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Nauticus closes $21 million B round

Nauticus is building a set of application switches to be used by business to securely deliver Web-based applications.

Nauticus Networks, a Framingham, Mass., startup, says it has recently closed a $21 million second round of funding, bringing its total raised to $33 million.

The company is planning to use its new resources to continue the buildout of its sales and marketing organization. Nauticus is building a set of application switches to be used by enterprises to securely deliver Web-based applications.

The company's investors include venture capital firms Charles River Ventures, Matrix Partners and North Bridge Venture Partners. The company was founded in October 2000, and plans to have its switches in beta trials by the middle of 2002.


According to Nauticus vice president of marketing Doug Barta, the company developed its technology as a result of changes in the way the Internet is used. In the early days, the Internet -- or at least the Internet as it's known today -- was used by businesses mainly as a way to deliver static information, or what Barta calls 'brochureware.' But as technology has evolved, and as high-bandwidth connections have become the norm in large enterprises, Internet usage has changed so that nearly every major enterprise application has now become browser-enabled. That way, enterprises can ensure that employees have access to applications no matter where they are and that information contained in the applications can be freely shared among those for whom it is important.


As such, Nauticus has developed what it calls a purpose-built application switch. Built as a two-rack unit-high device that is installed in the enterprise datacenter, the Nauticus Application Switch is designed to give the company's customers -- financial institutions, healthcare companies and other enterprises -- a way to deliver their mission-critical Web-based applications securely, and with high performance. The main focal areas for the switch are load balancing, SSL and application switching. The company claims that its switch can provide in excess of 10x price/performance enhancement over traditional offerings.

To achieve this, Nauticus has designed custom, application-specific integrated circuits (ASICs) that it says remove the bottlenecks that build up around TCP processing, decision-making and policy enforcement. The application switch has a hardware engine base underneath software.

For its SSL implementation, Nauticus is using hardware that Barta explains is able to handle tens of thousands of SSL transactions per second. By comparison, he says, a traditional SSL implementation is built to handle transactions in the hundreds.


Barta says Nauticus is competing against a roster of companies that are approaching similar problems with very different -- and in some cases, much more expensive -- products. While Nauticus is not yet releasing the pricing of its application switches, they will likely sell in the low five-figures. By comparison, competing products from companies like Inkra and Nexsi can cost as much as $300,000, because they come in pairs.

But Nauticus' main differentiation, says Barta, is that its switch is a hardware-based offering for enterprises that addresses load balancing, SSL and application switching. A similar product from F5 is strictly software, while other competing switches might be far more expensive, like those from Inkra and Nexsi, or targeted at service providers.


Nauticus is trying a unique approach. The company is behind the curve, as it must compete with more established players like F5 and to some extent Inkra and Nexsi, but its ability to raise significant funding is a sign that it has the confidence of the investment community. That is borne out even more by the fact that its second-round investors are largely the same as those in the first round.

But because Nauticus has yet to release its product, it is too early to tell if enterprises will buy into the approach. Enterprises are already buying boxes from companies like Redline that seek to address similar datacenter functions, but Redline has its product on the market and is spending significant funds on sales and marketing. Nauticus does plan to spend a large part of its new funding on marketing, but it has to start largely from scratch.

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