Networking software firm NexTone Communications said Tuesday it raised $35 million in a fourth round of financing from a group of large VCs led by One Equity Partners (OEP).

The cash infusion, which brings the company’s total financing to $67.5 million, will be used to hire more people and train engineers in the use of the company’s Internet networking software. The company’s signaling and switching software is designed to speed the delivery of voice, data, and video traffic over the Internet.

Also participating in the round are existing investors BCE Capital, Core Capital, Mid-Atlantic Venture Funds, and Safeguard Scientifics. David Walsh, a partner at OEP, will represent OEP on NexTone’s Board of Directors.

The funding comes as good news to the Gaithersburg, Maryland-based company, which recently changed CEOs. In 2001, NexTone was forced to rethink its business model in the face of declining sales.

In September, NexTone’s board reportedly felt the company needed someone with more management experience to lead the company. They tapped Malik Khan, chairman and chief executive of Boston-area technology company Converged Access to replace Hank Fiery.

Prior to founding NexTone, Mr. Sharma had previously been a product marketing director at Newbridge Networks.

Strategy Change

“We are seeing a tremendous uptake in the adoption of enterprise VoIP today, as well as a surge in the number of large-scale carrier VoIP deployments in all major regions of the world,” Mr. Khan said. “As both carriers and the enterprise roll out new VoIP services, they require a real-time session management product that allows them to diversify their service offerings, reduce costs, and enhance competitiveness.”

The VoIP space is certainly heating up, as more companies compete with big telcos to provide cheap long-distance calls and increasingly, enhanced services like video-conferencing, virtual private networks, and other services.

Infonetics Research recently reported that one-quarter of all voice minutes will be VoIP-based by April 2006 and that one-half of all central offices will support VoIP. That gives NexTone some bragging rights. It estimates its networks carry more than half of all long-distance VoIP traffic in the world.

When the company first launched in 1998, its core business was providing access equipment to small carriers offering VoIP service. After its customers fell on hard times in 2001, NexTone had to change its business.

It came out with a new software-based strategy in 2002. VCs seemed to agree the company was on the right track. That same year, NexTone closed a third round of funding, led by Core Capital Partners.