Inkra Networks gets more than virtual funding

Inkra Networks got a $30.1 million vote of confidence in its virtual data center solutions business today from Morgenthaler Ventures and other investors.

The Fremont Calif.-based start-up capped a hot summer with its latest round of funding, which included investments from Battery Ventures, Norwest Venture Partners, Storm Ventures and Greenstone Venture Partners. Inkra launched its new Virtual Service Switch in April and followed that quickly with a multimillion dollar integration partnership with NEC in June, and a reseller and distribution partnership with Korean integrators Comtec Systems and Global Telecom in July.

Inkra made its first U.S. sale to Savvis Communications in August, shipping four of its flagship Inkra 4000 Virtual Service Switches (VSS).

With its product in production and shipping, Inkra will turn its attention and its cash toward growth. “Customers are interested not only in what the product can do today, they also want to see the road map, so there will always be investment in research and development, but the key focus is to build our sales reach and enhance our support capabilities,” said Sanjay Dhawan, president, co-founder and CEO of Inkra Networks.

Dhawan expects this latest funding round will carry his company through to profitability. “Hopefully this is it. This takes us to cash flow positive and beyond. As long as we stick with our revenue plan we don’t anticipate having to raise any more funds,” he said.

The company could have raised more. “We would have liked to put in a bit more,” said Ken Gullicksen, partner with Morgentheler Partners. The funding round was oversubscribed.

Gullicksen said a lot of activity in the data center market is driving a swing back to centralization where there are fewer but larger data centers. This, and the continued “Webification” of applications are creating a need for solutions such as Inkra’s.

“There is demand throughout all tiers of service in the data center, and virtualization at the front of the data center is one of the concepts [providers need] to get right,” Gullicksen said.

Virtualization, as it is done by Inkra, integrates various dedicated hardware, software and service elements such as firewall, load balancing and SSL acceleration into a single system called the VSS. This allows providers of data center services to combine services from different elements onto the same system.

Inkra is targeting both enterprise data centers and data centers run by carriers. The company expects a 50/50 revenue split between both markets.