Plexxi Nabs $35M to Build Enterprise Data Fast Lanes

In today’s business world, the flood of software applications and humongous data sets that accompany them have put pressure on enterprise companies to figure out better ways to effectively manage the flow of all that information.

These new challenges in data networking have given rise to new players taking aim at a market that has been dominated by Cisco, Hewlett-Packard, and other incumbents for the past couple of decades.

One such upstart, Plexxi, got a big boost today with the announcement of $35 million in funding from an undisclosed new investor, with participation from previous backers Lightspeed Venture Partners, Matrix Partners, and North Bridge Venture Partners.

Nashua, NH-based Plexxi says it has raised about $83 million from investors since its founding in 2010. The company is eyeing an initial public offering in the next five years or so, CEO Rich Napolitano says.

“There’s an opportunity to build a big company in New England,” Napolitano says. “That’s our mission.”

Plexxi is part of a group of emerging New England companies pushing new ways for big companies to manage their IT infrastructures and reams of data. Related startups in the region include Actifio in data management, ClearSky Data in networking and storage, CloudHealth Technologies in cloud optimization, DataGravity in smarter storage and security, in networking, Storiant in cloud storage, and VMTurbo in data center control.

Plexxi’s new money will primarily give a jolt to its sales, marketing, and customer support efforts. It will also fund research and development, and the addition of at least a dozen employees—mostly engineers—to the company’s current staff of almost 90 people, Napolitano says.

Most of those employees are in Nashua, although some engineers are in Silicon Valley. Plexxi used to have a Cambridge, MA, office, and Napolitano says the company is considering opening a new location in the Boston area. “We definitely want to reach back into that talent base,” he adds.

In a nutshell, Plexxi sells a combination of software and hardware products that help improve the performance of data centers and the enterprise-level applications being run on their servers and in the cloud. The company deploys software that analyzes what the applications require from the network to run effectively; then, another software product determines the most efficient path for data flow and directs the hardware component to control the network traffic in real time.

“In this new world of big data and modern apps…you don’t build your infrastructure and pour apps into it,” Napolitano says. “You need the infrastructure to be shaped around the data and the apps as they grow.”

Napolitano compares Plexxi’s products with “zipper trucks,” the big machines that arrange concrete barriers next to highway medians to open up extra lanes on either side of the highway during periods of heavy traffic.

In a similar way, Plexxi carves out special lanes in the network to optimize the flow of data, he says. Continuing the analogy, Plexxi can “look into every single car on the highway, and understand what it’s really trying to do”—then help deliver the information where it needs to go. For example, Plexxi can prioritize more important data and help transport the information to its destination faster. It can also group related pieces of data together to more efficiently deliver the information.

“The problem with networks is they’re too rigid,” Napolitano says. “The nature of traffic is changing, especially as we create new apps. Our network is really dynamic.”

Part of Plexxi’s pitch is to say its technology can “dramatically” reduce operating costs. One customer had 3,000 people managing its network, and Plexxi’s products have allowed it to reduce that number to 300, Napolitano says.

Plexxi still has a lot to prove, but Napolitano says its revenue is projected to jump 10-fold this year over last year, and the total annual revenue now stands “in the millions” of dollars. It serves customers in government, financial services, and education, as well as networking service providers.

Napolitano became Plexxi’s CEO last November, after serving as an independent board member. He has spent more than 30 years in the IT industry, most recently leading EMC’s Unified Storage Division.

Plexxi co-founder and former CEO David Husak is now the company’s chief technology officer and executive vice president of products and technology. Plexxi co-founders Ephraim Dobbins and Mat Mathews also remain in leadership roles with the company.

Napolitano is currently focused on growing sales for Plexxi, and he says the ultimate goal is an IPO. Plexxi has closely watched Arista Networks, a Santa Clara, CA-based cloud networking software company that went public last year. As of this writing, Arista is valued at more than $4 billion, and its stock has been trading above $60 per share.

“Arista has proven that you can build a big public company in this space,” Napolitano says. “We hope for the same kinds of outcomes.”

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