VoIP vendor Nuera snags fifth round of funding

This week’s group of companies receiving venture funding included a surprising name: Nuera Communications Inc., a voice-over-IP product vendor that has been around since 1997.

The company, which has increasingly begun to focus on cable service providers looking to offer voice, raised US$20 million in its latest round. Not coincidentally, two of the lead investors are cable operators Comcast and Cox Communications. Sandler Capital Management and Argo Global Capital also participated in this round.

A Nuera spokeswoman says the funds will be used to further develop the company’s cable telephony media gateways and its VoIP gateways, which are used for international long distance applications.

“This money will also sustain us until the cable operators start deploying in larger scale,” she says. To date, Nuera has sold products to Comcast and overseas cable companies such as StarHub in Singapore and Liberty Media in Puerto Rico.

Cox invested in Nuera because “we want to support companies building products that work well in the cable plants that we have,” says Jeff Brown, executive director of corporate development and investments. Brown says Cox has been impressed with Nuera’s technology and pricing. The cable network operator, which also offers circuit-switched telephony in 10 markets, is trialing Nuera products for bundled telephony, cable TV and Internet access services.

To date, Nuera has raised US$109 million over five rounds of funding. That many rounds used to be unheard of, but extra rounds have become more common as venture firms try to keep companies afloat against a backdrop of limited exit strategies, such as IPOs or mergers. Nuera says it hopes to achieve profitability by year-end, but as a privately held company it does not disclose how much money it is losing or the amount of revenue it is generating.

Nuera burst onto the network scene six years ago pushing voice-over-frame relay products. The company spun out of an outfit called PCSI.

Over the years, Nuera has shifted its focus more to voice-over-IP gear via its ORCA gateways. The company, which competes with Cisco, General Bandwidth and Lucent, also counts a softswitch among its offerings.

Nuera is now working closely with cable industry group CableLabs to get its BTX media gateway certified. A higher-density model is being prepped for availability next year.

With the international toll bypass market nearing maturity, Nuera’s focus on the cable telephony market makes sense, say Kevin Mitchell, directing analyst at market research firm Infonetics Research.

“There’s lots of talk about triple play,” where service providers offer packages of telephony, cable TV and Internet, he says. “VoIP is the best way to go down that path.”

Nuera’s close relationship with VoIP service provider Net2Phone is key, Mitchell says, as Net2Phone is increasingly looking to help cable companies get into VoIP and is using Nuera gear to do so.

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