As digital transformation takes on greater urgency during the pandemic, enterprises looking to accelerate their plans often encounter cumbersome and expensive networking costs. Now an Israeli startup working with telecommunications providers is hoping to solve the problem with software that eliminates the need for much of the traditional hardware.

DriveNets today announced it has raised $208 million, sending its valuation over $1 billion. D1 Capital Partners led the round, which included new investor Atreides Management and previous investors like Bessemer Venture Partners and Pitango. The funding comes about two years after DriveNets raised $110 million.

DriveNets CEO and cofounder Ido Susan says telco providers that adopt the company’s software are able to offer better economics to enterprise users, who can then deploy new services for less money.

“Once you have shared resources, once you have everything on top of that solution, it’s reducing cost per bit,” Susan said. “It’s monetizing much better your investment. And it speeds up innovation.”

Founded in 2016 by Susan and cofounder Hillel Kobrinsky, the company aims to bring the same kind of disruption to networking that is occurring in other sectors, such as storage. Network traffic was already soaring before the pandemic, and projections indicate that it will continue to accelerate with the move to larger video formats and greater mobility, as well as greater virtualization.

“Industries like compute and storage had already moved to be software, in order to support the scale and the demand of the traffic,” Susan said. “But networking still has a hardware solution. And I think this is a bottleneck.”

This situation is constantly forcing telco providers to deploy more equipment to handle surges in use. And enterprises must do the same to expand or roll out new services. DriveNets sells what it calls its Network Cloud software to telco companies, which then provide it as a service to large customers.

While DriveNets has announced AT&T as a major customer, it is working with dozens of other providers, Susan said. DriveNets’ software allows these providers to run traffic from many customers over the same infrastructure while the software guides traffic. Customers like the service because they can increase network capacity without installing large amounts of new hardware.

The system can retain strong privacy and security so it’s also viable for larger financial institutions or other companies handling particularly sensitive data.

DriveNets plans to use the latest funding to continue product development while expanding into new territories and hiring employees to keep up with demand.

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