Monday, October 1, 2001
But we are going against the current climate of bad news and lack of confidence in the high-tech industry, and feature 25 promising Indian-founded tech startups — the “siliconindia Cool 25.”
Why?
As we put together our si100 list last month, we decided to omit early stage companies that haven’t yet shown significant revenues, and only include more seasoned firms. But early stage startups are important companies to feature, and we want to give them their due. The best venture investors are still out there looking to make things happen, and yes, the great companies of tomorrow are being formed as we speak.
It’s questionable that even marquee VC investors will be able to deliver on the promise of their billion dollar war chests. But nobody would deny that the VC funding process, and the regenerative startup culture of the tech industry is a fundamentally healthy thing — even if with every up-cycle the hype gets a little out of hand.
The companies we have featured were picked subjectively, taking into account the quality of the founders and investors, the market landscape that each company hopes to thrive in, the business fundamentals of the idea itself as well as the company’s ability to execute thus far.
Many of the companies featured are very early stage, and not all will survive the market, but we encourage you to remember these names, as we are confident that at least some will survive, thrive and grow into the success stories of tomorrow.
Fighting through the crowded mess in the networking sector is looking harder and harder. Some companies think they can still make carriers, data centers and enterprises buy their stuff.
1. Abeona Networks
Founded: December of 1999 by Vaibhav Malawade, CEO
Funding: $13 Million (Sequoia, KPCB)
www.abeona.com
Abeona’s profile is pretty enviable — with sage Sequoia Capital partner Pierre Lamond, and Vinod Khosla both taking seats on the board. Founder and CEO Vaibhav Malawade recalls taking his plan to Sequoia and KPCB. Pretty soon the team had a term sheet from Sequoia. Khosla was going on vacation, but soon got back and asked for a week to do his due diligence. Sequoia was kept waiting for a few days, and both firms got in on the deal.
Abeona is just emerging out of stealth mode. The company’s product is, as new technology goes, pretty easy to grasp.
The idea is to go into burgeoning Internet data centers and find a much more efficient way to do things, using a combination of both server and networking technology. As it is, the data center world, between servers and the firewall, is a tangled mess of web servers, server load balancers, cache, and security products. Abeona wants to change that, with a box that can, if needed replace all of these disparate elements and augment server performance and capacity tenfold.
The system translates into reduced operational and infrastructure costs for customers, and that’s music to the ears of CIOs struggling to manage growing data requirements on tighter budgets at target clients like financial services companies, and even large e-tailers like Amazon.
It’s an ambitious venture. Abeona’s current box can plug and play into existing systems to simply improve server performance, or it can be used in green-field operations. Khosla apparently expects the company to have a billion dollar run rate in four years. For now, the first customers are just signing up. These guys have big plans. Now they need to sell boxes — lots of them — to live up to the buzz.
2. Niksun
Founded: 1998 by Parag Pruthi, CEO, Dr. Mahendra Pratap, VP Solutions Engineering
Funding: $30 million (Hillman Company, Redwood Venture Partners, ABN-AMRO)
www.niksun.com
Niksun’s CEO and President Parag Pruthi says his company has a huge market opportunity in the network monitoring space. Its products continually monitor networks and prevent unauthorized users from interacting with servers and accessing valuable information.
Pruthi uses an analogy: there are fundamental differences between security systems based on building alarms and the 24-hour surveillance systems that use infrared cameras, motion detectors and security cameras. Companies involved in network security are only making improvements in the “alarm technology,” he argues. Niksun, on the other hand, offers a 24-hour network security system, a truly distinguishing difference.
The company has four products: Net VCR, which does SLA (service level agreement) monitoring and QoS (quality of service); Net Detector, which focuses on the continual monitoring of the network; Net Usage, which provides IP billing; and Net Reporter, which is a report generation software. According to Datamonitor, the security management market will grow to $1.2 billion by 2003.
