Cortina Scores $30M More

Cortina Systems Inc., a chip startup that's branched into several directions in its short life, has picked up another $30 million from its backers.

The Series C funding augments a $20 million round scored just last year (see Cortina Nabs $20M, Execs). It includes new investors Canaan Partners and Jafco Ventures and prior investors El Dorado Ventures, Invesco, Kodiak Venture Partners, Morgenthaler, and Redpoint Ventures.

The company also added two investors to its board: Joe Horowitz from Jafco and Eric Young (probably unrelated to the veteran second baseman) from Canaan Partners.

Confidence in Cortina was probably boosted by the company's success at The router giant is using Cortina's Arsenal chip in its I-Flex technology, which allows physical interfaces to be swapped across different platforms and different traffic types. A Cisco spokesman confirms that Cortina's chips -- among others -- are being used for I-Flex.

Cortina first emerged in 2003, building Resilient Packet Ring (RPR) chips, but has worked on diversifying since then. Cortina produced a multiservice framer called Arsenal in June of this year, targeting service provider edge equipment. And last month, the company announced its Barcelona chip for Gigabit Ethernet systems (see RPR on Display at Supercomm, Cortina Releases Arsenal, and Cortina Debuts GigE Chip).

"You need a bunch of chips to become a real company. When you have 10 or 12 chips, you really start to drive revenues," says Zino Chair, Cortina vice president of marketing.

Some of the company's previous financing went toward the acquisition of Azanda Network Devices, which sold traffic manager chips to accompany network processors (see Azanda Lands a Buyer). A different business, to be sure, but Azanda had a Cisco win of its own, which might have aided Cortina's decision. "Getting Azanda was a way to consolidate their business at Cisco," says Jag Bolaria, an analyst with The Linley Group.

"It's a well managed company," Bolaria says. "They seem to have gotten a toehold into metro Ethernet platforms and maybe some MSPPs [multiservice provisioning platforms]. They seem to have a good roadmap that's building outwards."

— Craig Matsumoto, Senior Editor, Light Reading

OSXman 12/5/2012 | 3:05:57 AM
re: Cortina Scores $30M More $30mm is a pretty good chunk of change for a venture round. I don't know what their financials look like, and I don't know how the company is being capitalized, but my guess is revenues are very modest, and the operating cash burn is still pretty significant. Given that the this is series C round, I wouldn't imagine that the $30mm buys much more than 25% of the company and perhaps not even that.

Bottom line: this is a risky investment and once you're in you can't get out. If I were to do this, I would want a very substantial return and the only way that can be achieved is by going public. The current market for comm IC companies (TXCC, VTSS, AMCC, PMCS) is pretty damn depressed and I would argue that there are much greater values amongst the publicly traded companies.
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