Yipes Scares Up $17.5M

Benefiting from the surge in interest around Ethernet services, Yipes Enterprise Services Inc. announced yesterday it's completed a $17.5 million funding round.

The funding round, Yipes's fourth, consists of a $9 million line of credit from Silicon Valley Bank and $8.5 million from prior investors Crosslink Capital , Norwest Venture Partners , JPMorgan Partners , and Sprout Group . (See Yipes Raises $17.5M.)

The "new" Yipes has raised $106 million since emerging from bankruptcy protection in 2002. Born as Yipes Communications, the firm enjoyed some bubble-era success -- and $291 million in pre-2002 funding -- before getting sucked into the telecom crash. The controversial Chapter 11 filing followed, allowing the company to clean up its balance sheet while landing in the hands of original Yipes investors, who took substantial write-offs in the process. (See Yipes Joins Chapter 11 Club and Yipes Reborn Amid Accusations.)

But things have gotten better. Yipes says it's in positive territory with its earnings before interest, taxes, depreciation, and amortization -- a step towards real profitability.

"They're clicking along," says Stan Hubbard, senior analyst with Heavy Reading. "They've made some progress in providing strong service-level agreements, which is a key thing for enterprise customers." (See Yipes Strengthens SLAs.)Yipes also has made inroads with certain vertical markets such as financial institutions, Hubbard notes, and the company has bragged of bagging many of the biggest U.S. law firms. And last year, Yipes got into the automated backup and recovery market through a partnership with LiveVault Corp. , creating a service called Yipes Protect. (See Yipes, LiveVault Protect .)

Yipes says the funding will be used to take it into new markets. That might include overseas business, as Yipes connects its customers to points outside North America through partnerships with the likes of British carrier Exponential-e Ltd. (See Yipes, Exponential-e Hook Up.)

Global reach has become a hot topic among Ethernet service providers. "They're looking for overseas partners. European companies are looking for partners here, and North American companies are looking at Europe and Asia," Hubbard says.

Network-to-network interoperability will be a key facet of these relationships, as not all Ethernet implementations are identical; some don't support jumbo frames, for example. The situation helped motivate the Metro Ethernet Forum (MEF) into certifying Ethernet services, hoping to ensure interoperability among carriers. (See MEF Certifies Seven.)

— Craig Matsumoto, Senior Editor, Light Reading0