Ceterus Gets Funds et Cetera
The startup, based in Allen, Texas, has been quiet since it was founded at the beginning of this year. But now its CEO, William Szeto, has told Light Reading that he's raised more than $13 million to date from a couple of heavyweight investors -- ComVentures and Sevin Rosen Funds.
Ceterus is developing a carrier hardware product for metropolitan access networks, according to Szeto, and has 40 on staff. It was formed in late January with a few former employees of Iris Labs, the last of a foursome of related networking equipment startups that shut down after raising some $90 million in venture funding (see Iris Group Wilts; Metera Next to Shutter). The company's name is Latin for "the other" or "the rest."
It was seeded with a $1.5 million investment from Sevin Rosen and ComVentures. To date, the company's board consists of Szeto, the former CEO of Iris Labs; Al Schuele, a general partner at Sevin Rosen Funds; and Roland Van der Meer, a partner at ComVentures.
The company started out renting space from Xtera Communications Inc., another Allen startup backed by Sevin Rosen and ComVentures. This summer, Ceterus moved to a 16,700 square-foot office a few doors down the street from Xtera.
So what's Ceterus building? Szeto won't specify. He generically labels it as something that works with today's infrastructure or extends the life of existing equipment.
"The approach is nothing new -- it's common sense," says Szeto. "But I felt that it was the lack of common sense that got a lot of us in trouble in the past couple of years."
Rather than build a box and tell carriers why they should buy it, Szeto says, Ceterus is starting out with a general idea that it won't refine until many months of talks with carriers. "Obviously, we have some idea of what it is we want to build, but sometimes it's not what carriers want to hear."
What technologies will the mystery box handle? The answer, again, is more broad than deep. "We're working with all the normal suspects in the space: Ethernet and Fibre Channel and so on," Szeto says.
Ceterus's funding is interesting for two reasons. First, it comes at a time when venture capitalists are demanding that startups have a nearly complete product and some customer trials before asking for the big bucks. Second, Szeto didn't score startup gold with the Iris Group companies, so it's noteworthy that Ceterus's investors aren't holding that against him.
Szeto says investors were mainly convinced that the team he's assembled can build something that carriers will want. "I'm willing to listen and to build the right thing," he says.
Prior to his involvement with the Iris Group companies, Szeto was chief technology officer at Monterey Networks, the core switch startup Cisco bought for about $500 million in stock back in 1999. Before Monterey, Szeto spent 28 years with Sprint Corp. (NYSE: FON), his last task there helping the company define its optical networking direction.
Contrary to industry rumor, Ceterus isn't using any of the technology developed at Iris Labs. "The banks and the creditors own that. We escaped with the clothes on our bodies."
Instead, Szeto and company are busy listening to carriers, careful not to let their ideas cloud what carriers are saying they really want. "We have one shot to get it right. We need to… make that one shot count rather than closing our eyes and saying, 'I have this idea already, I'm going to build something come Hell or high water, whether people buy it or not.' "
— Phil Harvey, Senior Editor, Light Reading