The company has 200 employees, has raised $30 million and has a burn-rate of $1 million and customers like Daimler Chrysler, Nortel, Verizon, UAL, Morgan Stanley and Salomon Smith Barney.
3. Peribit Networks
Founded: May 2000, Amit P. Singh, Chief Scientist, Balraj Singh, Chief Engineer
Funding: $10.4 million (Accel, Foundation Capital)
www.peribit.com
During the tech boom, Peribit Networks would have been a marketer’s dream. The company pitch combines two of the hottest words in the tech industry over the last few years: networking and biotech.
Co-founder Amit Singh was doing Ph.D. research in biomedical informatics before founding Peribit. Specifically, he was working on pattern recognition systems that could spot the all-important patterns in gene sequences. He had also done some work in computer science; his brother and co-founder Balraj Singh was a career semiconductor engineer.
Singh’s idea was simple: Information carried over IP networks in packets involves a number of useless repetitious signals that take up bandwidth. Using technology developed to discover repetitive gene sequences, the superfluous packets traveling over wide area networks could be located and eliminated in such a way as to dramatically increase network capacity.
The resulting product is the SR-50, a box that installs on the LAN side of any edge router. Clearly, the target market is not the core of the network, where there is a bandwidth glut. But there could be demand in the more constrained areas at the edge, within the local area networks of large corporations.
4. Laurel Networks
Founded: 1999 by Atul Bansal, CEO, Stephen Vogelsang, VP Sales, Robert Warden, VP Engineering
Funding: $77 million (NEA, Trinity, Worldview)
www.laurelnetworks.com
Laurel Networks’ IP compatible Service Edge Router will allow large telecom carriers such as AT&T and MCI WorldCom to use their existing IP infrastructure and provide new services on a single platform. It’s a familiar concept, echoed to some extent by competitors like Amber Networks (acquired by Nokia), Cisco and Juniper. Good thing the “allowing carriers to more easily make money on IP services” business model is projected to turn into a huge market.
What Laurel does is provide routers and switches that use the IP backbone of carriers, where there are large amounts of stranded bandwidth, to deliver more services on a unified platform. Atul Bansal, co-founder and CEO of Laurel, says his company is able to do this better than the competition. He also suggests that 88 percent of the $26.7 billion in carrier revenues last quarter came from providing ATM, Frame relay and basic IP services.
5. Bay Packets
Founded: February 2000 by Anurag Goel, CTO, Sanjeev Chawla, COO, Gaurav Goel
Funding: $24 million (Lucent Venture Partners)
www.baypackets.com
Bay Packets CEO Ken Epps used to be Chief Marketing Officer of Williams Communications. So one would hope he knows what carriers want these days. But spending has come to a screeching halt, and selling startup products will be tough.
Bay Packets has developed a software product that brings intelligence in the network by providing a service layer that interfaces with the diverse set of switches in the market today. The idea is to enable carriers to deploy new services (VPN, 800 number services etc) over existing infrastructure.
There are others trying to address the same problem. Co-founder Sanjeev Chawla says that Bay Packets products under trials with 4 tier one carriers in the U.S.
A quiet storage storm has been breaking in the portfolios of some of the top VC firms. The data storage market is quickly getting crowded with startups, before most have even unveiled their products. Here are six of the rising stars.
6. Zambeel
Founded: September 1999, by Dr Waheed Qureshi, CTO, Sid Agrawal, Chief Zambeelian
Funding: $26.5 million (KPCB, NEA)
www.zambeel.com
According to CEO Darren Thomas, formerly an exec with storage heavyweight Compaq, Zambeel offers “a storage solution that is completely lights out.” That’s typical vague stealth mode language. What Thomas and founder Sid Agrawal can communicate is that Zambeel is addressing the problem of storage management.
The Zambeel architecture can apparently take off-the-shelf components and provide a solution that completely automates manageability. “You turn this machine on, if it has a failure it replaces the part,” Thomas says. “When an employee reaches 80 percent of his capacity it can automatically give him another five gigs.” The system is supposed to cut down on high personnel and management costs in traditional solutions.
