As Silicon Valley has obsessed over artificial intelligence, significant attention has been paid to technology underpinning it: advanced computer chips, large language models and so on.
Less has been devoted to the pipes that help deliver A.I. — networking equipment.
But that has been changing, as companies and investors see the potential of improving relatively prosaic equipment like switches and access points to supercharge A.I. offerings. The latest sign is that Meter, a San Francisco-based start-up that sells packages of networking equipment, plans to announce on Thursday that it has raised $170 million at a valuation of more than $1 billion.
The round, which was led by the venture capital firm General Catalyst and includes backing from the likes of Microsoft and Sequoia Capital, is further evidence that for many in Silicon Valley, networking is becoming a hotter investment focus.
“Networking is an overlooked, yet crucial, aspect of the world’s tech infrastructure,” said Hemant Taneja, General Catalyst’s chief executive, who led the firm’s investment in Meter. “Networking spend is expected to grow massively in the next few years because of A.I. needs, and yet current networks are one of the biggest blockers” to growing A.I. computing power.
To be fair, networking is already a big business: Cisco, the heavyweight in the field, has a $254 billion market capitalization, while Arista Networks has a $118 billion market cap. Those incumbents haven’t been standing still either, with Cisco announcing this week that it was introducing a new generation of switches to keep up with huge data flows from A.I. services.
But Meter has drawn significant support — among its early backers were Sam Altman of OpenAI; Reid Hoffman, the LinkedIn co-founder; and Diane Greene, the former Google Cloud chief executive — with its promise of a new business model for the networking business.
Unlike traditional networking setups, which companies have to buy and maintain themselves at often high costs, Meter sells what’s essentially an all-in-one subscription service. It puts together packages of its specially designed switchers, routers, security devices and other equipment, and remotely maintains them.
Anil Varanasi, Meter’s chief executive, said that the company’s packaged approach made life simpler and cheaper for customers, though it had doubters in the beginning. “Everyone thought we were foolishly naïve in thinking we could build everything from the ground up,” he said.
(Mr. Varanasi and his co-founder, his brother, Sunil Varanasi, have long been interested in the business, having even moved to Shenzhen, China, in 2014 to study networking hardware up close.)
The all-in-one approach helps create faster and more reliable networks, said Ravi Gupta, a partner at Sequoia and an early investor in Meter. That’s especially important as companies increasingly rely on A.I. services.
Meter’s customers include warehouses, schools, the ride-hailing service Lyft and the hedge fund Bridgewater Associates. Aided by new funding, the company plans to start pitching data centers, where reliable networking infrastructure is a must. (It plans to expand geographically, across Europe, the Middle East and parts of Asia as well.)
It’s also working on further automating network operating: “Look at any business today,” Anil Varanasi said. “They’re under incredible pressure to do five-to-10 times what they have the resources for.”
Meter faces strong competition. Last month, for example, Cisco announced a major infrastructure partnership with Humain, a Saudi-backed A.I. company, and it is part of the United Arab Emirates branch of the Stargate data center project. Cisco’s Meraki cloud-based networking management business already collects billions in annual revenue.
But Mr. Varanasi, the C.E.O., said that the industry can support another player, and pointed to a new partnership with Microsoft as a sign that it can compete with bigger rivals. “Networking is one of only markets that have multiple $100 billion-plus public companies,” he said.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
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