Silicon Valley startup Graphiant navigated the current tough economic environment and scored another $62 million in Series B funding. This latest round, coupled with Graphiant’s Series A funding, brings the company’s total funding to $96 million. Lead investors are Sequoia Capital, Two Bear Capital, Atlantic Bridge and Harpoon Ventures.
Khalid Raza, founder of Graphiant said that this latest round of funding was difficult to secure. “In 2022 everyone was running to give you funding,” he said.
According to the National Venture Capital Association (NVCA), $240.93 billion in venture capital was invested in U.S. companies in 2022, making it the second highest year for venture capital investments. However, the NVCA also noted that deal activity was strongest in the first quarter of 2022 but a mixture of high inflation, rising interest rates and an unstable labor market caused deal activity to decline in the second half of 2022.
The recent collapse of the Silicon Valley Bank is creating even more instability for startups looking to raise money in 2023.
Those that are able to secure funding in the current environment are typically companies working in hot technology areas such as artificial intelligence (AI) or machine learning (ML). "If a startup gets funding now it's a function of proven market engagement," says Roy Chua, founder of research and analysis firm AvidThink. "Funding is more likely to happen in categories that are viewed as more resilient or likely to remain hot."
Graphiant’s value proposition
Graphiant’s technology may not be as sexy as AI or ML, but the company says it can deliver the performance and security of multiprotocol label switching (MPLS) without requiring any hardware.
Graphiant’s main proposition is that it separates the wide-area network’s (WAN) control plane from the data plane and the data plane resides in the company’s stateless core which acts as a hub through which all traffic is directed. That stateless core uses proprietary protocols to route traffic based upon customer and application metadata. Each traffic flow contains the routing information so the data can get to the right destination.
“We’re taking the best of SD-WAN and the best of MPLS,” Raza says, adding that Graphiant’s solution, which it calls the Network Edge, requires no software license because the company is using a network-as-a-service model. “We guarantee SLAs [service level agreements] through the middle mile. But the middle mile is just a forwarding device and the smarts are in the controllers in the cloud.”
If Graphiant founder Raza’s name sounds familiar, that’s because he also started SD-WAN company Viptela, which was acquired by Cisco in 2017 for $610 million.
Graphiant VP of Sales and Marketing Matt Krieg, also a former Viptela executive, said that the company is already working with several large service providers that want to use the company’s network-as-a-service solution outside their existing footprints but he added that these service providers will likely eventually using the solution inside their footprints too.
Krieg added that the company doesn’t plan to sell directly to enterprises but will work with partner programs or with service providers to tap into the market. The company plans to use this latest round of VC funding to build its sales channels and go-to-market strategy.
“Service providers have the perfect opportunity to monetize this,” Khalid said. “They can repurpose their central offices with compute and storage and grow their business.”
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