7. Rhapsody Networks
Founded: 2000 by Venkat Rangan
Funding: $12 million (Sequoia, Accel)
www.rhapsodynetworks.com
Rhapsody is looking, in general terms, to provide solutions for the effective management of storage networks. It will compete for mindshare and market share with a number of others in the space (including Nishan Systems and 3PARdata) as well as established SAN switching leader Brocade.
NetworkAppliance President Tom Mendoza and VP of Engineering Dave Hitz both sit on Rhapsody’s board, which should help matters. Rangan notes: “Large enterprises are just beginning to see the value of SAN (storage area networks).”
Marquee backers Sequoia and Accel will put their weight behind Rhapsody and look to drive it to success.
8. Confluence Networks
Founded: August 2000 by Nilesh Shah CEO, Kumar Gajjar, VP Software Engineering, Chan Ng, VP Technology
Funding: $15 million (NEA, Redpoint)
www.confluencenetworks.com
Nilesh Shah joined with Romulus Pereira and Piyush Patel to build Yago Systems into a blockbuster acquisition by Cabletron in 1998.
Confluence Networks looks to be his next big move. Confluence is in the storage arena, but there’s not much to know about the company, beyond management pedigree and backing.
Confluence has both. VP of Software Engineering Kumar Gajjar, a storage startup veteran who sold his last company, smartSAN Systems, to Gadzooks Networks, was thinking of starting another company. VP of Technology Chan Ng, an IBM veteran, was actually trying to recruit Gajjar for his own company. Shah somehow got both of them to join him. NEA and Redpoint had no problem backing the deal.
Shah echoes a familiar storage company pitch when he suggests that manageability has become the crux of the problem that needs to be solved in the storage market. Shah jokes that many storage startups have “more networking people than storage people.”
In his words, “Storage today is more like phone switching in the early 1900s. You connect the server, you connect the storage, and hope that it works.” Confluence will try to change that.
9. 3PARdata
Founded: May 1999 by Dr. Ashok Singhal, CTO
Funding: $116 million (Mayfield, Worldview)
www.3pardata.com
Raising $100 million is a daunting challenge these days, but it’s no guarantee of success. 3PARdata, which is flush with VC money from it’s recent $100 million third round, makes hardware and software for data storage.
“The size of this round during the current investment climate and the caliber of the investors is indicative of the quality of the technology, people and strategy of 3PARdata,” said Kevin Fong, managing partner of Mayfield and a board member at 3Pardata.
The company’s products are not yet in the market, and are due to be released next year, according to Gabe Gotthard, the company’s vice president of marketing and business development. He identifies Cereva and Yotta Yotta as direct competitors, and EMC and Hitachi can’t be ignored.
10. Trebia
Founded: July 2000 by Jon Sreekanth, CTO, Tom Riddle, VP Business Development
Funding: $40 million (Kodiak, Raza Foundries and BancBoston Ventures) www.trebia.com
All that Trebia is revealing is that it is developing the industry’s first “storage network processor.” Communications ICs were a big hit last year, we’ll see if the idea can be properly adapted to storage networking.
11. Nishan Systems
Founded: 1998 by Aamer Latif
Funding: $90 million (ComVentures, Lightspeed Venture Partners, Raza Ventures, Sofinova Ventures)
www.nishansystems.com
Nishan was an early entrant into the IP storage solutions market. It offers a native IP and Ethernet framework for storage networks that is interface agnostic (supporting iSCSI, Fiber Channel and so on). The company has been surprisingly un-stealthy in its approach. VP of sales Terry Eger has made some bold statements to the press about market leaders EMC and Hitachi, suggesting that those firms are too slow to adapt to changing technology and will be left behind. Those claims will be tough to back up.
