Original URL: http://www.theregister.co.uk/2013/04/02/midokura_sdn_funding/

Virty network whisperer Midokura takes VC cash

Skeptical SDN punters unlikely to start paying en masse till 2014

By Jack Clark

Posted in Data Networking, 2nd April 2013 05:00 GMT

Software-defined networking startup Midokura has raised $17.3m to help it hunt a rarely seen creature: a punter who actually pays for SDN.

Midokura's cash infusion was delivered by Japanese government–backed sovereign fund the Innovation Network Corporation of Japan, the company announced on Tuesday, along with investments from OpenStack-loving telco NTT Group's venture fund DOCOMO Innovations and NEC's venture fund.

The company makes network virtualization software and was founded by ex-Amazon technologists. Its technology is functionally similar to VMware-backed Nicira's, but the approach is different: Midokura has a Level 3 network gateway, whereas Nicira is Level 2. Both companies offer distributed switching at Level 2.

Nicira and Midokura have designed their SDN technologies to tightly integrate with open source cloud control freak OpenStack, though since Nirica was bought by VMware in 2012 there is doubt in the industry about how long that company's involvement may last.

The company will use the money to hire engineers and product managers, and feed its cash-consuming business* as it rides out a year that – it anticipates – will be hard to earn money in due to the young state of SDN technology.

"This year is still in the investigative stages, and it might start turning at the end of the year, and I think next year might be a better year for mass market [SDN adoption]," Midokura's chief strategy officer Ben Cherian told The Register.

Midokura uses a continuous-licensing basis for its network virtualization software. The technology is a 5-to-10MB download that runs on top of a JVM on standard server hardware. The company has designed specific distributions for major stacks such as Ubuntu and Redhat. Like many of the new breed of SDN companies – Nicira, Big Switch Networks – it doesn't care about underlying network gear, and its only network requirement is IP connectivity.

Though it supports OpenStack at the moment, the company has an ambition to be "cloud agnostic," Cherian said. When asked about Eucalyptus and/or CloudStack support, he said "in the short-term you'll see announcements from us that involve other stacks".

Midokura is not, we suspect, the only software-defined networking company finding it difficult to make money out of the burgeoning technology. Though networking companies are racing to implement SDN support across as much of their gear as possible, none of them have provided El Reg with numbers relating to sales. ®

*Bootnote

"We haven't hit the point of cash flow positive at the moment but we hope to in a reasonable amount of time," Cherian told us.