Startup Company Profile #1: Arroyo

Arroyo Video Solutions Inc. is a high-flyer in the VOD space. So much so that Cisco Systems is rumored to be ready to gobble it up.

Founded in July 2002, Arroyo has raised over $25 million in two rounds of funding. Investors include Matrix Partners, DCM-Doll Capital Management, and Foundation Capital, as well as Time Warner Investments and Comcast Interactive Capital. Headquartered in Pleasanton, Calif., the company counts 50 employees and boasts initial MSO wins with Comcast, Charter Communications, and Time Warner Cable.

For years, MSOs complained that they were tired of the cost and complexity that come with proprietary VOD server hardware. Arroyo listened and delivered. When developing the Arroyo OnDemand platform, company co-founder and CTO Paul Sherer told his engineering team: "If you couldn't buy it at Fry's, you couldn't put it in the box."

In other words, Arroyo is a software company, delivering a VOD and network PVR (nPVR) solution that can run on standard Intel-based servers and high-performance SCSI drives. Among the first vendors to offer native 10-Gigabit Ethernet support, Arroyo's servers support more than 1,000 VOD streams per rack unit.

    Startup: Arroyo Video Solutions
    Innovation factor: 8 (out of 10)
    Likely Acquirer: Cisco Systems
    Handicap: 3-2 odds on Cisco Systems
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