EdgeCast Raises Another Round

CDN provider Edgecast has gone back for another dip in the venture capital pool.  Today the company is announcing an additional $10M in a Series C financing round led by Menlo Ventures.  That brings their total funding to about $20M.  The first $10M didn’t vanish into the ether though, Edgecast managed to generate a profit in the fourth quarter of this year despite both the recession and renewed pricing pressure from Akamai.  

Edgecast’s model has been somewhat distinct from other challengers in the CDN space.  They developed partnerships with two large telecoms, Deutsche Telecom and Global Crossing, which has enabled them to scale more effectively.  What they are missing, of course, is the overall muscle necessary to compete more directly for the lions share of larger with larger content delivery networks like those of Limelight Networks (NASDAQ:LLNW, news, filings), Level 3 Communications (NYSE:LVLT, news, filings), and ultimately Akamai (NASDAQ:AKAM, news, filings).  That, therefore, is where the new funding will be going.  

As for their telecom partners, initially I was a bit skeptical about such relationships remaining for the long term.  I thought that perhaps after trying things out, more telecoms would buy or build.  However, the CDN/Telecom relationship has not developed the way I thought it might (yet at least) and there is far less of a sense of urgency right now.  In the meantime, I suspect other telecoms may choose to pursue this route.

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Categories: Content Distribution · Financials