Morgenthaler Ventures (where I am currently an EIR) announced today that they closed their ninth fund. In a normal market, this would have been business as usual and not be particularly newsworthy. However the current financial markets are anything but normal.

According to the NVCA release, the number of venture funds closed over the last quarters is:

    1Q'07           83
    2Q'07           83
    3Q'07           78
    4Q'07           85
    1Q'08           70
    2Q'08           76
    3Q'08           55

In 3Q of this year we saw a steep drop. However the impact of the current liquidity crisis and the resulting stock market decline didn’t become fully apparent until October. If I would have to bet, I would expect 4Q to look a lot worse. Venture Beat recently wrote about this and concluded that essentially what we are seeing, is a shakeout in the VC industry. While I haven’t seen numbers yet that conclusively demonstrate this, it intuitively makes sense. Firms that were burnt badly in the post-bubble of 2000-2003, now have fully invested their funds and realize that in the current financial climate they can’t raise additional capital. One would expect new entrants in the Venture Capital space to be the most vulnerable. A firm like Morgenthaler with almost 40 years of track record and an established network of LP’s is naturally in a much better position.

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OpenFlow Demo at the GEC3

We just finished the OpenFlow Demo at the GENI Engineering Conference, and it was amazing. We showed our new OpenFlow protocol running on switches from Cisco, Juniper, HP and NEC. Our experimental network stretched half way around the globe from Stanford to Tokyo via New York. It used fibers from  Internet2, CalRen and JGN2plus.

Over this network we showed how we can move around a running game server from one physical host to another without the game even getting interrupted. We demonstrated how you can route a network connection with a simple drag and drop interface (e.g. a TCP flow inside Stanford going via Tokyo and Houston). We even sent a running game server to Tokyo from Stanford, without losing the connection.

Press coverage of the demo included articles English, Japanese, Swedish and Spanish. The OpenFlow web site recieved a few thousand hits, with visitors from every major company in the networking space. All this was made possible by about 40 people from Stanford, Internet2, Cisco, Juniper, HP and NEC had been working on this for months.

As a result of this, OpenFlow is building momentum. NEC announced during the conference support for OpenFlow in their product, and more announcements will follow. By mid next year we are hoping to have pilot deployments at 6-10 universities, and I would hope we will see commercial deployments in that time frame as well. All in all a huge step forward for OpenFlow.

Congratulations to Neda, Yashar, Monia, Nick and Geoff for their best paper award at the Internet Measurement Conference. Their paper Experimental Study of Router Buffer Sizing tests out recent results on  buffer requirements of high-speed routers that serve highly aggregated traffic. Amongst other things it verifies the C/sqrt(n) result from my thesis as well as my former office mate Yashar Ganjali’s work on very small buffers and find that they hold well.

It is great to see this work getting recognized, but what is even more encouraging is that two router vendors privately confirmed to me that the next generation of some of their products will have substantially smaller buffers. This not only reduces power consumption, but also means that we are less likely to see latency spike whenever peering points or core links are congested.