYSE/Toronto: NT) this summer for $9.1 billion (see Nortel Buys Alteon for Big Bucks ).

Nexsi is developing a product it calls the Packet Service Router. While company officials are still vague about exactly what services the product will allow providers to offer, they have hinted that they will mostly likely include things like virtual private networks, firewalling, load balancing, quality of service (QOS) differentiation, and possibly billing. Through a combination of intelligent software and high performance hardware, the product will be able to look deep into packets at very high speeds without degrading performance through the network, says the vendor.

“What they need is an effective processing engine to handle lots of packets simultaneously at high speeds,” says Kennedy. “This would allow providers to bill individual packets differently or apply different security or QOS policies on a per packet basis.”

Nexsi isn’t the only vendor developing products that can handle more intelligent functions at higher speeds. Redback Networks Inc. (Nasdaq: RBAK), which provides products that do aggregation management at the edge, acquired Abatis Systems this summer to add more IP centric services to its product. Load-balancing Web switches from Alteon and Arrowpoint, which was acquired by Cisco, also plan to add more IP-service features to their switches (see Cisco Finds A Soft Spot for ArrowPoint).

Products from Nexsi aren’t expected to begin beta testing until early next year.

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com

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