Virtual routing vendor Arrcus raises $50m

• Arrcus has been developing its virtualised routing platform for more than six years
• It has been attracting telco and enterprise customers
• Now it has raised another $50m for further expansion

In another sign that demand for disaggregated network functionality is steadily growing, virtualised routing vendor Arrcus has raised $50m in its Series D round to help fund its expansion as customer engagements and its contract pipeline increase. 

The San Jose, California-based company, which was founded in 2016, is one of a small but significant number of virtual routing companies that have managed to attract customers and support in what is a highly competitive routing and switching sector, dominated by major names such as Cisco, Juniper, Arista, Huawei and Nokia. The other main virtual router vendor to have made a mark is DriveNets, which is now firmly embedded in AT&T’s network and has raised $587m in funding, while another disruptive virtual routing player, Volta Networks, was acquired by IBM in 2021 – see IBM snaps up Volta Networks to supercharge its automation and analytics ambitions.

 But Arrcus, which is pitching its Arrcus Connected Edge (ACE) Multi-Cloud Networking (MCN) solution to network operators in the telecom, enterprise and cloud or datacentre sectors, has remained independent and is now positioning itself for a growth spurt. 

The $50m funding takes the total raised since it was founded to $125m and gives it a valuation of about $400m: The company says its valuation has nearly doubled since its previous venture financing round in May 2021. Prosperity7 Ventures is the lead investor for this round, while Clear Ventures, General Catalyst, Liberty Global and Lightspeed, as well as Silicon Valley Bank, also participated in the round. 

“We believe Arrcus is a disruptive leader in next-generation network infrastructure that is software defined, flexible, programmable and efficient,” noted Aysar Tayeb, executive managing director of Prosperity7 in a statement about the Series D round. 

The new funds will be used to grow its international market presence and add to its engineering and R&D teams; its headcount has already increased by about 70% in the past year, taking its total employee number to around 130. 

Arrcus’s order pipeline has been growing steadily over the past couple of years, with the value of bookings doubling every year for the past three years, according to the company’s funding announcement.

Its customer base has doubled in the past year to more than 40 customers. As is the norm, many customer names remain confidential, but Arrcus has identified Liberty Global (which, of course, is also an investor), Japan’s SoftBank, and datacentre operator CoreSite (part of the American Tower empire) as existing users of its disaggregated, virtualised switching and routing software. 

“Leading global customers are making the shift to Arrcus’s disruptively innovative ACE platform for datacentre switching, 5G carrier routing and multi-cloud networking,” noted Shekar Ayyar, CEO and chairman at Arrcus. “As we continue gaining market momentum, we are pleased to welcome Prosperity7 as our new lead investor,” he added. 

- Ray Le Maistre, Editorial Director, TelecomTV