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Axiowave on Track for More Funding

Light Reading
News Analysis
Light Reading
5/7/2002
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Axiowave Networks Inc. has raised $37 million in new funding, and company officials claim it's near to raising another $8 million more to close a total of $45 in its third round.

The size of the round and the fact that the news wasn't volunteered by the company appear to be hopeful signs, although Axiowave's still in pre-product mode and has much left to prove -- in a market that seems clearly down for the count.

The startup's founder and CEO Mukesh Chatter, who gained fame in selling Nexabit networks to Lucent for nearly $1 billion (see Lucent Loses Two Big Names and Lucent Cleans Up Core Routing ), says he's hopeful. "We're just one company, and you can't gauge anything by that, but we are beginning to get good traction. We are making substantially more progress than we were with prospective customers even three months ago."

Much remains to be seen. Axiowave doesn't expect to close its round for another six weeks or so. Chatter says the new round is coming from inside investors that have previously kicked in funding, as well as some outsiders, and matters must still be sorted.

Chatter won't name names, but in the past Axiowave has gotten funding from Madison Dearborn Partners and Soros Private Equity Partners, as well as from a range of other sources, including Chatter himself.

Since its founding in May 2000, Axiowave has maintained a cloak of secrecy only broken intermittently. A month ago, for example, word of a layoff leaked out (see Stealthy Startup Leads With Layoffs), forcing Chatter to acknowledged that Axiowave had discontinued work on an ultra-dense crossconnect switch meant to be part of its product line. About 30 employees were laid off as a result. Chatter said yesterday that the census remains at about 150 and there are no further layoffs in sight.

Sources say Axiowave is making a partially optical multiservice core switch designed to compete with gear from Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Équipe Communications Corp., Nortel Networks Corp. (NYSE/Toronto: NT), and a slew of others (see A New Optical Taxonomy, page 9}).

Chatter says the new funding, when finalized, will be used to create a sales infrastructure to support beta testing and shipment of Axiowave's gear, due out later this year. Money will also be used to continue R&D.

Axiowave will not have a booth at this year's Supercomm 2002 trade show in Atlanta, however. "We'll be there seeing and meeting and talking, but it seems the idea of showing your gear in demos doesn't carry the weight it used to," Chatter says. The only thing that matters is to get a product into the hands of the right customers and get it working, he asserts. The rest will come.

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com For more information on Supercomm 2002, please visit: Supercomm Special

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Dr.Q
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Dr.Q,
User Rank: Light Beer
12/4/2012 | 10:27:16 PM
re: Axiowave on Track for More Funding
Anyone have educated guesses on what Axiowave is doing?

- Dr. Q
Prizm
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Prizm,
User Rank: Light Beer
12/4/2012 | 10:27:14 PM
re: Axiowave on Track for More Funding
The following quote sounds like BS for "we don't have a product ready to show":

'Axiowave will not have a booth at this year's Supercomm 2002 trade show in Atlanta, however. "We'll be there seeing and meeting and talking, but it seems the idea of showing your gear in demos doesn't carry the weight it used to,"'
BobbyMax
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BobbyMax,
User Rank: Light Beer
12/4/2012 | 10:27:11 PM
re: Axiowave on Track for More Funding
Lucent was duped into buying Nexabit. A few con artists robbed Lucent over a billion dollars. The company simply cannot be trusted with what it says.
realdeal
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realdeal,
User Rank: Light Beer
12/4/2012 | 10:27:10 PM
re: Axiowave on Track for More Funding
I hear it's a next generation Popiel Pocket Fisherman - they'd probably be better off trying to do this vs. what they are working on.

I can't find anyone at any ILEC/BLEC/CLEC/IXC who has been asked to look at their box.
simpleton
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simpleton,
User Rank: Light Beer
12/4/2012 | 10:27:09 PM
re: Axiowave on Track for More Funding
37 mil seems a lot these days considering that a lot of startups are either in their graves or close to it (see BrightLink, Nexsi, Accordion ...). Apparently, some people are putting their wallet where their mouth is.

Anyone here has any idea how long this kind of money will last a startup like Axiowave?
Outsider
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Outsider,
User Rank: Light Beer
12/4/2012 | 10:27:04 PM
re: Axiowave on Track for More Funding
How did Mukesh manage to get $45 million more in funding even though:

1. Nexabit's product was a terrible and resulted in a major loss for Lucent.
2. The Systems market now is in very bad shape.
3. And he has a mean personality.

He sells several companies for huge amounts (Nexibit for $900 million) and now he receives this kind of funding. Is he brilliant or just very very lucky?
netwiz
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netwiz,
User Rank: Light Beer
12/4/2012 | 10:27:01 PM
re: Axiowave on Track for More Funding
Sounds like you are jealous, did you miss the boat buddy?
TMX880 is in trials at a number of RBOC's and carriers, getting a lot of traction. Go check LU's quarterly and annual report.
ExIXC
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ExIXC,
User Rank: Light Beer
12/4/2012 | 10:27:00 PM
re: Axiowave on Track for More Funding
What a sour loser you are. You expect us to believe that you checked with every single ILEC/BLEC/CLEC/IXC since the article appeared - last evening.

