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Stealthy Qwilt has raised $24m to ‘cache in’ on IP video

With nearly two years of development under its belt, stealthy startup Qwilt is ready to launch, with a product it says can help network operators manage the huge amounts of video traveling over their networks. And it’s doing so with some serious backing from big-name investors: The startup, which was founded by networking execs from Cisco (s CSCO) and Juniper, (s JNPR) raised $24 million in two rounds of funding from Accel Partners, Redpoint Ventures, Crescent Point Group and other investors.

In a tech environment where most venture cash seems to be going to consumer-facing startups on the application layer, Qwilt’s plan to introduce new technology into the network might seem peculiar. But the company seeks to solve a serious problem with its technology: How can network operators best deal with the explosion of video data flowing through their networks?

By 2012, video will make up about half of all network traffic, according to Cisco, and will grow to 62 percent by 2015. That’s growing substantially, particularly as more video publishers make their content available over the Internet and as more devices — like connected TVs, Blu-ray players and game consoles, make it easy to watch IP-delivered video in a user’s living room.

All that growth has operators up in arms about the amount of capacity needed to usher that video traffic over the Internet and into their networks. Until now, many have thrown capacity at the problem by upgrading their networks. But that gets expensive, and isn’t a very capital-efficient way of dealing with the problem.

Qwilt’s solution relies on transparent caching technology designed to ensure that popular videos from services like Netflix, (s NFLX) Hulu and YouTube (s GOOG) can be stored at the edge of the network. That means video files are served up closer to the end user, which results in better video quality, at the same time that it offloads traffic that otherwise would travel over aggregation and core network infrastructure. By doing so, Qwilt can reduce network overhead by 60 to 80 percent, CEO Alon Maor told me in an interview.

That message resonates with some ISPs who are happy to reduce the amount of traffic that flows through their pipes. Maor told me Qwilt is in conversations with about 50 ISPs and trialing the technology with five ISPs. The caching product, which is primarily software-based and can run on any commercial off-the-shelf hardware, will be sold to ISPs for placement in their edge networks. With trials underway, Qwilt expects general availability of the product in the first half of 2012.

Qwilt has about 30 employees, with an engineering team in Israel and sales offices in London and Silicon Valley. On Qwilt’s board are chairman Yuval Shahar, former CEO of P-Cube (which was acquired by Cisco in 2004); Accel Partner Richard Wong; former Accel partner Peter Wagner; Crecent Point partner Ohad Finkelstein; serial entrepreneur Giora Yaron. Former RealNetworks (s RNWK) CEO Rob Glaser is also an investor in the company.

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