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Company: Level 5 Networks

HQ: Sunnyvale, CA

Founded: 2002

Management: Dan Karr is Level 5 Networks’ president and CEO. Until 2002, he was vice president of worldwide sales for GlobeSpan Virata, which sells DSL chips and software. Before that, he held the same position at multimedia semiconductor maker S3 from 1996 to1999. Charles Cotton, the company’s chairman, was previously chairman of Globespan Virata, where he worked with Karr. Level 5 Networks’ founders were engineers in Cambridge, England, for AT&T Labs. They started Level 5 when they were laid off.

Investors: This June, the company emerged from stealth mode with the announcement that it had raised $30 million in series B funding from Oak Investment Partners, Accel Partners, Amadeus Capital Partners, and IDG Ventures. Level 5 had raised $9 million in Series A funding in December 2001.

Business Model: With increasing CPU speeds, the primary bottleneck in computing today is at the Ethernet networking level. Intel and others have attempted several times to create new networking standards to address this issue. For instance, Intel backed the Infiband standard, which represents a marked performance improvement over Ethernet. However, it is incompatible with Ethernet, and as a result failed to catch on (except in a few niches). Level 5 has introduced what it claims is the first product that’s fully compatible with the Ethernet standard and allows network processors to communicate with each other at one gigabit per second. While other products can achieve the same speed, Level 5 claims its product, the EtherFabric Network Interface Card, excels in other areas as well, including a latency speed in sub-10 microseconds, compared with the common 50 microseconds, and the ability to run applications faster than competitive products.

The company says it will introduce another product next year that can reach 10 gigabits per second. In addition to speed gains, Level 5 claims that using EtherFabric will enable users to reduce the number of servers deployed by up to 50 percent. The costs of EtherFabric cards with software range from $295 to $495. At this level, early buyers can be expected to be larger corporations with high data throughput needs. 

Competitors: Level 5’s standard is competing with iWarp and InfiniBand interconnect technology standards. Intel and Broadcom are the two biggest potential vendors.

Dirt: It says something that Ethernet inventor Bob Metcalfe has given Level 5 laudatory press quotes, although his venture capital firm, Polaris Ventures, is not an investor. According to Metcalfe, as quoted in the company’s press materials: “Level 5 has created a solution that delivers great customer benefit. EtherFabric will stall the adoption of non-compatible solutions such as iWARP and InfiniBand.” Metcalfe represents the broad interests in the IT world to improve on Ethernet, rather than switch to new standards. Such improvements might not be sexy, but they have made a lot of money for other firms – and Level 5 could be next.



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