Juniper Networks' $312 million acquisition of Peribit Networks last April set off a wave of consolidation for wide area networking startups that continues today. While the startup was considering an IPO at the time of the sale, the subsequent round of consolidation shows that it pays to be at the cusp of the wave rather than the end of it.
Paul Bonanos reported in a recent issue of The Deal that Peribit's early stage backers, Foundation Capital and Accel Partners, invested in Peribit's $5 million first round in 2001 at a premoney valuation of $5 million. Mayfield came into the second round while Taiwan's WK Technology Fund led a third round in 2003 at a $100 million valuation. They all came out way ahead via the $312 million exit valuation.
The price may have been less if they had waited longer. Aside from having to compete with larger players such as Cisco in the WAN optimization arena, there were a host of startups that eventually got acquired and integrated into larger platforms:
Cisco acquired FineGround
Citrix acquired NetScaler
F5 acquired Swan
Packeteer acquired Tacit
Expand acquired DiskSites
As noted by the Internet Research Group in a recent newsletter, the true test may be Riverbed Technology's proposed IPO. The WAN startup recently filed for an IPO and its ability to pull it off will determine if Peribit's timing was right.
This is the second in a series of posts about venture capital exits from 2005 that are worth revisiting to point out the larger trend they highlight. Each deal is still worth mentioning for the exit strategy pursued, the returns achieved by the investors or the future trends it exemplifies. For a full list of The Deal's VC Deals of 2005, click here. I'll continue to profile some of these deals in the coming days. If you think I've left any notable ones out, let me know.
For more on The Deal's venture capital deals of 2005, see:
The Deal
Tags: peribit, riverbed, thedeal, the+deal, deal, vc, venture capital
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