Agility Snares Another $15M

ANAHEIM, Calif. – OFC/NFOEC 2005 – Tunable Lasers are on a roll, as Agility Communications Inc. has completed a fifth round of funding worth $15 million.

This follows the roughly $6 million raised in December by Swedish tunable laser firm Syntune AB and an unspecified but small round recently raised by Iolon Inc. (see Syntune Raises €4.7M and Iolon's Alright ).

Agility's fifth round hasn't been announced publicly but is highlighted in a presentation at the company's Optical Fiber Communication Conference (OFC) booth here. The financing came through earlier this year, says Kevin Affolter, Agility's vice president of marketing.

Affolter says the $15 million came from some new investors as well as previous Agility investors. The latter pool includes, among others, General Motors Investment Corp., London Pacific Assurance Ltd., Meritech Capital Partners, Mitsubishi International Corp., Morgenthaler, Nissho Electronics Corp., Siemens Venture Capital, U.S. Venture Partners, and WorldView Technology Partners.

Equipment vendors Ciena Corp. (Nasdaq: CIEN) and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) were also prior investors in Agility.

Agility has now raised more than $200 million including a massive round in 2001 (see Agility Gets $83M Third Round). The size of that round shows just how much faith investors had in tunable lasers, even as it was clear that the dotcom bubble was over. Agility and Iolon, the sector's stars, each appeared headed for an IPO or acquisition.

But the market continued its collapse, and demand for tunable lasers got delayed. Agility and Iolon, in particular, have been relatively quiet since, occasionally raising their voices to fend off rumors of near death (see Agility Is Alright, Too).

The new funding rounds might indicate that tunable lasers have finally stabilized as a business. Iolon expects to be profitable "by the end of the year," says John Aengus, the company's vice president of sales. But he adds that every vendor -- including Iolon, Bookham Inc. (Nasdaq: BKHM; London: BHM), and Intel Corp. (Nasdaq: INTC) -- is losing money on tunable lasers.

Even so, tunable lasers are ensconced now that DWDM equipment vendors have embraced the technology.

"You can tell it's starting to be a real business. People are looking at the next step -- an integrated transmitter" that combines the tunable laser with a modulator, says Gurinder Parhar, vice president of business development for tunables vendor Santur Corp. (For those wondering, Santur's latest announced funding came at the end of 2003 -- see Santur Tunes In $10M).

Parhar expects many companies will seek partners to provide the modulator. Agility, though, says it's been working on integrating the laser and modulator onto the same indium phosphide (InP) device.

The idea would be to lower cost, not just by providing an integrated device, but by putting the modulator onto InP in the first place. "One of the most expensive pieces [of an optical module] is the lithium niobate (LiNbO₃) modulator," Affolter says. The integrated laser-modulator is "about a year or so from availability," he notes.

— Craig Matsumoto, Senior Editor, Light Reading

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