Xtera's Long-Haul Regeneration

New CEO Jon Hopper says he'll use an additional $30M in funding to make the company self-sustaining

March 1, 2004

2 Min Read
Xtera's Long-Haul Regeneration

The few, the proud -- the long-haul networking startups that are still alive.

Xtera Communications Inc. counts itself among them. The startup today announced that it has closed a $30 million round of financing, which was first announced last year. And as reported by Light Reading's Headcount nearly two weeks ago (yes, two weeks ago!), the company also announced today that it's named a new CEO, Jon Hopper (see Play Merger Mania and Xtera Raises $30M, Gets CEO and CFO). It also named a new CFO, Paul Colan

The moves are part of a year-long makeover of the company, which has gone through its share of cutbacks and repositioning. The $30 million was originally pledged to the company last year in concert with its acquisition of MetroOptix assets, designed to propel the company into the metro multiservice market (see Xtera Nabs Metro-Optix Assets).

The company is still marketing its long-haul DWDM transport gear as well as the MetroOptix technology, which combines Sonet, digital crossconnect (DCS), ATM, and MPLS switching.

It's a gutsy bet by Xtera's investors. Many long-haul networking startups have been shut down in the past year -- and some have been quite spectacular failures, burning through hundreds of millions in venture capital financing (see 2003 Top Ten: Startup Flameouts). For example, shuttered startups Ceyba and PhotonEx burned through more than $300 million between them.

Hopper says he sees a company with solid technology and finished product ready to expand its sales activities. He says the bulk of the funding will go into expanding the company's global sales force -- with the emphasis on global.

"Our objective is to free up resources to invest in sales. We're looking at all sales capabilities throught the world. The markets have been growing outside the United States."

Xtera's venture capital investors apparently feel confident enough that another $30 million might get Xtera to the point at which it can generate enough revenues to entice a larger partner or perhaps even an acquisition.

Hopper says the goal is to get the firm to a self-sustaining state, without further VC funding, by 2005. He's not ruling out other sources of financing, such as bank loans, to take it to the next level.

Hopper wouldn't say how many employees are at Xtera now, but as recently as late 2003 the company had been whittled down to 80 people from a peak somewhere in the hundreds.

Although Xtera wouldn't provide the details of the financing round, Hopper says it consisted of existing investors putting in more money in exchange for a greater stake in the company -- read: "down round."

Hopper himself last hailed from Extreme Devices, a small startup developing power devices. That company was shut down and its remaining capital was invested in Xtera, says Hopper.

Xtera's investors include Sevin Rosen Funds, ComVentures, and Star Ventures.

— R. Scott Raynovich, US Editor, Light Reading

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