Switch-fabric startup TeraCross Ltd. began shutting down this week, having decided the market was too brutal to carry on.

"We had decided to do that while there were still funds in the coffers," says Kurt Busch, vice president of marketing. Investors and management wanted to bow out while the company could still pay off its debts and provide its nine employees with final paychecks and severance, he says. "It wasn't like Pluris." (See Pluris Shutdown Confirmed.)

TeraCross managed to complete development of its GLIMPS-1000 chipset, but the market for merchant switch fabrics was too grim to justify continuing.

"The switch fabric market's just not a good place to be right now," Busch says. "We did our best to try to raise money, but we saw how difficult it was going to be."

Power X Networks Ltd. was an early casualty among switch-fabric vendors, and Zagros Networks fell more recently (see Power X Powers Down and Oath (#@%#!!) of Allegiance).

Based in Ramat Gan, Israel, TeraCross had raised $13 million in two rounds of venture financing. Backers included Argoquest Holdings LLC, Ascend Technology Ventures, Intel Capital, and Pitango Venture Capital.

— Craig Matsumoto, Senior Editor, Light Reading