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Équipe Scores Another $51 Million

Bear market doesn’t stop startup pulling in a massive second round

May 22, 2000

3 Min Read
Équipe Scores Another $51 Million

Équipe Communications Corp. http://www.equipecom.com, an East coast optical networking startup, today announced that it had received $51 million in second round financing.

That brings the total investment in Équipe to-date to $60 million. “If that’s not a record [for an East coast startup] it must be close,” says Dennis Rainville, president and CEO of Équipe.

What is even more remarkable than the size of the round is the fact that it was closed while the stock market continues to hand optical networking outfits a painful beating (see Light Dims for Optical Stocks).

Équipe’s success may have a lot to do with who’s sitting on its board -- which includes Ed Anderson, managing general partner of North Bridge Venture Partners, Todd Dagres, general partner at Battery Ventures, and Paul Ferri, managing general partner of Matrix Partners (Ferri has been described as ‘the godfather’ of East coast hi-tech). All three of their venture capital firms have participated in both rounds of funding. “They’re pretty much the A-Team,” comments Rainville.

Équipe itself also boasts what could be described as the ATM-Team. Some of its key personnel worked at Cascade (which was subsequently bought by Ascend, which in turn was itself subsequently acquired by Lucent http://www.lucent.com). Unlike many optical networking startups, which are targeting new age service providers with nouveau technology, Équipe has a more traditional pitch. It’s trying to sell products to big-spending, established RBOCs and ILECs (see Équipe Communications Corp. ). Those products, which won’t be announced until later, are believed to rely heavily on ATM technology. (Équipe itself plays down ATM’s role in its products, describing them as ‘multi-layer core platforms”).

If so, it’s an interesting tack to take. Experts are divided over how ATM will fare over the next few years. Some believe it will be squeezed out, as service providers thin the network ‘sandwich’ of IP-over-ATM-over-Sonet-over-DWDM-over-fiber. Others beg to differ. “I don’t agree with people who think ATM is going away, for one particular reason: the RBOCs. They have no intention of walking away from ATM. So there is still a very significant market for the technology,” Jim Dolce, president of Unisphere http://www.unisphere.cc recently told Light Reading (see Jim Dolce). Dolce is also a member of Équipe’s board.

It's worth noting that some of Équipe’s core team arrived at the startup from Lucent (where they had landed after Lucent acquired Ascend in 1999). A source tells Light Reading that they were working on Lucent's next-generation ATM switch, code-named 'Oz', when they quit. (Rainville says Oz was only one of several product lines that he was responsible for at Lucent).

Still, with lawsuits becoming an increasingly common tactic used by large companies against startups formed by ex-employees, some industry watchers are expressing surprise that Lucent hasn't taken legal action against its former staff members.

“The bottom line is that we are not being sued,” says Rainville. “The first thing we did was go out and get some very good counsel and ask them how we do this cleanly.”

That’s not good enough for some Lucent investors, who want their pound of flesh. “Why isn’t Lucent pissed? I still own a bunch of Lucent stock and I want them to wake up,” says one stockholder, who spoke anonymously.

By Stephen Saunders, US editor, Light Reading http://www.lightreading.com

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