- Nvidia led a fresh funding round for networking software company Arrcus
- Arrcus' CEO said it plans to work with Nvidia to enable networking for distributed AI
- Arrcus is aiming to become an IPO candidate in 2026 or 2027 and to replace the likes of Cisco and others as the default networking fabric of the future
Networking software company Arrcus just hooked a big fish. GPU juggernaut Nvidia contributed $15 million to a $30 million funding round the startup just closed. But CEO Shekar Ayyar told Fierce Network Nvidia’s involvement is about more than just money – there are strategic implications as well.
The end goal? To become an IPO-ready candidate in 2026 or 2027 and aspirations to replace incumbents like Cisco, Juniper and Arista to become the “universal network fabric for the future.”
That’s big talk, but Arrcus has already raised a total of $157 million since its founding in 2016 and counts the likes of SoftBank, Samsung Next (Samsung’s investment arm), Liberty Global, Aramco Digital and Hitachi Ventures among its backers and partners. And now Nvidia – one of the largest companies on the planet – is part of that pack.
Nvidia play
Here’s how Nvidia factors into the equation. In a nutshell, Ayyar said Arrcus is working with Nvidia to help it fill a networking gap and allow AI to easily migrate into a more distributed environment.
Today, Nvidia and others looking to provide tight coupling for GPUs use networking tools like InfiniBand and Nvidia’s NVLink switch for short-hop connectivity. This is great for AI clusters that are, for instance, being used for centralized model training.
But as widespread inferencing proliferates, there will be a need to connect not just racks but also data centers and edge locations using low latency technologies like ethernet and 5G. That’s something Arrcus is good at, Ayyar said. It provides a software networking layer that can sit agnostically on top of whatever hardware enterprises are using.
The arrangement with Nvidia is non-exclusive and Arrcus is continuing to work with other hardware partners like Broadcom. (And for the record, Ayyar said though Arrcus wants to replace Cisco on the software front, there’s no reason it couldn’t partner with the company to run its software on Cisco’s Silicon One platform. In fact, he said, Arrcus would welcome such a partnership.)
That said, Ayyar noted there is an increasing level of engagement with Nvidia and the potential for the pair to do things on the tech and go-to-market sides in a differentiated way.
Already, Arrcus is working with Nvidia and SoftBank on a proof of concept to show that 5G can be used to send data to a DPU using Arrcus’ ArcOS network operating system (NOS) solution and jointly developed SRv6 Mobile User Plane (MUP) technology. Moving the data path from a CPU to a DPU frees up precious compute resources for more important tasks, Ayyar explained.
“Modern networks are evolving to address customer needs in the era of AI,” said Kevin Deierling, Nvidia’s SVP of networking in a statement. “We’re collaborating with Arrcus to provide high-performance, secure and cost-efficient data center networking for a variety of accelerated computing applications.”
Eye on the prize
Ayyar noted he’s previously spoken about edge and 5G applications for its technology and has spent nearly a decade at this point focusing on platform success rather than profit. Thanks to AI, he added, conversations are finally shifting in Arrcus’ favor.
AI is a “forcing function” that is causing enterprises “start reinspecting their networks and do things differently from what incumbents have been telling them to do," Ayyar said.
The CEO noted Arrcus is working with many more companies than it can name publicly and said achieving even a 20-30% market share with just two or three of these would translate into $50-100 million worth of annual bookings.
“We are working with about 15-20 of these types of [large revenue prospect] customers today, of course betting on the fact that some subset of those will grow to be substantively on Arrcus as they go forward,” he concluded. “And that’s the bet.”
This story has been updated with the latest total for the funding round, which hit $30 million, and total funding raised to date.