Expand Networks Ltd. has raised $21 million in its sixth financing round, led by new investor Vertex Venture Capital. Existing investors Tamir Fishman Venture Capital (TASE: TFVC), Challenge Fund - Etgar, and Discount Investment Corporation (TASE: DISI) also invested in the round. The company has raised $74 million to date.
Expand Networks was founded in 1998 to develop high-speed remote network applications access solutions for enterprises via WAN optimization controllers (WOC). Although the company had breakthrough technology in the 1990s, its performance lagged and it lost its pioneer standing in the market when the Internet bubble burst and communications equipment giants entered the field.
Early this year, the company decided to change its strategy and restructured. The company also replaced CEO Zohar Pearl with Elie Barr and acquired DiskSites, which is in the same field. The company has now completed a fairly large financing round.
In the past year, Expand Networks has enjoyed a major increase in demand for technologies similar to its own. In the past two years, this growth was behind the entry of Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR) into the market and for the success of Riverbed Technology Inc. (Nasdaq: RVBD), which was founded in 2002, held its IPO in September 2006 at a value of $800 million and now has a market cap of $2.2 billion. Last October, Gartner Group listed Expand Networks as a WOC market leader, alongside Juniper and Riverbed.
“Globes”: Where are you going?
Barr: “We’ve shown weakness in our ability to aggressively enter the market, for which a lot of money is necessary. I intend to improve the abilities of our sales staff to enter the market aggressively. We’ve begun building a help network for salespersons, which is already operational in Europe and the US. We intend to use proceeds from the round for both sales and to improve the products and technology.”
Expand Networks’ offices and development center are in Ramat Hahayal in Tel Aviv. The company had $20 million in sales in 2006, and Barr says first quarter 2007 sales were 60% greater than for the corresponding quarter. “We predict 60-70% sales growth for the year, compared with last year. We intend to reach the operating break-even point late this year or in early 2008. Assuming that these numbers are achieved, I hope we’ll do it.”
Published by Globes [online], Israel business news - www.globes.co.il - on April 30, 2007
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