Cisco invests $100M in networking startup Insieme, has option to buy it for $750M

Cisco has invested $100 million in a networking startup called Insieme that was started by three Cisco employees. Interestingly enough, the company also has the option to pony up $750 million more to buy the company, according to a memo obtained by the New York Times.

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Insieme was founded by Cisco employees Mario Mazzola, Luca Cafiero, and Prem Jain in January to address issues in advanced networking. Specifically, it focuses on software-defined networking (SDN), an somewhat easier and less expensive way to deploy cloud computing systems. The Cisco memo describes it this way:

Insieme’s product development efforts are complementary to that of Cisco’s current and planned internal investments. Insieme and other internal programs will be components of Cisco’s broader programmability framework. These types of investments have strongly benefitted Cisco in the past, and we will continue to look for similar ways to complement our internal development capabilities.

If Cisco did acquire Insieme, that would make it a “spin-in,” because it was created with Cisco’s backing. Spin-ins can help create innovative products faster than complex organizations can. However, as the Times points out, spin-ins can “risk hurting company morale by making some star employees multimillionaires with little risk.”

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