Latest injection of funding comes amid expectations of an SD-WAN boom and speculation that merger activity lies ahead.

Iain Morris, International Editor

January 23, 2017

3 Min Read
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, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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