For a kickoff, some recent acquisitions of startups aren't a case of exit strategies being successfully accomplished. They're the opposite -- assets sales forced upon companies that otherwise would probably have gone bust, which often leave original investors with little or no rewards. Recent examples of this include:
- Cielo Communications Inc., a developer of 1310nm Vertical Cavity Surface Emitting Lasers (VCSELs). Its assets were acquired last week by Optical Communication Products Inc. (OCPI) (Nasdaq: OCPI) for an undisclosed sum (see OCPI Acquires Cielo).
- Sparkolor Corp., a developer of polymer-enhanced gratings and tunable lasers. Its assets got snapped up by Intel Corp. (Nasdaq: INTC) last month (see Intel Buys Sparkolor's Assets).
- Telephotonics Inc., a startup developing polymer-based planar lightwave circuits, whose assets were quietly bought by E.I. du Pont de Nemours and Co. (NYSE: DD) last July (see Startup Creates Component Cocktail). Telephotonics simply changed its name to Dupont Photonics Technologies LLC, and, while it still operates as a startup, it is now a wholly-owned subsidiary of Dupont. According to Louay Eldada, founder and CTO, the technology is the same, but the focus is now on developing a switching fabric for metro networks.
Plenty of other component startups have simply shut up shop and quietly disappeared. Recent closures include:
- Qusion Technologies, a modulator-maker whose Website has been unavailable since October 4 (see Qusion Touts Wideband Modulator). When Qusion first appeared on the scene its technology, rather unfortunately as it turns out, was likened to that of Nanovation, a defunct integrated optics startup whose demise had been followed in the press like an episode of Big Brother (see Nanovation in Crisis, Nanovation Files for Chapter 11, Nanovation Up For Sale, and Nanovation Goes Bust).
Qusion executives could not be reached (the company's phone had been disconnected), but a spokesperson at Emcore Corp. (Nasdaq: EMKR), which invested in the startup, confirmed that Qusion is out of business.
- Trillium Photonics. The Ottawa-based startup closed operations on Tuesday, October 1, according to an article in the Ottawa Business Journal. Trillium, which made optical amplifiers, had scored $29 million funding in January 2002, which was supposed to keep the company going until the end of 2003, the paper said. But seeing no improvement in the industry until after that time, the board decided to wind up operations in an orderly manner now.
- Siros Technologies Inc. which scored $17 million in May 2002 to develop high-power VCSELs, closed down over the summer (see Siros Gets $17 Million in Funding ). Its facility and equipment went up for auction on Dovebid on September 6.
- Lightwave Microsystem's facility is also up for auction with Dovebid, starting on November 11 (see Obituary: Lightwave Microsystems).
- Onix Microsystems Inc., a MEMS subsystem startup, also appears to be preparing to close. The company's Website has been stripped down to a bare minimum, with all product, technology, and press information removed. Onix's executives could not be reached in person -- the phone system was only taking voicemail messages, which is not a good sign (see The Telltale Sign). It also appears that Onix's founder and director of business development, Meng-Hsuing Kiang, has recently left the company.
One rumor suggests that rival OMM Inc. is in the process of buying Onix's assets. Conrad Burke, OMM's senior VP of sales and marketing says the company does not comment on rumors (sigh).
While most of the tip-offs that Light Reading receives about startups in trouble turn out to be true, it can make a pleasant change when they're not. Our sources, it appears, were wrong about K2Optronics Inc., a developer of external cavity semiconductor lasers (see K2 Claims Laser Record).
Davinder Basuita, the startup's executive VP of sales and marketing, vehemently denies that the company was either closing down or about to have its assets bought out. In fact, he claims that, following successful customer trials, K2 is about to book its first orders. And the exit of players like Agere Systems (NYSE: AGR) from the components business has only strengthened his company's position, he says.
— Pauline Rigby, Senior Editor, Light Reading