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Seven enterprise IT start-ups grab new funding

Femtocells, wireless LANs and archiving among focus areas
By Cara Garretson , Network World , 10/25/2007
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You probably haven’t heard of most of these seven companies, yet.

Amid the $2.7 billion invested by venture capitalists in 372 private companies targeting enterprise IT customers during the third quarter, a handful of start-ups stand out as particularly promising. Venture capitalists, always on the look out for the next big thing, are pouring money into these companies with hopes that their technologies will soon become staples of corporate networks.

A special slice done for Network World of the MoneyTree Report, compiled by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Financial, (see complete survey results) shows that third-quarter investments in network-related companies are down slightly from the $2.9 billion invested in the second quarter, and have been hovering in the same range for the past few years. The report defines network-related companies as those from market segments including security, wireless, telecommunications, the Internet and software.

With newer investment categories such as reusable energy and flashier ones like consumer electronics taking up investors’ attention, start-ups aiming at the mature enterprise IT market need to come up with truly innovative technology to stand out. And with the IPO market for technology companies still just a shadow of its former self during the Internet boom, these companies also need strong hopes for profitability.

“Enterprise is not the easy place it used to be” for returns on investments, says Pascal Luck, managing director with Core Capital in Washington, D.C. “But as with any space, innovative technology is always interesting, and always a good investment.”

Highlighted below are seven companies that received over $20 million in funding during the third quarter, haven’t gotten much attention, but are aiming to bring innovation – either directly or indirectly – to enterprises:

With a fresh $20 million behind it from Kleiner Perkins Caufield & Byers, Lightspeed Venture Partners, and Northern Light Venture Capital, Aerohive Networks is aiming to make wireless LANs simpler and less expensive. The company, founded in 2006, launched its HiveAP product line in May. This architecture eliminates the wireless LAN controller, instead pushing network control and data forwarding to wireless LAN access points at the edge of the network, the company says. Aerohive’s products are also optimized for voice over wireless LAN applications, they say.

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