NFWare has only ten employees and was just a twinkle in the eye of founder Alexander Britkin around two years ago. But last year, the NFV startup found itself going head to head with equipment behemoths including Cisco, Huawei and Juniper for a slice of a networks deal with Rostelecom, Russia's biggest long-distance telecom operator. "To my knowledge, we were the only virtualized vendor that was allowed to play in the field," Britkin tells Light Reading.

With headquarters in Germany and an R&D presence in Russia, NFWare belongs to a new breed of software vendors that are looking to capitalize on growing interest in virtualization among telecom operators. By turning network functions into software programs, and running them on cheap servers instead of specialized hardware gear, operators hope to slash their costs and develop a service agility they have previously lacked, making the transition to New IP networks.

While players like Affirmed Networks Inc. and Versa Networks are chasing virtualization opportunities in the EPC and SD-WAN markets, NFWare is specifically targeting high-performance IP routing -- a business that is currently dominated by the likes of Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (NYSE: JNPR). It claims to have developed software that can process traffic at speeds of around 200 Gbit/s. "That is exceptional today in the market," says Britkin. (See NFV Made IoT Profitable for STC, Says Affirmed and Startup Versa Announces 'Carrier-Grade' Multi-Tenant NFV Platform.)

Others clearly see promise in the startup's offerings. NFWare has already raised a "six-digit" amount in funding from investors including Telefónica , Spain's incumbent operator. The company's non-financial support is already opening a lot of doors for NFWare, says Britkin. Moreover, its advisory board includes Dor Skuler, who founded CloudBand, Alcatel-Lucent's NFV orchestration business, before leaving Alcatel-Lucent (NYSE: ALU) (now a part of Nokia Corp. (NYSE: NOK)) at the end of 2014. (See AlcaLu Losing Key NFV Exec.)

NFWare is about to announce a second funding round, Britkin tells Light Reading, while it continues to work on its product portfolio. Currently, this includes carrier-grade NAT and load balancing functions, but the company plans to develop the load balancing product into a "fully fledged" application delivery controller. The ultimate goal, says Britkin, is "to commoditize all IP routing -- so all core routers and edge routers."

Additional funding should also help NFWare stay afloat while it builds a revenue-generating business. The startup began commercial deployments with small operators in Spain and Italy last year and is also carrying out projects with a number of Tier 1 players, including Telefónica and Rostelecom . Both have been conducting lab trials of NFWare technology and Britkin is hopeful of starting a field deployment with the Russian service provider in the next two months.

But are the world's biggest operators ready to entrust new players with a major commercial rollout of NFV technology? "These startups are not just good at doing trials and PoCs [proof of concepts] -- when they have good products there is no issue to have that deployed in operational networks," says Yves Bellego, the director of technical strategy for French telecom incumbent Orange (NYSE: FTE), when asked that question. Britkin reports similarly positive feedback from his own discussions with prospective clients.

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Nevertheless, there is evidently some concern that a ten-person company will be able to provide the necessary level of support. NFWare has been getting around that problem by joining forces with systems integrators in specific markets, particularly when targeting smaller service providers. It is also willing to partner with big vendors on some accounts if there is no overlap between product portfolios.

One of NFWare's key attractions may also be a short-term barrier to sales. Unlike its more traditional rivals, it is selling its software products on a pay-per-use basis, meaning customers do not have to make huge capital expenditure investments on hardware they may need only occasionally. "Not all customers are ready for that type of model," concedes Britkin.

Perhaps the biggest question hovering over NFWare is whether it can survive as the big guns focus their sights on virtualization, but Britkin is sanguine. "First, I think they will try to sell hardware for as long as they can and that gives us a couple of years to get to the market," he says. "Operators don't want a mono-vendor of networks -- they want solutions from different vendors -- and I'm not sure if big companies are that open."

On top of that, NFWare's technology smarts certainly appear impressive. Most of its engineers came from Intel Corp. (Nasdaq: INTC), the semiconductor giant, and operators are regularly taken aback when they see the software in action, claims Britkin. "Because we are just ten people, they think we will be able to support about 2 Gbit/s before crashing," he says. "When we show them 120 Gbit/s they are pretty surprised."

Could these capabilities, and the threat NFWare might pose to the established order, make the startup a takeover target for Cisco or Juniper? "Potentially, yes. I don't know their agenda," says Britkin. But he believes his organization occupies a fairly unique space in the NFV landscape, with its particular focus on high-throughput applications. With field deployments in the offing, that could make NFWare both a disruptive force and an enticing prospect.

— Iain Morris, , News Editor, Light Reading