EdgeCast gets $54M in funding because CDNs are always hot

Content delivery network EdgeCast has raised a $54 million fourth round of financing including an undisclosed mix of debt as it seeks to expand in the hyper-competitive world of shipping digital content around the globe. The round was led by Performance Equity Management (PEM), with follow-on participation from the company’s existing investors Menlo Ventures and Steamboat Ventures.
The money helps EdgeCast continue adding new products to its original business of moving bits around the web. The company is adding web acceleration products as well as new routing and security services. As the CDN business has become commoditized, providers such as Akamai have moved from shipping bits to buying companies that add more valuable services, such as advertising, optimization and security. EdgeCast has to keep up.
EdgeCast was founded in 2006 and has raised more than $20 million in equity funding since that time. The company says it’s in its fourth consecutive year of profitability, and that it has more than 6,000 accounts including Twitter, Pinterest, Sony and Hulu. However, a significant chunk of its business has come through reselling its service via ISPs such as AT&T and Deutsche Telekom, and video providers such as Ooyala and the Platform.
James Segil, president of EdgeCast, says that the telco CDN market has shifted from them trying to resell the EdgeCast CDN, to licensing EdgeCast software to build their own CDNs. However, he now sees that shifting back to having EdgeCast build or manage a CDN for ISP customers, which has become a hot-button issue on the web as giant players such as Facebook and Netflix are trying to build and offer their own CDNs.
Segil notes that none of the founding team has cashed out with this funding and that the money was taken primarily because the company wants to continue investing in the business with new products and larger sales team.