• SASE specialist Cato raises $359m at $4.8bn valuation 
• EC receives 76 AI gigafactory proposals 
• Telefónica mulls Vivo stake sale

In today’s industry news roundup: Cato Networks raises yet more funding instead of kickstarting its IPO process; the European Commission receives more interest than it expected for the funding of AI gigafactories; Telefónica is reportedly considering the sale of a stake in its giant Brazilian operation, Vivo; and much more!

SASE (secure access service edge) specialist Cato Networks has raised $359m in its Series G funding round that was led by new investors, including Vitruvian Partners and ION Crossover Partners, and existing investors, including Lightspeed Venture Partners. The new round takes its total funding to more than $1bn and gives the company a valuation of more than $4.8bn. Its previous round was in September 2023 when it raised $238m at a valuation of just over $3bn. “With more than 3,500 enterprise customers, consistent hyper-growth, and repetitive and scalable wins against all leading competitors, Cato is a proven and mature business to invest in,” boasted Shlomo Kramer, co-founder and CEO at Cato Networks. “Our true SASE platform and decade of AI innovation differentiates Cato from legacy vendors that favour a portfolio of point solutions. Customers and partners understand the difference and select Cato to benefit from proven security, operational efficiency and business agility,” he added. Cato announced in February this year that its 2024 annual recurring revenue (ARR) surpassed $250m, an increase of 46% compared to 2023. Despite that, Cato is reportedly yet to turn a profit, which might explain why it has raised money from another funding round rather than opting to kickstart its IPO process, something that industry analysts have been expecting for several years. But Cato’s management knows how to retain its key staff and keep them happy: Part of the new funding round was from the sale of shares held by employees, which means the money goes to them and not the company (according to CTech, about 30% of the funds raised were from the sale of employee-owned shares). The SASE sector, meanwhile, continues to grow, but there are wildly different valuations. Dell’Oro Group is one of the more conservative research firms in terms of market valuations – it predicts that the SASE market will double in size in terms of its value over the next five years to be worth $17bn by 2029.

The European Commission has received 76 proposals from companies wanting to develop Europe’s AI gigafactories – large-scale AI datacentres equipped with about 100,000 GPUs (graphics processing units) – the EC’s commissioner for technological sovereignty, security and democracy, Henna Virkkunen, told a press conference on Monday. In April, the EC outlined a ‘sovereign’ plan to build a “network” of AI factories – 13 of which are already being deployed – and construct AI gigafactories in its AI Continent Action Plan. It issued a call for expression of interest for consortia interested in developing such facilities, noting that €20bn of EC funding will be made available through the new InvestAI initiative to those prepared to pump private funds into the gigafactory developments. In total, InvestAI aims to “mobilise €200bn for investment in AI”. Overall, the EC’s aim is to at least triple the EU’s datacentre capacity over the course of the next five to seven years, with “highly sustainable datacentres” as the priority. And there’s been no shortage of interest – more than the EC had expected, it seems. “We got 76 submissions proposing to set up AI gigafactories in 16 member states and across 60 different sites,” stated Virkkunen. “This exceeds far beyond our expectations and showcases Europe’s growing momentum and enthusiasm for innovating in AI in Europe,” she said. Virkkunen did not, however, identify any of the applicants, noting only that the 76 included companies from within and beyond the European Union and included telcos, technology firms, datacentre operators, power suppliers and financial investors. Deutsche Telekom has already put itself forward very publicly, announcing in June its plans for a gigafactory with Nvidia, while Catalan News has reported that a consortium led by Telefónica and including MásOrange is aiming to pitch a €5bn proposal for an AI gigafactory in Spain. 

Still with Telefónica… As it figures out ways to solidify its position in Europe while keeping its purse strings tight, the operator is reportedly considering selling a 20% stake in Vivo, the giant Brazilian telco in which it currently holds a 70% stake, according to El Economista. In April, the telco’s new CEO, Marc Murtra, unveiled plans to overhaul the company’s holdings and operations, noting at the time it would focus on Europe but retain its leadership position in Brazil. 

Nokia’s latest venture, Enscryb, an energy innovation platform based on technology from Nokia Bell Labs, has brokered a partnership and signed up its first two customers, the vendor announced. Nokia described Enscryb as a “digital toolbox that enables real-time distributed energy flexibility orchestration in an era of increasing market volatility, demand and renewable production by simulating electricity systems of any size and complexity.” It added: “The Enscryb toolset also provides energy flexibility forecasting for battery energy storage systems and solar hybrid assets. By analysing data from both markets and clients’ own infrastructures, Enscryb enables more accurate and bankable financial modelling for renewable energy projects.” Its partner is Nodes, an energy trading company, while its customers are Nanuq, a charging infrastructure company, and Smartecon, a renewable energy provider. Read more. 

– The staff, TelecomTV