Cumulus Networks raises a $35 million down round

Cumulus Networks, a startup selling a version of Linux for data center networking hardware, has closed a $35 million round of funding. The valuation of Cumulus has fallen below what it was two years ago for an earlier round, cofounder and CEO J.R. Rivers told VentureBeat.

Participants in the round include Andreessen Horowitz, Battery Ventures, Sequoia Capital, SV Angel, Wing Venture Capital, and one new investor, Top Tier Capital, Rivers wrote in an email. Rivers wouldn’t provide specific valuation figures.

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Cumulus is seen as a challenger to Cisco, the ruler of the data center switching market. Rivers happens to be a former Cisco executive.

Companies can run Cumulus’ flavor of Linux on top of potentially less expensive switches from other manufacturers. Facebook and other companies have taken steps to adopt switches that lack big brand names to gain greater control and flexibility. Cumulus has even contributed software to the Facebook-led Open Compute Project, to which Facebook has submitted the designs of its own custom switches.

Cumulus now has 375 customers, Rivers wrote in a blog post on Monday. “We are engaged with 18 percent of the Fortune 50 and we enable IT organizations across all industries to be more productive,” he wrote.

However, the trick for Cumulus is to accumulate many big enterprise deals and further diversify away from the technology industry. For example, Cumulus has picked up business from service providers Axcient, DreamHost, and NephoScale, as well as video company Ooyala and customer experience management software company Medallia.

Enterprise growth has been a challenge for Cumulus, according to one source familiar with the matter. Some enterprises have felt that the technology lacks the full set of options that are typically necessary in order to meet their needs, not to mention tools that would help operations people run Cumulus Linux at scale, one source said.

Rivers responded to those assertions by pointing to multiple customers deploying Cumulus Linux in production on hundreds of switches. “In 2016, we are working on enabling customers to leverage Cumulus Linux in a variety of operating models, simplifying their move to the modern, streamlined operating models that open networking makes possible,” he wrote in an email.

Cumulus Networks started in 2010 and is based in Mountain View, California. It announced a partnership with Dell in January 2014. At the time, Rivers referred VentureBeat to its Crunchbase page, which mentions a $36 million funding round.

News about the down round follows reports of other companies raising money at lower valuations: Foursquare, Jawbone, and most recently DoorDash. Meanwhile, in recent months Fidelity has written down the valuations of Dropbox, Snapchat, and Zenefits, Fortune reported.

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