RouteScience Connects With $30.5 Million Deal

Having convinced investors that network performance should no longer play second fiddle to Internet connectivity, RouteScience Technologies Inc. is expected to announce today that it recently secured $30.5 million in its second round of venture capital funding. The two-year-old route control equipment provider has now raised a total of $56 million, and has no plans for future private equity offerings.

Sevin Rosen Funds led the Series B deal with a $10 million commitment. Other backers included new participant Foundation Capital and return investors Sequoia Capital and Foundation Capital.

Jennifer Gill Roberts, a partner with Sevin Rosen Funds, said that she was apprised of the investment opportunity by Sequoia. Both Gill and Foundation Capital’s Adam Grosser took RouteScience board seats as part of the transaction.

Founded by a trio of former Cisco Systems employees, San Mateo, Calif.-based RouteScience offers enterprise customers the ability to better manage their Internet routing from the network’s edge. Not only does RouteScience’s technology – the initial version of which is already commercialized – help improve Internet performance via real-time routing analysis, but it is also designed to reduce costs by allowing customers to customize their networks to select lower-cost ISP routes when available.

“Enterprises need someone or something to help them do this, because providers themselves don’t have any financial incentive to solve the problem,” said Herb Madan, co-founder and chief executive of RouteScience. “You can get a connection from them and they’ll do their best for you so long as your data is destined for their network, but if you’re going to an AT&T subscriber, for example, then it just becomes hot potato routing.”

Rather than acting as an outsourced service provider, RouteScience provides actual stand-alone hardware to its customers, of whom there are currently 15. This equipment model is aimed at facilitating routing customization, and also at saving customers from relying on an external network.

It is important to note, however, that the service model still has significant industry support. Alan Spoon, a managing general partner with Polaris Venture Partners and investor in service-model-based Sockeye Networks Inc., said that a legitimate case can be made that service models help customers avoid the timely and costly upgrading procedures required every time an equipment vendor comes up with a new technological advancement.

While Sevin Rosen’s Roberts disagreed with Spoon by arguing that RouteScience can painlessly install new software, both stressed that the routing sector will likely be large enough to hold multiple participants.

“This is a relatively new category, and it’s going to expand,” Roberts said.

Dan Primack can be contacted at Daineil.Primack@tfn.com

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