Israeli startup DriveNets, which offers cloud-based tools to help build networks more cheaply, raised a $262M Series C, source says at a $2.5B valuation
The Israeli company offers communications service providers (CSPs) and cloud providers a new way to build networks …
Context & Ripple Effects
DriveNets has been climbing fast: it exited stealth in early 2019 with $110M at a reported $300–500M valuation (its emergence from stealth), then raised a $208M Series B at $1B+ in January 2021 (that Series B). This $262M Series C roughly doubles the valuation to a reported $2.5B in under two years — investors paying up for software that lets carriers and cloud providers build networks without buying traditional routing hardware.
The round also fits a broader Israeli pattern: Cato Networks raised $200M at $2.5B in October 2021 (Cato's $200M round) and followed with $238M at $3B+ in September 2023, showing venture capital repeatedly crowding into Israeli companies selling cloud-delivered alternatives to carrier-grade infrastructure.
First-order effects
- Service providers and cloud providers evaluating DriveNets' software-based routing now face a competitor with fresh capital to scale deployments against the installed hardware base of incumbent network equipment vendors.
- The reported $2.5B valuation validates the January 2021 Series B's jump past $1B, pricing DriveNets on recurring software economics rather than equipment margins.
Second-order effects
- Rivals in cloud networking must match the software-delivery model and its pricing, while Cato Networks' parallel mega-rounds signal that capital crowding into Israeli cloud-networking will bid up talent and customer acquisition across the category.
Third-order effects
- If carrier spending keeps migrating from hardware boxes to software subscriptions, the network stack consolidates around platform owners like DriveNets and Cato Networks — a trajectory the corpus later confirms with DriveNets' $410M Series D at an $8.5B valuation, taking total funding to roughly $1B.
The trend: Carrier networks are being rebuilt as cloud-delivered software, and venture capital is repricing that shift round by round.