12. Sanera
Founded: 2000 by Raj Cherabuddi, CEO
Funding: $35 million (Storm Ventures, Acorn Campus)
www.sanera.net
Founder and CEO Cherabuddi was a former chief architect at Sun Microsystems. The company is extremely stealthy, but is building SAN switching products to compete with entrenched market leader Brocade.
Life is easy when you’re in stealth mode. We just had to go with the hype and point out some companies which have yet to tell the world anything, but which might be good to keep an eye on in the coming months.
13. nthOrbit
Founded: 2000 by Vani Kola
Funding: $7 million (Sequoia Capital)
www.nthorbit.com
Vani Kola is once again tackling the supply chain software space. Having sold her first supply chain company, Rightworks, to Internet Capital Group for $667 million in March 2000 (Rightworks has been recently acquired by i2), she took a one-year hiatus to come right back and launch nthOrbit.
While Rightworks dealt with procurement automation within an enterprise, nthOrbit is looking to automate and manage multi-tier collaboration in real time. This enables companies to have visibility through the different layers of the chain — manufacturers, distributors and retailers and the various companies that they employ. In any given company, there are about four or five different tiers involving 100 to 120 companies in the supply chain. Maintaining the flow requires a difficult, yet reliable balancing act and Kola, with nthOrbit, is apparently ready to walk the tight rope.
Kola declines to comment on the details of the 20-person company beyond the fact that it has raised $7 million and is backed by Sequoia capital.
“It’s fun doing it the second time around,” she says.
14. Force 10
Founded: May 1999 by Prabhat K. (“PK”) Dubey, CEO, Som Sikdar, CTO Funding: $160 million (NEA, WorldView, USVP, Amerindo)
www.force10networks.com
The words of Force10’s VP of marketing, ex-Cisco exec Steve Mullaney, tell the story: “At this time we are trying to be as quiet as we can in the general marketplace until we are ready to tell the world what we are doing.” A tankerload of VC funding from NEA, USVP and WorldView signals that something big is up at the networking startup.
The company has lured some top talent, like CIO and VP of business development John Jendricks, formerly at Juniper, where he held the same two titles. Hype or substance? We’ll see.
15. Centrata
Founded: 2000 by David Ratajczak, Boris Pevzner, and Shishir Mehrotra
Funding: KPCB, Dot Edu Ventures, Invesco, Presidio Venture Partners www.centrata.com
Centrata is an application infrastructure provider creating product solutions for next-generation datacenters — pretty vague. David Ratajczak, Boris Pevzner, and Shishir Mehrotra, all in their 20’s, founded the company.
The buzz comes from Vinod Khosla’s personal involvement with the company. Centrata is currently in the stealthiest of stealth modes.
The pressure’s on for a repeat performance for the founders and executives of the next three networking companies, since all three saw blockbuster entrepreneurial success during the boom. Can they deliver a second time?
16. Atrica
Founded: February of 2000 by Avinoam Rubinstain, CTO
Funding: $40 million (Accel, Benchmark)
www.atrica.com
Vivek Raghavan left his position as CEO of Redback Networks in 2000 during a management shakeup. Redback went without a CEO for several months — VC Pierre Lamond filled the management gap in the interim — before the company brought in Kevin DeNuccio in August. Raghavan, meanwhile, was snapped up immediately and named CEO of metro optical startup Atrica. He’s no stranger to entrepreneurial success. He founded Siara Systems, which Redback bought for a tidy $4 billion. But the question remains: Will the new project deliver in a tougher market?
Like just about any networking startup worth talking about these days, Atrica is targeting the metro networking arena, specifically optical Ethernet products.
No doubt looking for an upswing in his career after the less than stellar exit from Redback, Raghavan suggests that what drew him to Atrica was the fact that it was the first company to develop a truly carrier-class metro optical Ethernet product. Optical Ethernet may take some time to get solid traction in the market, however. Raghavan admits SONET technology is still entrenched and is likely to be for some time.
