Arrcus Ramps Network OS with $30M Series B

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By: R. Scott Raynovich

There's no doubt that there has been some disappointment in the capabilities of open networking to penetrate the stranglehold of large proprietary networking infrastructure. That's why its exciting to see that the venture capital (VC) community is still willing to place bets on the potential to topple Cisco, Arista, and others. The latest bet is a $30 million investment in San Jose-based Arrcus. 

Arrcus is a software-defined networking (SDN) startup targeting high-availability routing for the network edge. It's got its own network operating system, called ArcOS. Today it announced a $30 million Series B funding round led by Lightspeed Ventures, putting it's total capital raise at $49 million. 

Arrcus has a well known team of refugees from Cisco as well as other prominent networking firms. Arrcus co-founder and CEO Devesh Garg, formerly the CEO at EZchip (acquired by Mellanox, which was acquired by Broadcom), told Futuriom in an interview on Monday that the funding will take the company to the next level as it expands from 50 employees to 100 employees in the near future. Garg said the company already has more than 20 paying customers and a couple of dozen proofs-of-concept in the works. 

With the funding round, the company has assembled an impressive pedigree of backers with several top VCs in networking, including Lightspeed, General Catalyst, and Clear ventures. 

So what makes Arrcus different from the other SDN players in the market? Arrcus officials stress that the company is focused on building a open, network OS that comes with high-performance routing capabilities. Garg points to the team's strong routing expertise. Keyur Patel, the company's Chief Technology Officer (CTO), was a long-time distinguished engineer at Cisco where he worked on modifications to important Internet routing technologies including Border Gateway Protocol (BGP) and virtual private networks (VPNs). The team also includes founder Derek Yeung, a former principal engineer at Cisco. 

The Arrcus team, including its investors, believes that technologies such as Internet of Things (IoT) and 5G will push more traffic and need for routing capacity toward the edge of the network. (This trend was recently outlined in Futuriom's recent FREE 5G, IoT and Edge Compute report.) Arrcus has integrated its open, software-defined OS with high-density 100G/400G commercial off-the-shelf (COTS) hardware based on Broadcom's Jericho2-based switching silicon. This networking technology will be targeted at hyperscale cloud, edge, and 5G networks. 

Garg took a shot at existing SDN companies, saying they haven't delivered on promise of open networking solutions because many of the products don't scale. Instead, said Garg, the existing solutions have created "Frankenstein" networks based on buggy open-source code. “People are still saying they need high-performance routing," said Garg. 

Arrcus points that it was the first to implement an open networking OS, its ArcOS, on Broadcom's Jericho2 platform, which can scale up to terabit switching capabilities. The idea is that as edge-traffic grows, the webscale approach that is build in cloud data centers today will increasingly be needed in data centers closers to the customers. This will require a commercial cloud network OS that can handle a massive surge in IP routes. "The long-tail of the routing table is increasing," says Garg. 

There is no doubt about the promise of open networking, but Arrcus will still have to prove what other SDN companies have had trouble demonstrating -- that they can take meaningful market share from the leaders that dominate cloud networking products, which including Cisco and Arista -- or even even cloud providers such as Amazon, Google, and Microsoft which build their own software. Part of the challenge will is not just be offering the best technology, but convincing customers to buy from startups that don't yet have the service and support infrastructure of the larger players.