Mangrove Closes Its Doors

Mangrove Systems Inc. has decided to cease operations and look for a buyer, ending entrepreneur Jonathan Reeves's winning streak of startup exits.

Mangrove launched in 2002 to high expectations, as founder Reeves had racked up two successes with previous startups. His Sahara Networks got sold to Cascade Communications in 1997 for $212 million. Later, Sirocco Systems got bought out by Sycamore Networks Inc. (Nasdaq: SCMR) in 2000 for $2.9 billion. (See Sycamore Goes Shopping and Sycamore Gains Access.)

Mangrove, which has focused on building equipment that uses pseudowire technology to backhaul wireless data traffic, made the decision earlier this week, company officials told Light Reading today.

Mangrove will continue supporting its Pirhana line of gear, which is running in live networks, and the company is "actively in discussion with potential partners and potential acquirers," a spokeswoman says.

Mangrove was trimmed to 50 employees at the time of its last round of funding, but it has now been trimmed further to a skeleton crew that's supporting the customers and closing down the shop.

Mangrove had been rumored to be in trouble last year; one source had noted the company needed more funding to survive. That issue appeared to be settled when Mangrove raised $13.2 million, part of an anticipated $20 million round announced in August. (See Mangrove Secures New Funding.)

In November, Mangrove CEO Reeves told Light Reading the company had five paying customers, one being a major OEM. But the company seems to have decided it lacks the stamina to carry on.

"In this day and age, in order to capitalize on a market, you really need a big brother," the spokeswoman says. She wouldn't elaborate on what's changed about Mangrove's outlook since that last funding round.

Mangrove faces some competition from fellow startup Hammerhead Systems Inc. , although Reeves describes his company's gear as an access aggregator that would feed a box like Hammerhead's. In turn, both companies are pitted against big names like Alcatel-Lucent (NYSE: ALU), Cisco Systems Inc. (Nasdaq: CSCO), and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA).

Wireless backhaul was the latest target for Mangrove, as it's been for most other pseudowire companies (and most everybody else, it seems). A 3G feature set for Pirhana reached general availability in December, with Reeves touting its robust ATM support.

"A lot of pseudowires out there do a really lousy job of ATM support," he said in November. That would be key for 3G networks, "where you've got a lot of ATM still floating about in the network." (See Wireless May Boost Pseudowire and Cellular Looks to Converged Access Networks.)

— Craig Matsumoto, West Coast Editor, Light Reading