P-Cube Inc. was founded in mid-1999, still a time of prosperity for venture-backed technology companies. But it wasn’t necessarily a great time to be in the market, according to Yuval Shahar, co-founder, president and CEO of P-Cube. While the free flow of capital was nice back then, the glut of technology companies in the transport space was obscuring who was a real contender and who was a profitless drone.
“There were so many companies making a lot of noise, so many messages, you couldn’t get yours in,” Shahar says.
Apparently that all behind Shahar now, as his company is expected to annouce today that it received $35 million in funding today.
While most entrepreneurs are cursing today’s economic malaise and the resulting dried up pool of available capital, Shahar is delighted. “The downturn has been good for us,” he says.
The downturn has shaken out the pretenders and spotlighted companies with real products, solutions and revenue. P-Cube makes software that allows broadband service providers to use their resources more efficiently by controlling access to their bandwidth. This Series C funding round came from new and existing investors.
Joining this round were new lead investor Granite Global Ventures, Venrock Associates and Accel Europe, which joined existing investors Accel Partners, ComVentures, Evergreen, Sandoz and TDF. Accel Partners brought in its sister organization, Accel Europe, to help with the funding.
This investment brings P-Cube’s total commitments up to $65 million so far.
“We’ve raised money in the best of markets and the worst … we can’t complain,” Shahar says.
What’s different now, he adds, is that the level of due diligence is much more stringent, more lengthy, lasting weeks and involving numerous interviews and follow-up.
The company will use the new funds for continued product development and marketing activities to take P-Cube to positive cash flow.
Shah says the round was oversubscribed. The company decided to cap it at $35 million, even though investors were knocking on the door to give more. The company may hold another close to accept additional financing.
The dilemma facing service providers, like P-Cube, today is how to keep pace with the growing number of applications, protocols, devices and services. P-Cube’s applications run the gamut from video games for teenagers to networks for work-at-home executives. It has also been partnering with big-name firms.
P-Cube recently inked an agreement with the global services North America division of telecommunications-equipment manufacturer Ericsson. P-Cube hopes the partnership accelerates the adoption of broadband services while reducing time-to-market.
P-Cube’s Shahar, who expects his firm to be at break-even by middle of 2003, likes playing in challenging times. What doesn’t kill you will make you stronger. “Companies that survive difficult markets have a chance to grow into real viable companies,” he says, pointing to Cisco and Oracle in the 80s and early 90s as companies that emerged into strong enterprises. “We have a chance to be a strong company.”
Scott Bonham, managing director of Granite Global Ventures, weighed in: “With their broadband networks in place, carriers must find ways to get more leverage from these investments by implementing IP service awareness and control at the application and customer levels.”
P-Cube has R&D facilities in its Sunnyvale, Calif. headquarters and Israel. In addition, it has six U.S. regional offices and a European sales office in London. “We have traction overseas,” he says.
Contact Ken Ryan at: Kenneth.Ryan@tfn.com