$250M revenues. See Red Herring article
Sun, surf, and $50 million
By Georgie Raik-Allen
Red Herring Online
March 24, 1999
Hawaii is the ideal location to take a honeymoon, a
surfing holiday, or a telecommunications company that
wants to build a private network to bypass the
increasingly congested Internet.
Digital Island was founded in
Honolulu to access the undersea
trans-Pacific fiber-optic cables
that, by mandate of the National
Science Foundation, surface on
the island. Direct access to
international circuits at U.S.
pricing, the stability of the
economy, and proximity to Asian
markets also made it a great spot to build a global
network.
This week Digital Island scored its own slice of
paradise, closing a $50 million mezzanine round of
private financing from Merrill Lynch, Chase Capital
Partners, and Arbor Investors, bringing total funding in
the company to $88 million. Digital Island is expected
to go public within a year.
As part of the deal, Shahan
Soghikian, general partner of
Chase Capital Partners, will join
the board of directors.
SURFING THE OVERNET
Many companies are developing
technology to address the
problem of a congested public
Internet that is susceptible to
delays and down times. Examples
include technologies that allow
more data to be sent down
existing fiber, or that build intelligence into routers to
prioritize data as it travels across the Internet.
Digital Island labels its solution an "overnet," which sits
on top of the public Internet. It claims that its
wheels-and-spoke architecture and ATM backbone
allow it to slash the number of router hops that data
takes on the public Internet, reducing latency and
increasing reliability.
According to its VP of finance, Mike Sullivan, Digital
Island targets multinational companies looking for a
secure network that guarantees transport of
mission-critical applications to its customers and
branch offices.
It has developed its own network to carry large
amounts of corporate information around the world via
leased telecommunications cables and data centers in
Honolulu, New York, San Francisco, and London.
So far, the company has attracted more than 90
clients, including MasterCard International, National
Semiconductor, ETrade, and Novell.
Unlike many providers of network services, Digital
Island charges for the amount of megabit usage rather
than a flat fee. Mr. Sullivan says this puts the onus on
the company to deliver a more reliable service. It
constantly monitors the network for congestion and
adds links whenever more than 70 percent of capacity
is being used.
The company has been generating revenue for the past
few years and reportedly expects to ramp up to $250
million annual revenue within the next few years.
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