An all-hands meeting at wireless network provider Meraki just closed with a bang: it’s raised $40 million and is now looking for a 100,000 square foot office, my sources confirm. The financing comes mostly from existing investors including Sequoia and Northgate. Around half of the $40 million is debt financing with the principal to be repaid within five years. Meraki had hoped to keep the round quiet as not to rile up competitors.
[Update 5:45pm PST 7/10: Meraki just called me to confirm all the details in this article are accurate.] Meraki will use the funds to keep a cash cushion, pay for its new headquarters, and aggressively hire in sales so it can break away from competitors. If all goes well, I hear an IPO is on the horizon.
For those less familiar, Meraki helps big companies, schools, and organizations set up their networks by selling them wireless LAN devices, security appliances, and the cloud architecture software that knits them together. It’s all designed to be easy to install and managed from a browser-based dashboard.
This new cash doubles Meraki’s total funding to $80 million from the $40 million it had previously raised through its Series C from Google, Sequoia Capital, DAG Ventures, and Northgate Capital. Sequoia, Northgate and other investors in this round were clearly impressed with Meraki, as I’ve learned the $40 million “only diluted the company 5%”.
A source close to the company says Meraki was spending around $65 million a year, and Q2 2012 saw the company rake in over $20 million — more than it was shooting for. The $40 million cushion will protect it in case expenditures rise for supporting its 20,000 customer networks or if it wants to rapidly pursue a new market as it competes with dedicated companies like like Aerohive and giants like Cisco.
As more huge organizations want powerful networks without giant IT departments to run them, Meraki sees its business booming. That’s why one of its latest hires is a new CFO that will prep it for an IPO. That’d be a pretty impressive run for what was just an MIT grad student project in 2006.
[Update 5:45pm PST 7/10: Meraki has confirmed the news, including that Sequoia and Northgate are investors, and said all the details noted here are accurate. Mentions of me waiting for confirmation have been removed.]
Meraki came out of a research project at MIT in 2006 and is now based in San Francisco. Meraki has grown rapidly from its modest roots. It now provides wired and wireless networking systems controlled in the cloud. Customers include universities (MIT, Stanford), retailers (Peet’s Coffee), hospitals, hotels, and others. Meraki is funded by Sequoia Capital, DAG Ventures, Northgate Capital, and Google.