Hoping to buoy the slumping service provider sector by tapping unused bandwidth from existing network infrastructure, Akara Inc. recently raised $30 million in its second round of private financing. Proceeds from the deal will largely be used to help push the Waltham, Mass.-based company’s initial product offering, an optical utility services platform that is scheduled to be officially unveiled Monday.
“People today are being more prudent and looking for simple solutions that will work in conjunction with their existing systems,” said Greg Smith, president of Corning Innovation Ventures, which co-led the Series B funding. “Akara has a proven solution that is simple and straightforward and actually works across an awful lot of different protocols. You can just drop it into an existing system and make it work for you.”
Moreover, the company seems to have a wide base of potential customers as it is targeting both service providers and enterprise end-users in certain verticals like finance and government that might be trying to build internal storage systems. So far, the firm has already lined up a handful of customers whose names will be released today along with the product announcement.
“I like the fact that Akara can sort of switch hit and address more than one market,” said Tim Lee, a director with VenGrowth, which co-led the second round transaction alongside Corning Innovation. “I know the market is kind of down on the service provider side right now but service providers will be around in the longer term and Akara will be there to help them.”
VenGrowth and Corning Innovation worked together to set the terms of the $30 million financing, although VenGrowth put in slightly more capital with a commitment of just under $10 million. Additional investors included Dain Rauscher Wessels, Morgan Keegan, Presidio Venture Partners, Sumitomo Corp. and Series A backers Battery Ventures and Greylock Partners.
“With Battery and Greylock we already had two strong U.S.-based investors, but we have our R&D operations in [Ottawa] so we wanted to bring a Canadian VC into the group… which we did with VenGrowth,” said Ed Ogonek, president and chief executive of Akara.
The vast majority of the $30 million infusion consists of private equity, although there is also a bit of debt thrown into the mix. This strategy follows that of Akara’s $17 million Series A round, which included $4 million in lease financing from Dominion Ventures.
Contact Dan Primack: Daniel.Primack@tfn.com