I work for another startup and I can tell you first hand it is very difficult to raise money and hats off to anyone who has. The bar to get funding is sky high and not to mention the extremely delailed due diligence process. I suggest you start raising $$ for your 'Popiel Pocket Fisherman' project -- let us know how you make out.

Cheers!
manoflalambda
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manoflalambda,
User Rank: Light Beer
12/4/2012 | 10:26:56 PM
re: Axiowave on Track for More Funding
Sounds like you are jealous, did you miss the boat buddy? TMX880 is in trials at a number of RBOC's and carriers, getting a lot of traction. Go check LU's quarterly and annual report.

Ah yes, but that wasn't the Nexabit concept eh? However perhaps it will be a nice recovery though.

Salute,
Manoflalambda
ex_nexabit
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ex_nexabit,
User Rank: Light Beer
12/4/2012 | 10:26:50 PM
re: Axiowave on Track for More Funding
After having suffered years of criticism and needling from a few nitwits, some of us ex-Nexabit engineers have to come forward and say something.

First, the Nexabit product was an excellent product - Hardware, Software and Mechanical. The hardware (chips and all) worked on rev 1 of all boards. The major hassle was a full custom ASIC that our ASIC vendor could not deliver in good time because they were themselves ironing out the process (and we helped them clean up their process). The base technolgy brought into Lucent by Nexabit could have been (and still can be) fruitfully used not just in a core router but also the edge and possibly by enterprise routers. Also, some of the chipsets were versatile enough to be used in non-router applications. All this would have been possible, if the knuckleheads in Lucent worked instead of playing politics.

Second, the Nexabit team was almost wholly first rate - very smart, very hardworking and very motivated. A monumental project of that size was accomplished by around 65 engineers and support staff - we raised the bar on what could be achieved by a small but dedicated team such that many startups around us, used us as an example of how a startup should work.

Third, it was Lucent that screwed Nexabit. Lucent was supposed to provide the sales channel and bring on some help in the software area - Nexabit had around 22-24 software engineers including SQA. We desperately needed help in software and Lucent was supposed to help us with man power - none came. By spring of 2000, 9 months after acquisition, we delivered a very stable GA release of software. Furthermore, it is public knowledge that Lucent was in deep sh*t by this time and the only interest the top brass had was in covering up the shady on-goings which brough the company down to its knees eventually - think Enron.

Fourth, what technical success Nexabit had, would not have been possible without Mukesh. He brought the energy and the will to succeed. For all the negative things said by most who, incredulously enough, have not worked for him (and possibly a handful of disgruntled people within Nexabit), those of us who did infact work for him, will stand by him and say exactly the opposite. Proof positive for this is that over half the Nexabit engineers went to work for him at Axiowave. Mukesh had to limit the number of people he could take from Nexabit-Lucent because of Lucent sensibilities (whatever that meant)! Most of the other half who did not go to Axiowave were people who were tired and did not want to join a startup or some wanted to start a company of their own or those who simply did not move fast enough to join Axiowave before Mukesh had to shut the door.

I have found that Mukesh bashers can broadly be classified thus:

1. Nexabit Employees - A very small (I can count max 6-7 out of the final 120) people who themselves did not cut the mustard and felt small in the company of an over-acheiving team.

2. Non-Nexabit Lucent Employees - A majority of these nitwits come from Ass's End failed acquisition. If Nexabit was a $900 million mistake by Lucent, what does one call the $22-$24 BILLION mistake that was the Ascend acquisition? Many of these people (and I have run into a lot of them) thought that Ass's End had some sort of entitlement in Lucent to all things related to Data Networking - my answer to these people was to go suck an egg. Lucent nixed Chromatis which was a ~$3.5 billion acquisition, but, they are still hanging on to the Nexabit box. The story of Lucent's mismanagement of acquisition can fill a library, so why is it that a smaller acquisition that did not work out gets some of the jokers on this bulletin board point to Mukesh? Does it not occur to these geniuses that Lucent screwed up this acquisition also?

3. VCs and paraphernelia - Mukesh does not give the company equity away to VCs. Period. He financed Nexabit privately with the help of Ray Stata and went for VC money after the company valuation was significant. This meant starving out the VCs, who control their pet analysts who in turn influence the press.

What were the wrong things with Nexabit? With 20/20 hindsight, everyone has something to say about. I think,

1. We should have hired more engineers (mostly software and sqa engineers) in the startup stage.

2. Bribed some of the carriers - just like Juniper, Sycamore ...

3. Built our own sales force.

4. Not be acquired by Lucent.

5. But having been acquired by that organization with dipsh*t management, I think, the biggest lesson was that, despite the poor condition of Lucent to help us in this aspect, we should have stuck it in there and seen the product through to deployment.

I have much to say, but will leave it at this.

flame >> /dev/null


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