Aryaka snags $50M in funding; next stop IPO?

networking
SD-WAN vendor Aryaka scoops up $50 million in its latest round of funding.

In what could be a precursor to a long-rumored IPO, SD-WAN vendor Aryaka announced it has closed a $50 million round of funding led by Goldman Sachs Private Capital Investing.

The Series F funding round brings Aryaka's total funding to $184 million. As part of the funding round, it was announced that Matthew Dorr of Goldman Sachs will join Aryaka’s board of directors as a board member, and Michael Kondoleon will join as an observer.

Last year Aryaka chief marketing officer Gary Sevounts said in an interview with FierceTelecom that Aryaka was "definitely" looking into an IPO as "one of the potential directions for the company."

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“Aryaka is a pioneer in the SD-WAN market and is one of the few as-a-service operators with its own network," said Scott Raynovich, founder and chief analyst of Futuriom. "This impressive funding round, backed by Goldman Sachs, indicates that the company may be ramping up for an IPO.”

Aryaka would be an attractive IPO candidate for several reasons. In IHS Markit's March report, Aryaka was third behind VMware/VeloCloud and Cisco, respectively, in fourth quarter SD-WAN revenue. Aryaka was in second-place last year before being passed by Cisco.

Aryaka has its own network, which includes 30 software-defined POPs with customer sites in 70 countries. Aryaka's customers include Emirates Airlines, HMSHost, Air China and Samsung.

The SD-WAN market is fractured into two main areas: SD-WAN appliance vendors and SD-WAN-as-a-service companies. Aryaka is firmly in the "as-a-service SD-WAN company, which pits it against service providers such as Orange Business Services and AT&T, according to Lee Doyle, principal analyst at Doyle Research.

In November of last year, Matt Carter came on board as Aryaka's new CEO after replacing former CEO John Peters.

"I think they've repositioned themselves with the new regime," Doyle said. "They don't compete with VMware and Cisco. As a managed service provider, they compete with companies like AT&T and Masergy. They need a lot of money to compete against the big service providers."

Aryaka said the funding would be will be used to scale business operations, grow revenues and "hire exceptional talent."

According to Vertical Systems Group, carrier-grade managed SD-WAN services in the U.S. increased in the second half of last year to the tune of more than $282 million in revenue. Vertical Systems Group expects network operators to further ramp up their managed SD-WAN offerings.

Aryaka is also fully engaged in the trend of SD-WAN vendors partnering with the large cloud providers. Aryaka has cemented partnerships with Amazon Web Service, Microsoft Azure, Google, Oracle and others.

One of the reasons for the SD-WAN and cloud partnerships is that enterprise customers want to be able to access and use their apps and workloads in cloud environments or on premises.

Another driver for SD-WAN partnerships with cloud service providers is that more applications are being born in the cloud or migrated to the cloud, which increases the need for secure, optimized solutions, particularly for branch offices that are accessing cloud applications over legacy WAN infrastructures.

On the security front, Aryaka has partnerships in place with Palo Alto Networks, Symantec and Zscaler.

Investing spigot is wide open for SD-WAN vendors

Aryaka's latest funding round is further proof that the SD-WAN sector remains attractive to investors. Earlier this month, CloudGenix announced a $65 million round of financing to bring its total funding to $100 million.

In January, Cato Networks, which is often cited as Aryaka's main competitor, announced a $55 million investment round that was led by Lightspeed Venture Partners.

RELATED: CloudGenix rakes in $65M in funding to bring its total to $100M

"It's clear that the money spigots are still wide open for SD-WAN," Doyle said. "There are still good opportunities out there."

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