17. Teraburst
Founded: January 2000 by Ashok Jain, CEO
Funding: $51 million (Tyco Ventures, Raza Ventures, Merrill Lynch Ventures, Labrador Ventures, Satwick Fund)
www.teraburst.com
TeraBurst CEO Ashok Jain's last venture, Internet Devices, was sold to Alcatel for $180 million, and prior to that he co-founded NexGen with Atiq Raza, before that company was sold to AMD.
The basic idea behind TeraBurst, according to Jain, is to provide a switch that delivered on the advantages of both all-optical and optical-electronic-optical switching. The TeraBurst Switch uses optical cross-connect technology.
18. Axiowave
Founded: May 2000 by Mukesh Chatter, CEO, Ray Stata, Chairman
Funding: $42 million (Madison Dearborn Partners, Soros Private Equity)
www.axiowave.com
Nexabit co-founders Mukesh Chatter and Ray Stata are at it again. But this time the market's not quite as favorable, and the words "terabit router" just don't have the same ring to them. But the pedigree is still strong - Stata was Chairman of Analog Devices. Axiowave, in rough terms, is building a networking box that effectively connects electronic transport with optical transport. The company is still in stealth mode.
Is wireless really a bad word these days? Some opportunities may still be out there in the midst of the 3G fiasco.
19. Flarion
Founded: February 2000 by Rajiv Laroia
Funding: $12.5 million (Bessemer Venture Partners, Charles River Ventures)
www.flarion.com
Founder Rajiv Laroia developed the Flarion technology at Bell Labs. He started trying to develop data systems for wireless networks four years ago. He suggests that he predicted the problems that would happen with 3G networks, since those networks are really not designed around connectivity to an IP network.
So he worked to develop an entirely new wireless system designed around packet data — which could also do voice — and which didn’t run up against the hurdles and costs associated with 3G. The project was developed at Lucent for two and a half years until it was spun off in February 2000.
With the wireless world in disarray, it’s a difficult time to come in with a brand new system, especially when giants like Nokia and Qualcomm all have such an intense vested interest in existing standards.
“It’s a radically different technology,” Laroia admits. But operators have spent billions for 3G spectrum, and it is rapidly becoming evident that 3G technology is not going to be worth the money. So why not deploy something better and more cost effective? The Flarion product simply needs to be installed in a wireless base station, spectrum allocated to it, and, according to Laroia, it works.
On paper it looks like a blockbuster, but the road ahead will be fraught with challenges.
20. Bytemobile
Founded: July 2000 by Vaduvur Bharghavan, PhD, Chairman, CTO
Funding: $15 million (Benchmark)
www.bytemobile.com
Bytemobile builds a wireless IP networking and optimization platform. Former Verifone CEO Hatim Tyabji is intimately involved with the company, as executive chairman.
Co-founder and CTO Vaduvur Bharghavan says that there is a mismatch in the wireless world between how end to end applications behave, in terms of transmitting data, and how networks operate. The wireless edge router that the company builds masks that and increases the bandwidth effectiveness of carriers without using new spectrum and incurring additional capital costs.
Bhargavan says that three global carriers are currently using the company’s products, but declines to name them.
21. Ashvattha Semiconductor
Founded: 2000 by Guruswami Sridharan, President, Kartik Sridharan, CEO, Arun Guruswami, CFO, Sushila Sridharan, VP Operations
Funding: $4.5 million (Comstellar Technologies)
www.ashvattha.com
Ashvattha has kept a low profile, but its radio frequency (RF) chips for the wireless and handheld markets, which support diverse standards (CDMA, TDMA, GSM, W-CDMA, GPS and Bluetooth) without destructive interference, could be a killer technology in today's fragmented wireless environment. But will the big handset vendors go with this sort of solution? The future is so uncertain in the wireless industry that Ashvattha will need to constantly adapt.
The age of reason has returned in the technology world, but a few wildcard technologies may just be able to make some noise.
