Ellacoya seeded with another $7 million

Ellacoya Networks secured $7 million in venture capital financing this week that should carry the intelligent bandwidth management company through to profitability in the second half of 2005. The cash infusion by Atlas Venture, Flagship Venture Partners and Lightspeed Venture Partners will help Ellacoya fund sales revenue growth.

The company also opened new sales offices in Tokyo and the U.K. The latest round of funding caps approximately $100 million raised since the company launched in 1999. The announcement comes just one month after Cisco Systems announced it would buy Ellacoya competitor P-Cube. However, Kurt Dobbins, founder and chief technology officer of Ellacoya, said the funding round had been in the works long before the acquisition was announced and was not in response to it.

"The funding implies recognition of the worldwide trend in broadband to transition from just a broadband service to application-based services and the importance of the IP service control system that Ellacoya makes to fulfill that," Dobbins said.

Ellacoya currently has more than 40 cable broadband and DSL provider customers in North America, Latin America, Asia and the EMEA. Most of its traction to date has been with cable providers.

"Historically, we have been focusing on MSOs, but we are seeing significant new business with telco and DSL providers," Dobbins said. "What we do is becoming mainstream for broadband regardless of the technology. It is becoming a necessary component of the network."

The company’s IP Service Control System is used by broadband providers for deep packet inspection at the network and application layers of the network. It provides policy-based bandwidth management using policies set by the service provider and based on specific subscriber and application profiles. Ellacoya also recently introduced two new plug-in software modules to the base hardware system that add functionality for automating the delivery of multimedia services through dynamic QoS and for network intrusion protection which detects denial-of-service attacks and quarantines the subscriber.

"The Network Intrusion Manager is an extension to our belief that IP service control belongs at the edge of the network, as close to the subscriber as possible," Dobbins said.