A Canadian SD-WAN Startup Has More Customers Than Verizon

There is a lot hype about hot Silicon Valley startups in the software-defined wide-area networking (SD-WAN) market -- such as Viptela, which was recently acquired by Cisco for $610 million. Meanwhile, quiet Canadian startup TELoIP (pronound "Tell-Oh-IP"), with 40 employees, has been plugging away with a bundle of patents to deliver effective SD-WAN to 145 customers and 3,000 sites in Canada.

This is an impressive feat for the somewhat off-the-radar company based in Mississauga, ON. In comparison, Verizon recently told FierceTelecom that it has 90 SD-WAN deployments -- which, seen in global service provider scale and compared with TELoIP, does not seem that large.

TELoIP's success puts it among the top tier of startups that are emerging as effective network-as-a-service (NAAS) providers for the WAN, where small-to-large enterprises want a quicker and more efficient way to build broadband access to cloud, without having to manage their own complicated equipment setups. WAN NAAS providers can take orders online, ship a customer premises (CPE) box, and set up and manage broadband WAN for customers that don't want the hassle of running their own networks. Some of the other emerging players in this space include Aryaka Networks, which targets larger enterprises that need a global network, and VeloCloud, which is more like TELoIP because it is focused on small-to-medium business (SMB) and mid-market companies.

TELoIP has been around since 2011, but it took a more direct way to getting to market than most startups. It got its start as the provider of broadband to a large chain of convenience stores in Canada, known as Mac's. This anchor client enabled TELoIP to raise funding and develop its technology portfolio, which consists of 19 patents.

"Our target is SMB and mid-market. We've scaled, we have some deals that are 1,000-plus sites," says Kevin Suitor, the chief marketing officer of TELoIP. "We have customers in the 10-100 (site) range. They just want to run their business -- they want us to run their network."

Suitor says that TELoIP's strong intellectual property (IP) consists of patents for bonding and load balancing that can help with dodgy local loop technology. For example, it creates a bonded service over a bunch of low-end DSL loops, which is perfect for retail outlets with lots of sites that require a lot of access hookups. Suitor says that the differentiator of TELoIP technology is that it is proven in the field -- as demonstrated with clients such as Mac's -- whereas other SD-WAN providers have struggled with proving that their technology works out of the lab.

TELoIP also has an interesting investor base. It has raised $35 million entirely from individual investors, all of whom sit on the TELoIP board. These investors include big names in the communications space, including Chairman of the Board, Roger Davis, who was a senior executive at AT&T. Other investors/board members include Jim Meenan, former CEO of AT&T Canada, and Lindsay Sparks, a former Microsoft executive. Rui Luis, the CEO and CFO of TELoIP, was the former CEO of Digital Rapids Corp., which provides video processing technology to Time Warner, Sony, and CBS.

TELoIP has been adding to its roster. Michael Gagnon recently joined as VP of Sales. Gagnon was in charge of North American sales and channel at Nubo Software. Previously, Gagnon held senior sales roles with Talend, Coveo, Verint, Aspect Communications, and AT&T Canada. It's clear from the expansion of the sales team that TELoIP has its eyes on more US customers.

TELoIP's value proposition demonstrates how successful WAN NAAS providers are filling a gap in the market. They can come in, aggregate pieces of the local access network, lower bandwidth costs by as much as 50 percent, remove the need to install expensive networking equipment, and take the headache of managing the network away from the customers.

"A CCIE [Cisco Certified Internetwork Expert] usually costs $100,000 or more per year," says Suitor. "We can provide the whole network and service for less than that."

Another element being highlighted by TELoIP is that the SMB and retail mid-market may be one of the sweet spots of SD-WAN. This growing SD-WAN segment appears to be one of the healthier markets leftover from wreckage in the software-defined networking (SDN) space, where countless startups have crashed and burned -- and more are in the process of burning. SD-WAN appears to still be where it's at, especially if you can carve out a successful niche and demonstrate that to a growing customer base, as TELoIP has.