Atrica Closing in on Third Round
Metro Ethernet startup Atrica Inc. is about to close a third round of funding, according to sources in the know. The company isn't talking, but the round is imminent and likely to be in the $30 million range.
”I can’t comment on that,” says Vivek Ragavan, president and CEO of Atrica. “All I can say is that startups are always raising money. And we are a startup.”
Bill Cadogan of St. Paul Venture Capital and former president and CEO of ADC Telecommunications Inc. (Nasdaq: ADCT), is said to be the lead investor, according to several VC sources familiar with the deal. The round is expected to close at around $30 million at a pre-investment valuation of roughly $60 million. This latest round would bring the total amount raised to about $68 million.
In January Atrica recieved a seed round of $4 million from 3Com Corp. (Nasdaq: COMS). Then it received $16 million from two big venture firms, Accel Partners and Benchmark Capital (see Out of Atrica). A month later the company secured about $18 million in a round that included several large carriers like BellSouth Corp. (NYSE: BLS), SBC Communications Inc. (NYSE: SBC), and France Telecom SA. Telia AB and Bezeq also came on board as investors.
The company claims to have about seven service providers worldwide that are either trialing its product or have recently finished tests, according to Ragavan. Only three have been announced: France Telecom and the Israeli provider Bezeq, which are both investors, and the Photonics Department of T-Nova, part of Deutsche Telekom AG (NYSE: DT), which is not. So far, the company has received early purchase orders from two of its trial customers, but it doesn’t expect to recognize revenue on these orders until the first half of 2002.
France Telecom has been trialing the Atrica products the longest, since last January. According to sources within France Telecom, the trials there have gone well. The carrier has completed testing the first version of Atrica’s product and is now about to start testing version two.
The company currently has four products. The A-2100 Optical Ethernet edge switch, A-5100 Optical Aggregation Switch, A-8100 Optical Core Switch, and A-8800 Optical Core switch. Atrica executives say that traditional Ethernet players like Extreme Networks Inc. (Nasdaq: EXTR), Riverstone Networks Inc. (Nasdaq: RSTN), and Foundry Networks Inc. don’t offer carrier-class products for the metro. They claim that Atrica’s solution is better, providing carriers with 50 millisecond restoration and end-to-end service-level agreements. These features are very close to what can be offered with Sonet technology, but at a lower price.
Unlike companies like Cisco Systems Inc. (Nasdaq: CSCO), Luminous Networks Inc., and Lantern Communications Inc., Atrica says it can provide these features using rapid spanning tree protocol (RSTP) and multiprotocol label switching (MPLS) instead of using a pre-standard version of resilient packet ring (RPR) technology.
Unlike others in its space, Atrica is has not laid off any of its workers. With 155 employees currently on staff, the company will likely spend its new funding hiring more people to beef up its sales and manufacturing teams.
“We see a market opportunity, and we’ll continue to add more people,” says Ragavan. “We have a very attractive company and people are perceiving us as a leader in the market place.”
— Marguerite Reardon, Senior Editor, Light Reading