Meru Networks Closes $30M Series E Funding

Meru Networks, the top privately held developer of Wi-Fi technology for enterprises, will announce Monday, April 20, a $30 million Series E round led by new investor Vision Capital Advisors LLC.

The round, which brings the amount raised by the Sunnyvale, Calif.-based company to over $100 million, was joined by existing investors Clearstone Venture Partners, NeoCarta Ventures Inc., BlueStream Ventures, the D.E. Shaw Group, Evercore Partners, Tenaya Capital and Monitor Ventures.

Meru, which was founded in 2002, offers wireless local area network equipment based upon the 802.11n standard, which enables higher flows, or "throughput," of data and voice traffic than previous incarnations of the technology. The company has customers in every industry vertical, said Meru CEO Ihab Abu-Hakima, but has a particularly strong base in the educational and healthcare sectors.

Rather than using a network architecture based on wireless hubs that force users to compete for bandwidth, Meru has developed a technology that can efficiently dole out bandwidth as it is needed.

"Meru was founded on the vision that sooner or later most enterprise will run their business on wireless infrastructure," Abu-Hakima said. "From day one the company designed a whole new architectural approach to support this."

The round represented a decline in valuation for Meru, but was "not a washout," said NeoCarta managing director Barry Newman, who sits on the company's board.

Meru is one of a handful of survivors in the wireless LAN sector, as that market has shaken out over the past several years, with some companies changing focus, some going out of business and others being acquired.

San Jose, Calif.-based Cisco Systems Inc., which acquired wireless LAN developer Airespace Inc. for $450 million in 2005, is the big rival in the space. Meru also competes with publicly traded Aruba Wireless Networks Inc. of Sunnyvale, Calif.

In an April 6 report issued by wireless consulting and research firm Novarum Inc., Meru scored high in tests against Cisco's and Aruba's Wi-Fi access points. It consistently beat or matched its rivals in throughput, giving equal access to various wireless users on a network, the ability to handle heavy voice and data traffic and power consumption. The report was sponsored by Meru.

"Wireless in the enterprise has evolved from a facility of convenience to a way to manage costs and be more efficient," Newman said. "That said, we are still at the very early stages of wireless as part of commercial infrastructure of enterprises, but what we offer is higher performance and higher reliability that can handle a proliferation of wireless devices that wasn't contemplated by earlier generations of technology."

The funding news should put to rest, at least for the time being, persistent rumors that Meru is on the block, possibly a target for a networking company like Juniper Networks Inc. of Sunnyvale.

"I've been reading stories about this every quarter or so for the last three years," Newman said. "Many companies in the wireless space have either been sold or were up for sale in the last couple of years, so speculating about M&A in this space is certainly not a crazy thing."

Abu-Hakima said he expects this round to be Meru's last, and that the company intends to go public within the next 12 months, depending on market conditions.

For legal counsel, Meru retained Stanley Pierson of Pillsbury Winthrop Shaw Pittman LLP.