Big Bear Hugs $40M

Big Bear Networks, a Milpitas, California-based company working on integrated optical components for 10-Gbit/s and 40-Gbit/s networks, today announced that it has raised $40 million in new funding (see Big Bear Bags Big Bucks).

Big Bear still isn't talking about the details of its product, but the company seeks to lower the cost of optical networks by providing an integrated optical component that uses signal processing to automatically tune itself to fiber networks and help carriers eliminate engineering costs.

The funding comes about six months after Big Bear named former Tyco International Ltd. (NYSE: TYC) vice president Mark Thompson as its president and CEO (see Big Bear Comes Out of the Woods). Thompson, who hadn't previously raised venture capital, said it was an eye-opening experience trying to raise funds in 2001.

"There has been a dramatic shakeout in valuations," he says.

Thompson wouldn't disclose the valuation, but sources in the Silicon Valley venture community say the deal had been shopped around as a down round, meaning investors were willing to accept a substantially lower valuation than those in previous rounds.

This seems likely, as Big Bear raised $20 million in seed funding in 2000, the height of the valuation bubble.

Austin Ventures and Menlo Ventures led the round. Other participants included Oak Investment Partners and original investors Accel Partners and Sequoia Capital.

When pressed on the details of the product, the company isn't saying much, other than that it will be a component that uses traditional foundry techniques to make optical-electrical interfaces that combine signal processing, high-speed optics, and electronics. The packaging of the modules will be ceramic.

Signal processing of optical transmission becomes more important at higher speeds because of the growing potential of signal distortion (see Nonlinear Effects). "The idea is to make this a plug-and-play component so there is not a lot of engineering for the transmission at 10-Gbit/s or even higher speeds like 40-Gbit/s," says John Jaeger, vice president of marketing for Big Bear.

Big Bear's founders are component design veterans. Laura Adams, Big Bear's vice president of product management, was previously director of optical data systems at Lucent Technologies Inc. (NYSE: LU), where she was involved in 10-Gbit/s systems production. According to the company Web page, Adams demonstrated 40-Gbit/s all-optical clock recovery for her PhD thesis. John Paul Mattia, chief technical officer of electronics, has 15 years' experience in high-speed circuit and device design -- including stints at Texas Instruments Inc. (NYSE: TXN), Lucent, and Bell Labs.

Big Bear officials say that they will lean heavily on conventional fabrication techniques, operating as a fabless component designer. It already has a deal in the works with a major fabrication partner, according to CEO Thompson.

— R. Scott Raynovich, US Editor, Light Reading
dodo 12/4/2012 | 11:02:25 PM
re: Big Bear Hugs $40M Isn't Kodeos , Nothern New Jersey in the same business?
HarveyMudd 12/4/2012 | 11:01:58 PM
re: Big Bear Hugs $40M I am surprised that Big Bear Network would use thesis ideas to implement a product. A VC funded company is not a place to implement research ideas.

We are also talking at least four years to perfect the ideas if the ideas have any merit. I am not sure if the VCs had the idea evaluated by the subject matter experts.

It is not clear to me what is the total market for this kind of product.
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