Sep 11, 2024

Limelight basks in $130m Content delivery provider Limelight Networks Inc has secured an impressive $130m in its first round of equity financing, which it will use to expand its multimedia broadband services in Asia and double its capacity worldwide. Share this article However, privately held Limelight, which is profitable, needs just $20m to $25m invested to do just that. One hundred and thirty million is a lot more than is needed, said Limelight cofounder and chief strategist Michael Gordon. But if you’re going to raise money you may as well raise a lot. The company will expand its existing North American and European network, and set up new networks in Asia by 2007. Earlier this year, it set up in Japan and Hong Kong, and in a month or two will also be in mainland China and Korea. Later this year it will move into India, Gordon said. Currently, there are no plans to expand into the Australasian region. Presumably, the company also will need some extra cash for its legal battle against chief rival Akamai Technologies Inc, which recently sued Limelight for alleged patent infringement. Limelight, which holds 14 patents of its technology, does not infringe Akamai’s patents, Gordon said. They’re just wrong, he said, of Akamai’s lawsuit. Akamai mostly uses homegrown software on its servers, as well as a mix of open-source, including Linux, and Microsoft Windows. Investor confidence in the company seems to stem from its strategy of installing several thousand servers in various cities around the world, which stores copies of the various objects on those servers. While invisible to the user, the system determines which server is closest to the user and sends the content to that user from the server in their city. That makes it very fast and for media content it makes the experience very high quality, Gordon said. While the company currently enables the delivery of multimedia products primarily for media customers, Gordon said it would increase its enterprise business over time. Among its 600 customers are enterprises, including YouTube, which is thought to generate about $1m a month in sales for Limelight, MySpace, Foxnews.com, MSNBC.com, MySpace and Real Networks Rhapsody. Limelight also provides bandwidth to Babycenter.com, which is run by drug giant Johnson&Johnson. Financial services companies also use Limelight to give customers financial education via video. Gordon said Limelight expects enterprises also would use the service for investor relations and other podcasts. You will see us increase our focus on enterprise customers over time as they adopt more and more use of media content in addition to their additional text and graphics web page infrastructure, Gordon said. The volume of content Limelight handles per quarter increases roughly 40% to 50%, in line with its revenues, Gordon said. Limelight’s second quarter revenue grew 40% to more than $14m from a year ago. It was the company’s 11th consecutive quarter of profitability, but the company did not disclose details. The company sells various products, notably ContentEdge for content delivery via HTTP, MediaEdge Streaming for video and music, and Custom CDN for tailored delivery methods. The Tempe, Arizona-based company launched in 2001 with about $3m in seed money from its founders and partners. In the first half of 2005, it had a venture debt round for $15m, led by Silicon Valley Bank, which is basically a loan offset by equity stake. Gordon was somewhat elusive on just why the company raised an additional $100m than it strictly needed to expand its operations. I recognize that the round was] larger than normal. That’s a function of the value of the company, he said. Gordon said investors sought a larger equity stake in the company, which bumped up the value of the round. No one’s going to give you $1m for 1% of your company, he said. Limelight investors are open to various exit strategies at this point, including a possible initial public offering or acquisition, Gordon said. However, he noted that one of the reasons the company chose Goldman Sachs Capital Partners to led the recent round was because it was a group of very patient investors and we’re going to do what’s right for our customers and not try to rush to some sort of conclusions on what the company’s future looks like. Generally speaking I’m planning to grow this company, expand capacity, add additional people and build a bigger, better business, Gordon said. He expects to grow the company’s 100-strong workforce to perhaps 150 by year’s end. And after the recent round, Gordon said Limelight has no plans to pursue additional capital at this time. Sign up for our regular news round-up! Give your business an edge with our leading Tech Monitor