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Tasman: Lucky Seventh Round?

Having three or four venture funding rounds isn't unusual these days. But when the funding gets up to Series F or G -- that's round six or seven -- maybe it's best to change your name.

Router vendor Tasman Networks Inc. did that two years ago, switching from Tiara Networks. The new lease on life may have worked, as today, the company announced a $14.4 million venture round.

That totals $93 million in seven rounds during a seven-year lifetime. The latest round adds new investor Harbinger Venture Management, joining previous investors Mayfield, New Enterprise Associates (NEA), and Parker Price Venture Capital Inc. Some of Tasman's 85 employees also contributed to the round (see Tasman Scores $14.4M and Tiara Becomes Tasman).

Through so many rounds, you often get downrounds and "washouts." Early stages of Tasman's investment were almost certainly wiped out (see Washed Out in the Valley). In fact, the company's Website no longer lists many of the original investors. Mayfield and NEA are the largest shareholders, with equal stakes that total more than half of Tasman's ownership, according to Tasman CEO Paul Smith.

Tasman officials expect this round -- following a $15 million Series F in 2002 -- to be their last trip to the VC well. The money is earmarked for general expansion, both in Tasman's San Jose, Calif., headquarters and its operation in India (see Tasman Scores $15M and Tasman Opens R&D Center in India).

Tasman does have revenues and relationships, including a partnership with MCI Inc. (Nasdaq: WCOEQ, MCWEQ) that Smith says is going into its fifth year (if nothing else, MCI can coach Tasman on corporate name changes).

Tasman is a router vendor targeting low-speed edge interfaces such as T1 and DS3. Cisco presents the most obvious competition, with router lines from the 1700 to the "low end of the 3700," Smith says. Juniper reportedly is eyeing this space as well (see Juniper: The Other Cola? ).

The company sells to carriers directly, with enterprise sales coming through undisclosed OEM partnerships. "It seems like a good [arrangement] for a startup, not having to deal with all the marketing and branding issues associated with trying to break into the market," says Neil Osipuk, an analyst with Infonetics Research Inc.

The company's raison d'être is to integrate functions into the router, saving on the number of appliances deployed into the network. "Security is a big part of that," Smith says. "There are various different security technologies that our customers tell us belong in the router."

Tasman's focus on security was sparked only in the last two years, though. As security has become more of an issue, it's become clear that many router architectures don't have the processing power to add security functions comfortably, and Tasman found its architecture left enough computing headroom to make security integration feasible.

Exploiting that, Tasman's latest pitch is that its routers, coincidentally named "Tasman," can save money over feature-laden routers from others. "You've seen security integrate into routers, but our customers' observation is that the performance suffers," Smith says. "You need to buy a box two or three times more expensive than you wanted to get."

— Craig Matsumoto, Senior Editor, Light Reading
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