Ok, let’s recap this last year. The world transitioned to work-from-anywhere; Streaming services like Netflix and Disney+ broke records in demand; Tech giants launched online gaming services; 4K is the “new normal” and almost all flagship devices support 8K imaging. This though, directly leads to an increase in traffic, resulting in overloaded private infrastructure networks, alongside unused business network infrastructure. Essentially, a major headache for telecoms companies.
DriveNets, an Israeli startup that provides telecoms companies a way to manage network traffic with a software and cloud solution - eliminating the need to purchase expensive and complex hardware, announced a $208 million Series B, resulting in a post money valuation of over $1 billion. This adds DriveNets to the ever growing club of Israeli Unicorns. For the Israeli high-tech ecosystem, this marks a milestone, with 3 different companies crossing the $1 billion valuation line over the last month.
Do to data communication what Amazon did to data-centers
In order to channel an exponential amount of data and operate existing networks, telecommunication companies acquire massive and expensive routing systems as a solution. This means that if they want to keep up with demand, then it’s going to negatively effect their bottom line, leading a telecoms firm to raise funds from other sources. To prevent this situation, DriveNets solution routes the network through the cloud, and that reduces dependence on hardware from the supplier.
DriveNets' software runs over standard white box hardware and can easily scale network capacity by adding additional white boxes into physical network clusters. This unique disaggregated network model enables the physical infrastructure to operate as a shared resource that supports multiple networks and services. It detaches network growth from cost, increasing network profitability.
The $208 million investment was led by D1 Capital Partners, marking its first investment in Israel. In addition, existing investors Pitango and Bessemer Venture partners also participated in the round. The Series B was funded on a company valuation of over $1 billion, bringing DriveNets total raised capital to $325 million.
DriveNets was founded in 2015 by Ido Susan and Hillel Kobrinsky, two serial entrepreneurs with previous startup success: CEO Susan was co-founder at Intucell, which developed automated solutions for cellular networks and was acquired by Cisco in 2013 for $475 million, at the age of only 26. Kobrinsky was one of the founders of Interwise, a conference video provider, which was acquired by AT&T for $121 million. Currently, DriveNets has over 320 employees deployed in global offices in Israel, Japan, Romania, and the U.S.
“In terms of our customers, we’re already in 2022”
In a conversation with Geektime, Hillel Kobrinsky, co-founder of DriveNets, explained that the year of COVID sparked unprecedented changes in the field. “In terms of our customers, we’re already in 2022 because they had respond to a surge in connectivity demand over the past year, with a capacity they had planned for 2021.” Kobrinsky tells that other than the transition to work-from-home, the private infrastructure was running at full capacity, while the organizational networks were sitting idle: “On one hand, this led our customers to invest in expanding infrastructure, while on the other, a whole network sits unused with the offices empty. This is exactly the issue that our Network Cloud infrastructure solves by enabling customers to build architecture networks on the cloud, acting as a shared physical resource for all running software networks. This allows technological flexibility and significant financial efficiency.”
One of the customers, which Kobrinsky mentioned, that implemented the system is U.S. telecoms giant AT&T.
With some help from Trump
Over the last two years we’ve seen how the U.S. government, and subsequently other “western” countries, have cut ties with Huawei - a major global competitor. In the past you called it “luck”, are you still feeling the effect?
Kobrinsky: “We barely run into Huawei with our current customers, and in this case, I assume that it’s in our advantage. Nevertheless, there are a few respectable, veteran infrastructure providers on the market with long-standing relationships with our customers, and I respect the competition ahead. To better handle this, we recently expanded our executive sales team to advance relevant market penetration and maintain relationships with potential customer.”
Your valuation crossed the billion dollar mark, which is an impressive milestone. Now, your at the stage where entrepreneurs usually tell us that “we are here to stay and build a long-term major market player.” But you’ve both previously sold startups, so maybe it’s just a wait for the right offer kind of scenario here?
Kobrinsky: “We’re focusing on providing value to our customers - expanding our solution offering to increase value that our customers receive from Network Cloud infrastructure. Our second focus is on expanding market access by enhancing sales and support teams in relevant markets. I believe that as long as our customers are satisfied, and continue to see the technological and financial edge in our product, then good things will happen.”