Cinta's Strange Story
It’s sometimes said that the quality of a startup can be judged by its financial backers. By that reckoning, Cinta http://www.cintacom.com, a venture launched by entrepreneur Wu-Fu Chen last November, is a winner.
Cinta is backed by two particularly heavyweight venture capital companies -- Battery Ventures http://www.battery.com and Sequoia Capital http://www.sequoiacap.com
Now, however, it’s beginning to look as though Cinta went overboard on attracting its high-flying financiers. Specifically, it handed over 55 percent of the company –- a controlling interest -- for its $15-million first round, according to an executive of NEC Corp., who requested anonymity.
The executive says he was given these figures by Cinta’s VP of marketing, Tai Chen, in a job interview. After hearing them, he declined the job, suspecting that Cinta would run into trouble raising further money and wouldn’t be able to compensate staff adequately.
“I just blew them off,” says the NEC executive. ”They gave away the store.”
Cinta itself declines to confirm or deny the 55 percent figure. However, comments made by Kallen Chan, the company’s chief financial officer, suggest that it’s in the right ball park. “Even if it was 50 percent, that’s not so bad,” says Chan. “It was a fair valuation of the company, and nothing to be ashamed of.”
“People here will be fairly compensated,” Chan adds, pointing out that Battery and Sequoia also recognize the need to provide financial incentives for staff.
Chan also refutes suggestions made by the NEC executive that Cinta “has got to be running out of money” –- an assumption based on Cinta’s staff count, which now totals 75 people, according to Chan.
However, Cinta has got an extra $6.6 million in the bank that few people have known about until now. It was raised quietly in February, partly in the form of a loan, from Comdisco Ventures, according to Chan. As a result, Cinta isn’t short of money and is targeting “late this year or early next” for another round of finance.
The NEC exec has got an axe to grind with Cinta, for luring away his staff to work in Cinta’s Portland, Oregon, software development facility. “They raided us. They took 20 to 30 staff,” he says, adding that Cinta’s Tai Chen “was surprised as hell we weren’t suing him.” Chan says Cinta hasn’t received any complaints from NEC, and denies having so many ex-NEC staff.
Cinta is developing “an optical switching and transport system” which is neither ultra-long-distance nor metro, according to Chan. Strange? Yes, but that seems to be Cinta all over.
By Peter Heywood, International Editor, Light Reading, http://www.lightreading.com