Quality of service solutions provider Sitara Networks last week raised $23 million in a mezzanine financing led by Charles River Ventures. Founded five years ago, the company has raised a total of $88 million worth of venture capital to date.
Menlo Ventures came on board for Sitara’s latest round, which also included participation from OneLiberty Ventures, New Enterprise Associates, Oak Hill Venture Partners, Prism Venture Partners, Siemens, Van Wagoner Capital Management, MFS Investment Management, Deutsche Banc Alex. Brown, SI Ventures and Thomas Weisel Partners.
The company’s latest venture windfall will be used primarily to invest in new product development, sales and marketing.
“At a time when venture capitalists are very selective about their investments, we are fortunate,” says Malik Khan, Sitara’s chief executive and founder, who expects the company to be cash-flow positive sometime this year.
Quality of service (QoS) is a hot topic in the networking industry today, Khan says. Enterprises are demanding it, and carriers and service providers are worrying about how best to provide it. In short, QoS helps deliver the right information to the right people at the right time so they can make good business decisions, whether they relate to streaming media, e-mail or voice over IT applications.
VCs seem willing to bet on companies proficient in the space. Mark Siegel, a managing director at Menlo Ventures, says as companies explore ways to manage converged networks, QoS “is a key market” in which to invest.
“Companies are realizing the benefits [of QoS] for leveraging their existing infrastructures and as a result, we have seen Sitara’s deal sizes increase,” says Mike Zak, a general partner at Charles River Ventures.
Sitara CFO Mike Palin adds that while some enterprises offer partial QoS solutions and others do not scale well, the company is gaining traction with customers.
Sitara was last in the private equity market in August 2000, when it brought in $15.5 million from a group of backers, including Arbor Investors, Essex Investment Management, Kinetic Ventures, Van Wagoner Capital Management, Alex Brown Employee Venture Fund and Valhalla Capital.
Sitara has no immediate IPO plans, but may attempt to go out when market conditions improve.
Ken Ryan can be contacted at:Kenneth Ryan@tfn.com