More Startup Setbacks in Texas

Plano, Texas-based access equipment maker Xalted Networks Inc. has filed for Chapter 11 bankruptcy protection. The company was founded in January 2000 and, at one point, had about 130 employees.

Xalted has only announced one funding round, a $21 million Series A round, which included investments from BlueStream Ventures, Granite Ventures, Charter Venture Capital and Alliance Ventures. In February 2002, the Dallas Business Journal reported that Xalted had closed another $10 million round, and a company director said in March that Xalted was looking for another $15 million elsewhere to complete the round (see Xalted Axes Staff). In light of its bankruptcy, it's not clear whether Xalted ever closed its second funding round.

Xalted executives still won't say how much funding the company has closed to date.

The company announced in June that it had "expanded its U.S. operations to worldwide." Translation: It moved its software development to Bangalore, India, where technical labor is less expensive. At that time, it also announced plans to hire 70 more engineers in India.

In its bankruptcy filing, Xalted lists its estimated assets at between $500,001 and $1 million. Included in its list of creditors was a $4,000 payment for Xalted's Supercomm tradeshow booth.

"This is a positive note for our company," says Keith Bradshaw, Xalted's director of marketing. "We're still very much alive, and our investors are 100 percent behind us."

Bradshaw says Xalted now employs around 40 people in the U.S. and India and aims to have 80 or more on staff in the next six to 12 months.

Elsewhere in North Texas, White Rock Networks confirmed it has shed 25 percent of its staff, bringing the number of employees there to about 115, according to Andrew Knott, White Rock's VP of marketing and customer service.

Knott says White Rock is still a fully functional company and expects its OC192 Sonet add/drop multiplexer (ADM) to enter field trials within a couple of weeks (see White Rock Gets Coarse). ADMs allow lower-level signals to be dropped from a high-speed optical connection in a synchronous transmission network.

A source close to White Rock says the company has hired Pat Rockford, who previously did stints at Xalted and Photuris Inc., as its new VP of sales. Knott declined to comment on the rumor.

— Phil Harvey, Senior Editor, Light Reading
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willywilson 12/4/2012 | 10:07:22 PM
re: More Startup Setbacks in Texas I had thought they had a really interesting story.
theanswer 12/4/2012 | 10:07:20 PM
re: More Startup Setbacks in Texas It doesn't take any of that advanced math we took in college to figure out the story line. It is add and subtract when you don't have sales to speak of. The subtracting numbers include workforce and not just money from the shrinking pile you got from the last round. With all the delays, scandals, and capex woes I expect things to get worse before they get better. people quitting, layoffs, dismissals, shutdowns, are realistic so don't bury your head. Also don't dwell on it until you hate your job and the people calling the shots even if their decisions don't make since.
Techman 12/4/2012 | 10:07:17 PM
re: More Startup Setbacks in Texas Don't know who you are referring to as Sami...
But do know COO, VP of Product Management, and several director and managers are all gone. No sales and shrinking last-round funding don't help either. Getting ready to Mahi!!!!
b4uthink 12/4/2012 | 10:07:16 PM
re: More Startup Setbacks in Texas They were on the right track with their product. Its to bad the senior management didn't know how to build it. Their knowledge base was very weak in the technology that was the centerpiece of the 7X architecture. Their VP of sales (Pat Rockford) was the most technically adept person in the bunch. He and that Keith Bradshaw guy,(Director of Marketing I think), were probably the only ones that really knew what the product needed to do.
willywilson 12/4/2012 | 10:07:15 PM
re: More Startup Setbacks in Texas They were on the right track with their product. Its to bad the senior management didn't know how to build it. Their knowledge base was very weak in the technology that was the centerpiece of the 7X architecture.


The senior management didn't understand the technology? Sheesh! That was the whole damn story. What were they, then? Potted plants?
exObserver 12/4/2012 | 10:07:13 PM
re: More Startup Setbacks in Texas One of the biggest problems at Xalted was that the management team did not know or understand the technology available. Instead of using a multi-protocol technology like MPLS (or even ATM or IP), they decided to invent their own protocol. They were and are so naive that they thought they could define a better protocol in a few man months, than what is already out there. Also they never considered a ring with any other equipment in it besides their own.

This homegrown protocol is very inefficient, and all hadware and software associated with it must be designed in house. They were suprised when it came time to test, that the off the shelf parts could not understand what an Xalted Paket was. As far as I know they never had the hardware working beyond hard coded simplistic demos.

They also spent too much time congradulating themselves, thinking they did a whole lot with a little. When in fact they did very little with a lot.

These guys were finished before they were started.

theanswer 12/4/2012 | 10:07:10 PM
re: More Startup Setbacks in Texas Hope Pat can turn WRN excutives thinking on product strategy since Ron couldn't.
I think WRN grew way to fast causing an excessive burn rate that wasn't addressed until late in the telecom struggle. WRN should have never had the car give away and ramped to 245+ people until the market demonstrated the need for their products. Now all hopes are based on the VLX2020 which is not feature rich enough to steal market share without a big player's help. Cost is not the only game in town, it also has to work robustly with the features companies will buy today.
i_kveld 12/4/2012 | 10:07:02 PM
re: More Startup Setbacks in Texas C'mon, the car giveaway was a couple of years ago
and probably cost less than two recruiter fees --
back when headhunters were a fact of life.

And I don't think WRN ever reached 245 people. They had their first layoff over a year ago, and
have had two more since.

The truth is there's nothing all that "wrong" with
the product(s) or the company -- and even if they were absolutely perfect and nearly free, do you really think there'd be a queue of customers waiting to buy? I sure don't. You might as well start a subscription satellite TV channel in Pennsylvania Dutch as try to see new telecom gear these days. You can't fault the strategy when
there was no realistic way to win.

i_kveld 12/4/2012 | 10:07:01 PM
re: More Startup Setbacks in Texas Aren't they moving offshore?

Yet another company that was going to replace the circuit-switched network with packets, before the carriers went broke...
TeleGone 12/4/2012 | 10:06:58 PM
re: More Startup Setbacks in Texas It is summer, and it is cold...

The start ups of North Dallas are dying out.
it is going to be difficult to have a suriver.

Last week alone, many of them have layoff, to name a few:
and even Navini

The left in the town:

But the chance for them to be around next year is very small, maybe Navini can.

Prediction anyone?
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