Funding for startups

Dynarc in Trouble

Swedish metro equipment startup Dynarc appears to be in crisis following its failure to raise another round of finance.

The company laid off another 30 employees this week, in addition to the 50 or so in the U.S. that it laid off a couple of months ago. It now has only about 30 left, according to Frederic Thepot, the former director of technology at Dynarc, who lost his job in the first round of layoffs.

Dynarc's president and CEO, Olov Schagerlund, couldn’t be reached today. Sources said he was busy in meetings with investors, in an effort to put together a rescue plan.

Because of the way Swedish company law works, Dynarc isn’t likely to go bust altogether, according to Thepot. But, he suggests, it will end up being a much smaller engineering company with a different name and different customers.

Dynarc closed its last round of funding in February 2000, when it raised $55.4 million in a private placement of shares with U.S. and European financial institutions (see Dynarc Raises $55.4 Million ). This valued the company at more than $600 million. Dynarc's annual report for the year 2000 lists more than a dozen institutional investors, including Credit Suisse First Boston and Chase Manhattan Bank.

In the press release announcing the Feb 2000 round of funding, Schagerlund is quoted saying: “We are continuing to pursue the established plan of preparing the company for a stock exchange listing this year.”

When the IPO market went sour, Dynarc first tried to raise further cash in the U.S., according to Thepot. That didn’t work out, so it turned its attention to European sources.

Until recently, it looked as though NeSBIC CTe Fund, a Dutch VC firm, would come to the rescue. It led an effort to raise another round of funding, but, in the end, it wasn’t able to convince other investors to join it. “We have backed out,” NeSBIC research principal Naresh Sharma told Light Reading today.

Sharma is convinced that Dynarc had a rosy future ahead of it. “According to some customer calls we made, they were one year ahead of the competition,” he says. Unlike many metro equipment startups, it’s shipping products and has several customers. One of them, Sweden’s Song Networks, has placed an $18 million order for Dynarc’s equipment, which it plans (or planned) to use in 80 cities throughout Scandinavia (see Fortunes Swing for Swedish Startups ). Song wasn’t available for comment at press time.

Dynarc has also played an important role in efforts to standardize resilient packet ring (RPR) technology -- a way of slashing the cost of rolling out services in metro networks by eliminating Sonet and ATM equipment. Development of the RPR standard appears to have hit problems recently, which may have made it even tougher for Dynarc to raise the funding it needed (see RPR: RIP?).

— Peter Heywood, Founding Editor, Light Reading
metroman 12/4/2012 | 7:41:59 PM
re: Dynarc in Trouble My understanding is that the Dynarc products are not stable and they are finding it tough to break into larger customers due to lack of Inter Metro capability.

This comes from (former) employees.

Also they are suffering from the lack of consensus on standards coming out of 802.17. I think there are a number of others in the same boat. If Dynarc cannot get funding then what about Luminous, Native, Appian...??
Confucius 12/4/2012 | 7:41:55 PM
re: Dynarc in Trouble 1. Not everybody is waiting for 802.17 to decide what to build (and sell).
2. Not everybody is starved for cash.

Did you notice that Coriolis just got funding. What does that tell you about metro startups?
metroman 12/4/2012 | 7:41:53 PM
re: Dynarc in Trouble Confucious he says, oooh handbags!

1. The lack of an agreed standard is hurting all small, VC funded organisations. More consistancy from the IEEE committee might make VCs more willing to part with cash and might make customers more willing to buy the technology. Companies like Cisco can stall the process and sell proprietary technology onto their massive installed base. Startups do not have the freedom to do this and require standards to allow them to grow a market share through having better products.

2. My comment was a question; as you would have noticed if you had recognised the symbol "?" at the end of the sentence. I am very happy to hear that Coriolis has got money but so did Dynarc in February. Patience must surely run out at some point.

In any case, my opinion is that RPR (and it's proprietary derivatives) is doomed to a tag of "great technology, poor application". By the time we see interop between major vendors, OC48 speeds will be too slow for the Metro Access rings. Bring on Link Aggregated, CWDM implementations and you might have a story in 2004. In the short term, Ethernet component prices are making it easy for others to eat up the market.
Peter Heywood 12/4/2012 | 7:41:51 PM
re: Dynarc in Trouble Metroman - just to be clear ...Coriolis got money just recently. Dynarc's last round was Feb 2000 - 20 months ago.
SiO2 12/4/2012 | 7:41:50 PM
re: Dynarc in Trouble confucious say:

|| 1. Not everybody is waiting for
|| 802.17 to decide what to build
|| (and sell).

rest assured that the RBOCs are, and
they want you to demonstrate exactly
where you are in the OSMINE process
to boot. that $32M (that coriolis
just took) is chicken scratch once
telcordia gets into the picture!

|| 2. Not everybody is starved for
|| cash.

the days of your business surviving
off of 6 month CLEC sales cycles and
exponential CAPEX growth are over.
anyone who has both money and clue
are operating with an extreme
prejudice toward caution.

|| Did you notice that Coriolis just
|| got funding. What does that tell
|| you about metro startups?

while it might tell me that coriolis
is doing some things right, i certainly
wouldn't use it to make any general
assertions about metro startups.

with regard to coriolis specifically,
low-order virtual concatenation
undoubtedly has value in the metro
access segment. no argument there.
however, clearly coriolis is in a
race against the competing standards.
were i them (coriolis), i'd be less
concerned about the ongoing RPR
crusades than the progress of the
ITU T1X1.5 committee in standardizing
VBA. once this happens, the elegant
solution to this problem is VBA in
h/w coupled with GMPLS in s/w. the
dimension of metro rings simply does
not warrant processing signaling PDUs
in verilog/VHDL (much less proprietary
signaling PDUs).

at the end of the day, all of these
pre-standard implementations will
be added to the pile of historical
artifacts, along with dynarc's DTM,
geyser's DBA, etc ...


Peter Heywood 12/4/2012 | 7:41:50 PM
re: Dynarc in Trouble I'm looking for some feedback from users of Cisco's SRP (spacial reuse protocol) - sometimes called DPT (dynamic packet transport). If you can help, pls contact me on [email protected]
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