Midokura Raises $17.3 Million for Cloud SDN

It takes money to build out a modern networking startup. Japanese network virtualization startup Midokura today announced that it has raised $17.3 million in a Series A funding round.

Midokura’s backers include the public-private partnership Innovation Network Corporation of Japan (INCJ). Midokura launched in the U.S. in October of 2012 with its MidoNet SDN approach for the OpenStack cloud Midokuraplatform.

Midokura is taking on the funding now to help fuel an accelerated burn rate that is needed to expand operations and reach, as Ben Cherian, Chief Strategy Officer at Midokura, explained to Enterprise Networking Planet. Midokura currently has 27 employees: 16 in Tokyo, 6 in Barcelona, and 5 in the U.S. Cherian noted that his company has a “long list” of development plans, which the new funding will help accelerate.

Cherian added that to date, Midokura has made some money, but the company has been mostly in the early “burn” startup phase. With the new funding in place, the hope is that early proof-of-concept deployment will migrate into paying customer deployments.

In addition to the Series A funding, Midokura is also shuffling its executive ranks. Dan Mihai is moving from the CTO spot to CEO, while Tatsuya Kato, the former CEO, is now Chairman of the Board.

“We’re heading into a market cycle that will require a lot of market education,” Cherian said. “With Dan Mihai moving from CTO to CEO, that will help us to accomplish that goal.”

Product Direction

Midokura’s flagship product is its MidoNet network virtualization technology. With MidoNet, the network is structured virtually as one large grid router. Virtual services, like load balancing and firewall, are presented as services that clients can enable.

Cherian said that the future direction for MidoNet is to double down on the feature set within MidoNet and expand Layer 2-4 capabilities.

Currently, MidoNet can directly integrate with the OpenStack Quantum networking cloud platform. Moving forward, Midokura plans to integrate with other cloud stacks as well.


“There is lots of noise in the market,” Cherian said.

The market for SDN and network virtualization techonology is a hot one today, with no shortage of vendors aiming to participate. According to Cherian, however, there are currently only two vendors that MidoNet sees as competition: Big Switch and VMware’s Nicira.

Big Switch builds and develops open-source and commercial OpenFlow switch and controller technology. Just last week Big Switch rolled out its Switch Light commercial OpenFlow switch technology.

Nicira was acquired by VMware for $1.26 billion in July of 2012. The company’s core technology is the Nicira Network Virtualization Platform.

Despite the noise, Cherian is confident that with the new management shift and funding in place, Midokura will be competitive.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @TechJournalist.

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