The last two years have witnessed a drop in funding activity, both in terms of dollars invested and number of rounds.
According to the Tracxn Report on the Enterprise Networking space, over $2.2B has been invested into the sector since 2011. The report covers enterprise networking companies which help in connecting computers and related devices across departments and workgroup networks, facilitating insight and data accessibility and act as backbone in an enterprise communication. According to the report, the sector has raised $2.2B since 2011, with NEA, Sequoia Capital and Lightspeed Venture Partners.
So far, $491 Million has been invested in ~30 Companies since 2015, and the report finds that funding in the space has decreased since the highs of 2012-2013, a period which saw the sector raise a total of ~$1B. This surge in funding during the timeframe can be attributed to the increased popularity the SDN concept drew in, and the period witnessed an increasing number of startups coming out from the SDN domain.
The last two years (2014-2015) have witnessed a drop in funding activity, both in terms of dollars invested and number of rounds. 2015 witnessed a marginal growth from the previous year in terms of funding amount, owing to an increase in the number of early stage funded companies in 2015 due to increased relevance of SDN and network virtualization platforms.
On the other hand, On the other hand, the number of late stage deals has decreased rather significantly over the last two years, when compared to the highs of 2013 which could be attributed to the gap in SDN technology concept emergence to technology adoption in the market.
In terms of the number of number of companies founded, 2015 witnessed a drop and with multiple acquisitions taking place in the market, we can expect this number to dip further. However, SDN will continue to drive the market as the gap to adapt the solutions lies in having a common platform which supports both the traditional and SDN. This is in keeping with the trend as the number of companies founded in the last 5 years have been focused on concepts of Virtualization, SDN, White(Brite) Box Switches and application based on SDN.
Around 50 startups around the technology of SDN have been founded, out of which nearly 30 startups have raised funding. Moving forward, the biggest benefit of software defined networking is how it supports, or will support, virtual environments and enterprises.
Business Models in Enterprise Networking
When we break it down to the segments within the Enterprise Networking space, Network management has the most number of startups. The increasing adoption of having strategic initiatives internal to the company and outsourcing IT functions to a trusted third party has led to rise of new companies in network management. Also, the Virtual Network Functions provided as SaaS model will drive the next decade, and will value as much as one-fifth of all IT operations outsourced to a third party, and it is safe to assume that the growth in network management solutions will continue to take place.
In terms of funding, the Software Defined WAN space (SD-WAN) has attracted the most funding, seeing SD-WAN has seen a total funding of $350 Million since 2011. Software-defined WAN (SD-WAN) is an approach to designing and deploying an enterprise WAN that uses SDN to determine the most effective way to route traffic to remote locations. The SD-WAN market is evolving with new startups emerging as well as traditional players extending their solutions, and notable companies include Velocloud (2012, $48M) Viptela (2012, $66.5M) & CloudGenix (2013, $34M).
The report does not cover companies which provide exclusive services like networking consultancy, network installation & services and resellers of network equipment
Preview the Enterprise Networking Report here:Tracxn-Research-Enterprise-Networking-Landscape-February-2016
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