Open Source Networker Vyatta Raises $11 Million, Led By Citrix

We've written about Vyatta, which is focused on open source networking, several times. The company has delivered an open source network operating system, routers based on open source software that outperform Cisco routers for a fraction of the cost, and more. Today, the company has announced that it has raised $10 million in Series C funding, led by Citrix. The funding round also includes existing investors Comcast Interactive Capital, Panorama Capital, and ArrowPath Venture Partners. (Vyatta raised $11 million in funding last April.) The company plans to move ahead with cloud computing and virtualization initiatives.

In conjunction with its funding announcement, Vyatta announced that it has joined the Citrix Ready product verification program to create solutions for companies deploying cloud computing infrastructures. That means Vyatta will compete in the growing arena of open source cloud computing, where players such as Eucalyptus Systems are providing cloud technology with distinct cost advantages over offerings such as Amazon AWS/EC2.

Vyatta's open source operating system runs on standard x86 hardware and can be virtualized with hypervisors. It's likely that the company's new hookup with Citrix will result in the two companies pushing the the Citrix XenServer virtualization platform. The company also offers open source-based routers that sell for under $1,000 while comparable routers from Cisco cost thousands more.

So how does Vyatta make money? The company's business model has always focused on subscription-based support, a la Red Hat's business model. As it grows and spreads its solutions to new markets, Vyatta's challenge will be to deliver top-notch support. If my business router and other key networking components go down, I don't want to listen to music while on hold.

For more thoughts on what Vyatta and Citrix might do together, including input on how virtualization is forcing all networking vendors to change, check out GigaOm's story.