Hitachi Boosts Arrcus Series D to $65 million

Hitachi has jumped into the Series D funding round for cloud networking company Arrcus, expanding the series D by about $15 million, according to both companies.

The additional funds come from Hitachi and other investors that wanted to expand their participation, Arrcus CEO Shekar Ayyar told Futuriom on Friday. Arrcus had previously announced a $50 million Series D, so a $15 million expansion would put the round at about $65 million, though the company did not cite the final number in the press release. Companies often leave flexibility in funding rounds for additional capital before the round officially closes.

Ready for AI Infrastructure

Ayyar told me that Hitachi's investment and involvement is important because of its role integrating large systems as cloud infrastructure expands for new applications such as AI.

“Hitachi is a multifaceted conglomerate," said Ayyar. "The venture arm is super important as a strategic partner both within Hitachi and at the system integrator arm. With the buzz around AI, our pieces align with the way Hitachi ventures looks at the world. The infrastructure is ripe for disruption. It’s not just about AI and training data. There’s also the question of compute capacity, that’s where we can support how infrastructure can support new workloads such as AI.”

Apparently Hitachi agreed, citing Arrcus in an effusive blog post on Medium. The post said Arrcus is playing an important role in the expansion of routing and switching in the cloud:

We believe that Arrcus’ innovative solution combined with a strong team with proven execution capabilities and market traction make it a compelling investment opportunity in the rapidly evolving networking industry. With the increasing adoption of Arrcus routing and switching solutions by Fortune 500 and Global 2000 customers, Arrcus and Hitachi Ventures are excited about the future potential of this technology.

In the infrastructure domain, hyperscalers are a bellwether for things to come — from Meta to Google to AWS, the hyperscalers are rethinking their datacenter and network design to meet the AI capacity. While the hyperscalers innovate across every layer of the technology stack, how can others, be it enterprises or telcos keep up with the growing need for flexible, cost-effective, scalable and programmatic networking solutions based on technologies that were built on networking protocols designed for the datacenters of the 90s.

The investment round was led by Prosperity 7, with participation from Liberty Global, General Catalyst, CLEAR Ventures, and Lightspeed.

Looking to Expand Asian Business

Founded in 2016, Arrcus provides the Connected Edge (ACE) platform for cloud-native networking. The programmable ACE platform is designed for more flexible and cost-effective multicloud connectivity with features like traffic engineering and telemetry.

Ayyar said the participation of Hitachi will help Arrcus with expansion in regions such as Asia, where it also has a big relationship with SoftBank as both an investor and as a customer. He said that the footprints of its customers continue to expand in areas such as financial services where demand for expanded networking is strong.

“We have 40-odd customer engagements and in many of them we are moving from one use case to many use cases,” said Ayyar.

Futuriom Take: Adding the Hitachi investment and global muscle is a big boost for Arrcus, demonstrating growing interest in cloud-native networking technology that can scale for new apps.