Equinix secures big-name investors
Internet start-up Equinix tomorrow will announce a hefty $280 million cash infusion, including investments from AOL, Netscape co-founder Marc Andreessen and E*Trade.
The money marks a strong vote of confidence for the new firm, which already has committed itself to spending $1.2 billion over the next few years to build a new Net infrastructure.
The Redwood City, California, company is one of several start-ups aiming to improve the performance of Web companies by "="" rel="follow" target="_self">explosive public stock offerings and successful private investment drives.
Equinix wants to build a series of private network hubs around the world, where Internet service providers, content companies and applications providers can place their Internet equipment. These giant hubs will take part of the load from existing Internet network connection points now run by communications companies like MCI WorldCom and Sprint, which analysts say are badly overloaded.
In addition to alleviating Net congestion, Equinix plans to allow content companies, ISPs and other Net firms to link servers inside its facilities to share content without having to send signals onto the "public" Internet.
Equinix has few competitors in this direct line of business. CEO Al Avery's old company, PAIX--now owned by Metromedia Fiber Network--is the firm's main rival. PAIX has its own plans for expanding its series of network hub centers.
Although the company and concept are young, the firm's idea was attractive enough to garner $12 million in initial financing from Microsoft and Cisco Systems earlier this year.
Tomorrow's announcement will detail $80 million in new investments from AOL, Andreessen, the Enron Corporation, Rupert Murdoch's News Corporation and Northpoint Communications, as well as from a handful of investment groups.
"We were lucky we were able to choose the companies that we wanted to have invest in us," CEO Avery said. "We wanted to make sure we chose investors who were concerned about the health and the growth of the Internet."
The company also has secured another $200 in new debt financing, Avery said.
But even with more than $300 million on its books, the young company is still a long way from reaching its stated goals.
Early last month, it embarked on an ambitious building strategy, committing to a $1.2 billion, four-year contract with Bechtel to construct nearly 30 of its network hubs around the world. One facility in the Washington area is already open, and the company expects to construct about a dozen centers by the end of next year.
That raises a now common question: Will the company go public to cover the rest of its expenses?
"We'd love that," Avery said. "We fully expect, as did our investors who did plenty of due diligence, that we can easily take this company public in the next 12 to 18 months."