NetEffect (formerly Banderacom) is a company that has been around since 1999, and manufactures (get ready for the technical jargon) full iWARP 10 Gigabit Ethernet adapters. Lets just suffice it to say that everything in the data center runs on ethernet, 10 Gigabits is really really fast throughput between computers (or computers and storage), and iWARP is a protocol standard that enables RDMA to run over Ethernet.*

These guys have taken down tons of venture money. Not quite HomeAway money, but still lots.

• August 2000 Banderacom raises $9M from Intel, Crossroads, Austin Ventures, and Jato Tech Ventures
• June 2001 Banderacom closes second round of $35M from Intel, Crossroads, QLogic, AV, Jato, Trinity Venture Capital, and Infinity Venture Capital.
• May 10th, 2004 NetEffect announces $22M Series A from TL Ventures, Granite, TI, and Duchossis Technology Partners
• July 24th, 2006 NetEffect Announces $25M Series B from AV, Duchossois, Granite, Infinity Capital, JatoTech Ventures, TI Ventures, and TL Ventures
• June 19th, 2007 NetEffect Announces $4.5M in venture debt from Hercules Technology Growth Capital

It looks like they burned through the first $44M figuring out that Infiniband was not going to be the wave of the future. Then somewhere in the dark years of 2003 and 2004 they booted the management team, changed the name, raised more money and bet it on Ethernet and iWARP instead. Now some of the stuff I read said they are a fabless semiconductor company. Fab plants cost tons of course, but without a fab plant spending $100M seems wild.

So what’s wrong with this picture? We have a long history of brand name companies and venture investors pouring money into this thing for 8 year now, and all of a sudden an off-brand VC offers venture debt. Hmmmm… If things were going swimmingly, current investors would be happy to throw more cash into this deal.

I have no inside knowledge of this deal at all, but my best guestimate is that either they are close to breaking even and making a go of this business, or they will be in the Austin deadpool soon.

*For those who care, you can find a definition of RDMA on Wikipedia here.

Sphere: Related Content

Filed under: Deals