DriveNets Scores $262 Million Series C

DriveNets, maker of a cloud-based networking system for service providers, has secured $262 million in Series C funding, bringing its total to $587 million and pushing its valuation farther north of its previous $1 billion. The investment, sizeable in these times of restricted capital, is a vote of confidence in the market for disaggregated cloud services.

DriveNets, one of the Futuriom 40, was founded in 2015 by Ido Susan and Hillel Kobrinsky. It replaces proprietary chassis from switch and router vendors with a Network Cloud software stack that runs on cheaper, white-box hardware. Controlled with Network Orchestrator software based on microservices, the white-box clusters can be applied to any kind of network infrastructure, including mobile access, core networking, public cloud datacenters, and edge applications.

“DriveNets’ approach of building networks like cloud allows telecom providers to take advantage of technological efficiencies available to cloud hyperscalers,” said CEO Susan in a press release announcing the funding.

An early win with AT&T (NYSE: T) helped validate DriveNets’ approach when that service provider opted to replace its core routing network with DriveNets platform. That helped push DriveNets to a Series B round of $208 million in January 2021 that pushed the company to a unicorn valuation.

New Funding, New Execs

DriveNets has been busy on all fronts. Since that funding in 2021, it claims to have doubled bookings year-over-year and scored 100 customers, grown network traffic on its software solution by 1,000%, and expanded its employee roster by 30% (LinkedIn shows nearly 350 employees as of this writing).

The company also recently hired three new execs, including James Morgan (ex-Juniper) who will be heading DriveNets’ European strategy; Ryan Donnelly (ex-Salesforce), who will become SVP of infrastructure; and John Sweeney (ex-Mavenir), who will be EVP Americas at DriveNets.

Facing a Challenging Future

DriveNets is part of a growing segment of cloud networking that looks to enable telcos to cloudify their network functions and hyperscalers to add multicloud capabilities. Its closest competitors include Arrcus, another Futuriom 40 firm, which has created a kind of massive operating system entirely in the cloud.

The disaggregated cloud-networking approach that made DriveNets a hit with AT&T has been embraced across the service provider industry. Telcos aren't the only takers: Customers include datacenter service providers such as CoreSite Realty, which has adopted Arrcus’ platform to provide a CoreSite Open Cloud Exchange (OCX) to power hybrid and multicloud automation and management. In another example, datacenter market leader Digital Realty (NYSE: DLR) has created a multicloud networking platform called ServiceFabric Connect based on virtual connectivity from network-as-a-service provider Megaport.

These and other examples herald strong demand for DriveNets’ approach, which competes with solutions from both Arrcus and Megaport. DriveNets will need its new funding to face off against these rivals and others as market momentum builds.

DriveNets’ Series C funding was led by D2 Investments with participation from existing investors Bessemer Venture Partners, Pitango, D1 Capital, Atreides Management, and Harel Insurance Investments & Financial Services.