22. OmegaBand
Founded: 2000, by Gigi Baror, CTO, Tony Hurson, Mayur Mehta - VP Engineering
Funding: $9 million (TeleSoft, InveStar)
www.omegaband.com
Infiniband is the much-heralded new input/output standard for servers — the product of a trade association founded in 1999 by sever giants IBM, HP, Sun, Intel, Dell and Microsoft. OmegaBand is building boxes to provide high performance shared input output with InfiniBand.
The technology is clearly higher performance than current technologies, but adoption is in question.
OmegaBand Co-founder Mayur Mehta says that this year will be a “coming out party” for Infiniband but that systems will not be integrated until next year and won’t be in the mainstream until 2003.
23. KnowNow
Founded: April 2000 by Rohit Khare, CTO, Adam Rifkin
Funding: $8.5 million (KPCB, Palomar Ventures)
www.knownow.com
Another Vinod Khosla funded "real time enterprise" play, this startup, founded by graduate students Rohit Khare and Adam Rifkin, has developed an event router that acts to keep a continuous connection open between an Internet browsers and the server, and a JavaScript-based mini-server to operate at the client end.
This enables real-time communications over the Internet without the need for users to download plug-ins or perform any installation. So Web developers can use KnowNow technology to deliver instant updates to users' browsers without them having to initiate a request. Not only that, but users can now "publish" updates to other users subscribing to the same information instantly now that their browsers can act as mini-servers. The ultimate idea is to provide greater visibility into systems and the supply chain for businesses using enterprise applications.
It's a compelling technology and could be the next generation of Enterprise Application Integration (EAI) technology - replacing solutions currently offered by heavyweights like BEA and Tibco.
24. Halosoft
Founded: 2000 by Prof. Pradeep Khosla, Levent Gursoz, CEO
Funding: $1 million (Dot Edu Ventures)
www.halosoft.com
Halosoft’s VIVA technology is like a virtual computer with a virtual operating system that runs on a host computer and creates a virtual computer within it. Co-founder and CEO Levent Gursoz, who started Halosoft along with Carnegie Mellon professor Pradeep Khosla, says that the software can be applied on the server side as well as peer-peer systems over the Internet.
If there are many hosts and VIVA running in all of them, they behave as a single entity. The software can function on any host (Linux, Windows, Mac), supports several programming languages (Java, C, etc.) and can be extended to other languages. On the server side it functions just as Java would, but has better scalability, especially on a Linux platform.
Dot Edu Ventures, put in $1 million. Currently the company is working on a first round, which hinges on the outcome of a pilot project with a server company.
“We won’t release the technology for technology’s sake,” Gursoz says. “There has to be an understanding of how to tie it with a good business from which revenues can be made.”
With six employees based in Pittsburg, PA, Halosoft has a very low burn rate, Gursoz says. The challenge, of course, will be tackling competition from Java.
25. Aprilis
Founded: June 1999 by M. Glenn Horner, Parag G. Mehta, David A. Waldman, Richard T. Ingwall
Funding: $10 million (Zero Stage Capital)
www.aprilisinc.com
Aprilis is developing technology that stores data as holograms using a light-sensitive material known as a photopolymer. Photopolymers store data in 3-D (using the thickness of the disc), allowing more data to be packed in a disc than a normal CD or DVD, which can store data only on the surface.
According to Mehta, more than100 gigabytes could be stored on a half-millimeter thick standard 5.25-inch diameter disk. But density is not the only requirement for data storage. Transfer rates (i.e., the speed data can be read out) is crucial as well. The firm’s writeable discs can write and read data at 125 megabytes per second (Mbps). High-level drives can read data only at 30 Mbps; rewriteable DVDs read data at less than 5 Mbps.
While the technology may change the way data is stored, Aprilis is “several months away” from building a product. The company has fewer than 20 employees, but Mehta said it plans to hire another 30 within the next three months. Aprilis raised $10 million in first-round funding in December 2000, led by Zero Stage Capital. It is in the midst of another round in which Zero Stage is participating again. Mehta declined to disclose the amount Aprilis hopes to raise. si
