Isovalent, the creator of open-source networking and security software Cilium, raised a $40M Series B from Thomvest Ventures, Google, Microsoft, and others
Context & Ripple Effects
Isovalent is scaling fast: it emerged from stealth in late 2020 with a $29M Series A led by a16z and Google behind Cilium, its cloud-native networking and security layer built on eBPF. This $40M Series B brings back Google alongside Microsoft and lead investor Thomvest Ventures — meaning both major public-cloud rivals are now on the cap table of software that sits inside their customers' clusters.
The round also reads differently in hindsight: roughly fifteen months later, Cisco acquired Isovalent for a reported ~$650M in cash, about 32 times ARR — versus the ~$250M valuation implied by this Series B — making this round the last marked private price before a large strategic premium.
First-order effects
- Isovalent gets the capital to keep developing Cilium and eBPF as open-source projects while commercializing enterprise support around them, with Google and Microsoft as both investors and potential distribution channels.
Second-order effects
- Cloud-networking rivals like Aviatrix, which raised its own $40M round in 2019 to sell multi-cloud networking services, now compete against an open-source alternative whose development is subsidized by the hyperscalers themselves; new entrants such as Cloudbrink, which emerged with $25M for hybrid-workforce security two months later, show how crowded that funding window was.
Third-order effects
- Hyperscalers co-investing in core infrastructure startups creates a predictable exit path — Cisco's acquisition at more than double the Series B valuation confirms strategics will pay premiums for open-source control points — pushing the category toward consolidation under network-equipment and cloud incumbents rather than independent IPOs.
The trend: Cloud-native networking and security is consolidating around open-source projects backed by hyperscaler capital, with strategic acquirers stepping in once those projects become enterprise control points.