Cisco, Corning Invest in LightPointe
“We think that the investment by Cisco and Corning is more than just money,” says John Griffin, president and chief executive officer of LightPointe. “They are class A companies, and their involvement does a lot to validate the FSP space.”
These aren’t the first big-name companies interested in free-space optics, which uses lasers to transmit traffic through the air instead of through fiber. Nortel Networks Corp. (NYSE/Toronto: NT) and Lucent Technologies Inc. (NYSE: LU) have both invested in this area (see Nortel And Lucent Compete For Air Time ). Nortel has a stake in a company called AirFiber Inc. that has developed a solution to set up mesh networks using ATM switching. And Lucent made an early investment in Terabeam Corp., a company that not only is developing its own free-space optic technology but is also operating as a service provider.
These companies have had investments in FSO for over a year and still the market hasn’t exploded. Why not? LightPointe’s executives say that it has more to do with the companies, rather than the sector itself. They say that Terabeam hasn’t been overly successful yet, because it has taken a service provider approach. They also don’t see AirFiber getting much traction, because it is touting a network architecture, rather than a topology-independent solution.
“We allow providers to deploy whatever topology they want,” says Baksheesh Ghuman, chief marketing officer for LightPointe. “The other thing is we have the technology today. That’s why Corning and Cisco wanted to invest in us.”
Unlike other startups out there, LightPointe has been shipping product since 1998. It has already generated revenue from its products in the enterprise market. Now, with its higher capacity product that scales to 2.5 Gbit/s, the company is moving into the metro area network to help service providers extend the reach of their fiber networks.
This is exactly why Corning was interested in LightPointe, says Greg Smith, president of Corning Innovation Ventures. At first it might seem strange that Corning, a fiber provider, would be investing in a free-space optics company -- a technology that competes with its own fiber products. But Smith says that because LightPointe’s solution can be deployed in a fraction of the time it takes to install new fiber, customer fiber rings can be extended and generate revenue more quickly.
“For a customer that is tenuous at best, this is a way to get them on board fast,” he says. “And if their data rates go up, they’ll be more likely to replace it with fiber down the road.”
Right now, LightPointe’s relationship with Corning is still at arm’s length. “We might recommend them to a customer, but we’re not reselling their gear,” says Smith. On the other hand, Cisco has included LightPointe in its vendor ecosystem, which means that it will work with customers to integrate the technology into its customers’ networks and will help market its solutions to them.
First-round investors Ampersand Ventures, Sevin Rosen Funds, and Telecom Partners also participated in the second round. LightPointe raised a total of $12 million last September in its first round of funding and secured an additional $6.5 million in working capital earlier this year from Silicon Valley Bank and GATX Ventures (see Fog Clears for Free-Space Optics). In total, the company now has raised more than $51 million.
- Marguerite Reardon, Senior Editor, Light Reading