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Harris: A10 Networks Drawing Investors

July 16, 2008

By Scott Duke Harris, San Jose Mercury News, Calif.

Jul. 16–In this age of iPhone idolatry, Facebook fascination and all forms of virtual melodrama, the Internet’s infrastructure only gets noticed when it fails. And that’s unfair. So let us salute the way investors are now showering some love and $23 million on an obscure San Jose-based start-up, A10 Networks.

What does A10 do? It’s like a cop on the information superhighway who escorts vital digital traffic into the carpool lane — and accelerates it, said Enterprise Strategy Group analyst Jon Oltsik. “The stuff A10 does makes the Web run better.”

A10 founder Lee Chen, who launched the company in 2004 in time to serve the boom in video and applications, is able to cite one study that found his company’s “server load balancer” and “bandwidth management” technologies deliver twice the results at half the cost of its biggest rivals — F5 Networks, Cisco Systems and NetScaler (now part of Citrix Systems).

“Suffice it to say I know they have a real talented team there,” Oltsik said. “And their design goal is to make this very fast and very cheap, and that’s always going to be attractive to customers.” A10 says it corralled 100 new business customer so far this year.

A10′s latest funding round was led by the Japanese giant Mitsui, which has distributed A10 products in Japan for two years now, “and has seen extremely positive results with great market potential,” according to Masaki Saito, Mitsui’s general manager for IT outsourcing. The

new financing brings A10′s total funding to $39 million. Existing investors Triton Ventures, H&Q/Asian Pacific, Harbinger Venture and Enspire Capital also participated, joined by new investor CIDC.

Chen, also a co-founder of Foundry Networks, said the latest round will enable A10 to reach profitability and expand rapidly in the next 18 months. The company recently doubled the space of its San Jose headquarters to accommodate an expansion of research and development and customer support staff. It now employs 110 people worldwide, including 40 in San Jose.

Meanwhile, on the frothy front end: Two Silicon Valley start-ups, Gaia Online and Social Gaming Network (SGN), that rely on the Web’s vast infrastructure, also landed new financing. Gaia, which bills itself as “the leading online hangout for teens”- or at least their surreal alter-ego avatars — landed $11 million from Institutional Venture Partners, which specializes in late-stage investments.

In a press release, Gaia pointed out that eMarketer is predicting the number of actual teens visiting virtual worlds will jump from 8.2 million in 2007 to 20 million in 2011. The 5-year-old company says more than 350,000 “Gaians” now log into the site each day, often socializing, playing games and watching virtual cinema.

“We are focused on bringing Gaians the experiences they will not get anywhere else,” says Chief Executive Craig Sherman. And can actual adults become virtual teens? Just wondering.

Palo Alto-based SGN, which recently announced a $15 million funding round, boasted of a new big-name backer: Amazon founder and CEO Jeff Bezos. The size of the investment was not announced. Bezos also recently invested in Kongregate, another online game site.

And in the workaday world: YouSendIt, whose flackage proclaims it “the trusted global leader in digital content delivery,” on Tuesday announced $14 million in third-round funding led by Emergence Capital.

The Campbell-based company manages more than 10 million files each month for seven million users worldwide. CEO Ivan Koon said the new capital will be used to expand a business that is designed to enhance productivity and efficiency. Prior investors Sevin Rosen Funds, Alloy Ventures, Sigma Partners and Cambrian Ventures also participated.

Zend Technologies, a Cupertino-based company that specializes in a popular Web application language known as PHP, recently secured up to $7 million from TriplePoint Capital. Zend said it will use funds to address market opportunities as they arise.

Contact Scott Duke Harris at sdharris@mercurynews.com or (408) 920-2704.

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