Verizon’s Software Beachhead in Boston: The Story Behind CloudSwitch and Terremark

8/26/11Follow @gthuang

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about 15 enterprise customers in banking, media, and biotech (including Novartis, Biogen Idec, and Dassault Systèmes). Rubin admits the company was on track to raise a “classic” Series C venture round when it got snapped up. “In parallel we were having conversations with the Verizon team, and they kept surprising us,” Rubin says.

As is usually the case, the startup’s technology and team were key attractors. “It was a difficult piece of software to develop, and they made tremendous progress,” says Axel Bichara, a partner at Atlas Venture and a CloudSwitch board member. He adds that (unlike a lot of startups) CloudSwitch actually did what it set out to do—take existing applications in data centers and move them into the cloud, or between clouds, via a virtualization software layer.

“In the end, if you have a great team, your probability of success drastically increases,” Bichara says.

By most accounts, the acquisition (which may or may not show up in a Verizon regulatory filing sometime) was a good exit for Atlas Venture, Matrix Partners, and Commonwealth Capital Ventures—who collectively put a little more than $15 million into the company.

A lot of work remains to be done in the deal integration, of course. We’ll be watching to see whether this young startup team can indeed galvanize Verizon’s cloud-software efforts—and help drive enterprise adoption of cloud computing more broadly—or whether it will fall by the wayside like so many other failed acquisitions.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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