Reef Point Lands $21M, Gets Woody

Security gateway vendor Reef Point Systems Inc. has changed CEOs for the fifth time and convinced a new investor to chip in on a $21 million funding round as the company continues its pursuit of a big carrier deal.

The new funding round comes from new investor American Capital Technology Group and previous investor Jerusalem Venture Partners (JVP).

And with new money comes new management. The new CEO -- the company’s third in less than two years -- is wireless infrastructure vet Woody Ritchey. Ritchey comes from a private portfolio management firm where he led various wireless related companies. Earlier, he ran Invisix, a Cisco Systems Inc. (Nasdaq: CSCO) / Motorola Inc. (NYSE: MOT) joint venture that developed IP transport technology for wireless carriers. Ritchey has also held executive positions at Motorola and AT&T Inc. (NYSE: T).

The new COO, Dennis Chateauneuf, brings some VOIP infrastructure experience into the mix. Until recently he was CEO of the startup Sentito Networks . Before that he was CEO at the VOIP company Dynamic Telecommunications Inc. (DTI) , and then at CopperCom after the two companies merged.

So why the new money? Why now? “Fixed mobile is here, not in the sense that the services are being rolled out but that the providers are building the networks,” says American Capital managing director Andrew Fillat. “We felt that Reef Point’s product fulfills a critical function in that marketplace and that it has such an advantage over others in the space.”

Fillat adds that Reef Point's attractiveness as an investment target increased dramatically when it was blessed by Alcatel as an OEM partner last April. Fillat says the relationship will open the door for Reef Point to sell into big carrier networks.

Fillat, along with JVP general partner Adam Fisher, and new CEO Ritchey will each join Reef Point’s board, the company says.

Ritchey says the new money will be used primarily to raise the visibility of Reef Point’s products to partners and carriers. “This is really about distribution and partnerships -- we are really a well kept secret in the marketplace that we’re going to change.

“We’ll use the money to gain more geographic coverage in Europe and in Asia, but also to get our messaging out there in a more clear and purposeful way."

Reef Point says its products are specifically designed to manage new security risks brought forth by converged wireless and wireline systems. As wireline and wireless networks combine, the wireless devices become exposed to the open Internet and all the problems that can entail, such as viruses, spam, and denial-of-service (DOS) attacks. (See IMS Imperils Mobile Security.)

This has led to the emergence of dedicated security gateways, like Reef Point’s, that protect the mobile core from outside threats.

Reef Point now has two products in its portfolio -- a security gateway focused on unlicensed mobile access (UMA) and another that’s designed for IP multimedia subsystem (IMS) networks. (See Reef Point Intros Gateway.)

The company points to the session border controller (SBC) crowd as its sole competition. Reef Point says its security gateways provide better security and are more scaleable than SBCs.

“If you look at what session border controllers were built for, it is to provide a firewall and NAT traversal functions for VOIP networks,” says Reef Point VP of product management Cam Cullen. “What they don’t have is general purpose security functionality; they don’t have HTTP-based security for non-voice services like video; and they are weak in encryption.”

The SBC makers agree that they do much more than just providing security. “As SBCs sit at the border of the VOIP network, they also deliver other key functions beyond security, including NAT traversal, protocol interworking, transcoding, and support for single and double NAPTs and VLANs for signaling and media for topology hiding, overlapping IP address spaces, and VPN bridging,” says Acme Packet (Nasdaq: APKT) spokesperson Kevin Mitchell.

NexTone Communications Inc. marketing VP Dan Dearing also had something to say about Reef Point’s claims. “Reef Point is optimized as a security gateway -- essentially setting up secure IP tunnels between the user and service provider network. They lack NexTone’s intelligence to perform policy-based session switching and management at the network edge.”

Reef Point’s gateways are designed to support many simultaneous sessions involving various media types. “Reef Point sees the ability to support multiple inactive and active tunnels simultaneously as a key feature of UMA gateways that is not well supported by the SBC or VPN gateway vendors with which it competes,” writes Unstrung Insider analyst Gabriel Brown in a new report titled “Mobile Network Security: The Threat of Convergence & IMS.”

Contrary to Reef Point's view, Brown says it’s not just the SBC companies that are out there pushing “convergence gateways... Azaire Networks has had the most success so far, winning deals at T-Mobile for example. Tatara Systems has also had success as a 3GPP AAA server play at companies such as Vodafone and O2.”

And there’s more competition on the way. “Cisco will enter the market early next year, as will smaller providers such as Airvana and Starent Networks, alongside startups such as Stoke,” Brown says. “SBC vendors, such as Netrake, are also working to position themselves in this parallel market.”

The security gateway and the converged services market are by no means Reef Point’s original story. When the company was known as Quarry Technologies, it built IP edge switches aimed at helping wireline network operators provide measurable, managed services to business customers. Since the company started in 2000, it has changed CEOs five times, that we know of.

In June 2005, the firm reinvented itself with a move into fixed/mobile convergence security gateways and changed its name to Reef Point. (See Reef Point Unveils Security Gateway.)

Reef Point is a privately held company headquartered in Boston. It has around 60 employees and has raised a total of $121 million in funding to date.

— Mark Sullivan, Reporter, Light Reading