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Optical/IP

Infinera Raises $52M More

The cash keeps rolling for systems vendor Infinera Inc., which today announced it has picked up another $52 million in venture funding and some key contacts in Asia.

Infinera has now raised $205 million since launching as Zepton in 2000. The latest round included the entire slate of previous venture investors: Accel Partners, Benchmark Capital, Jafco Ventures, Kleiner Perkins Caufield & Byers, Mobius Venture Capital, Sprout Group, Sutter Hill Ventures, Venrock Associates, and WorldView Technology Partners.

Because Infinera is building a complete system and owns a manufacturing facility, its costs have run high compared with the austerity forced on more recent startups; its employee count is now more than 250. Infinera isn't saying how much more cash it might need, nor is the company making the usual startup prediction of getting to breakeven on its latest round.

"The motive for the round was that we're seeing a lot of customer action and wanted to strike while the iron was hot. We didn't want to run into cash constraints," says CEO Jagdeep Singh. "Turning out customers requires cash."

The funding round includes two new investors, UTStarcom Inc. (Nasdaq: UTSI) and Itochu Techno-Science Corp. (CTC), that could boost Infinera's standing in Asia.

CTC is a Japanese distributor that works with the likes of Cisco Systems Inc. (Nasdaq: CSCO), Oracle Corp. (Nasdaq: ORCL), and Sun Microsystems Inc. (Nasdaq: SUNW) -- and now, Infinera. As for the UTStarcom relationship, the companies aren't divulging details but say they will pair up Infinera's Wavelength Division Multiplexing (WDM) system, the DTN, with the UTStarcom NetRing optical transport, targeting Asian carriers.

Infinera officials won't say whether UTStarcom will be able to resell the DTN, but the companies are "working with customers in Asia," says CEO Singh.

Infinera's other strategic investors are Agilent Technologies Inc. (NYSE: A), Applied Materials Ventures, Cypress Semiconductor Corp. (NYSE: CY), and Juniper Networks Inc. (Nasdaq: JNPR).

Infinera's DTN offers an electrical alternative to all-optical switches and add/drop multiplexers. While electrical switching is a more old-school concept, Infinera managed to shrink and integrate the optical component to fit on an indium phosphide chip. The idea is to lower the cost of electrical switching enough to make carriers give up on all-optical dreams (see Infinera Declares WDM War).

For all the attention it's gathered, Infinera still faces the startup's dilemma: Until it amasses customers, it won't appear stable enough to attract customers. The company has claimed to be in several lab trials but hasn't announced any wins in live networks. "That's what worries [carriers]. It'd be great if they had some systems sold," says one source close to the company.

Singh notes that the company is "on track to meet the goals that we had," which include deployment of the DTN by the end of the year.

— Craig Matsumoto, Senior Editor, Light Reading

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rocksolid 12/5/2012 | 1:10:10 AM
re: Infinera Raises $52M More This is real interesting. $50M big ones being given to an optical systems start-up! Given VCs complete aversion to the optical space these days Infinera must really be on to something big. A me too product like Ceyba or wait for the market technology like Photonex would ever get this level of money these days.

Anybody know where these guys are in terms of customers?

What about companies like Celion, Ilotron and Xtera? Are they still around?
spegru 12/5/2012 | 1:10:06 AM
re: Infinera Raises $52M More Ilotron closed about 3 yrs ago. Some of the the Key Guys recently founded Azea.
Xtera are still around I believe.....
deauxfaux 12/5/2012 | 1:10:05 AM
re: Infinera Raises $52M More These guys are burning $4.5M a month! With zero revenue today, and no customer win announcements this tells you 3 things: 1) they tried to raise even more, 2) they can't get to CF break-even on their current cash balance, 3) KP and their top tier board did a fantastic job of arm twisting.

fiber_r_us 12/5/2012 | 1:10:03 AM
re: Infinera Raises $52M More With a burn like that, they would have to maintain incredible gross margins (for the optical industry anyway) over a very large revenue base (which doesn't exist in the carrier transport world right now) just to break even!
Stevery 12/5/2012 | 1:10:03 AM
re: Infinera Raises $52M More cuz it probably wasn't the power of the product sales.
Sisyphus 12/5/2012 | 1:10:01 AM
re: Infinera Raises $52M More I am pretty sure the VCs have done the math. And probablym they've had access to information we don't have here, so while it's easy to slam this as excess and lunacy, I am pretty sure VCs do not yet see themselves as non-profit organizations. Infinera probably is nothing like the other start-ups it has been compared to in this thread. It does seem a risky play, but something in there seems to also have the potential to deliver huge dividends. We need a few big success stories in our industry these days. For now, I'll assume Infinera has the potential to become one.
whyiswhy 12/5/2012 | 1:09:59 AM
re: Infinera Raises $52M More Deaux:

I agree with your simple economic analysis, and propose everyone with any brains can figure that one out. Infinera is a total and complete boondongle.

That bright crew? It don't take genius to know the employment weather outside is cold. A few more dollars on the fire will get them through the winter.

-Why

PS: Kleiner definitely played hard ball on some knee caps, with a metal bat. I heard the screams all the way on the other side of the valley!
deauxfaux 12/5/2012 | 1:09:59 AM
re: Infinera Raises $52M More The "VC Math" part is interesting.....notice that there was no external lead VC or price. Looks like this was an internal round with a new investor, probably at the old price, who is also going to be their distributor in China. VCs can easily do an inside round when there is a strategic investor in the mix. The fascinating part about this is that one of UTS original investors brought UTS into this deal. So how rational was the pricing?

I am not slamming Infinera, nor am I comparing them to the other startups mentioned in this thread. I know a lot of the senior guys there and they are as bright a crew as you will find. Nevertheless, there is no economic case for this company that can justify $200M in financing to date, and the almost certain needs that they will have for another $100M.
cxs 12/5/2012 | 1:09:57 AM
re: Infinera Raises $52M More Infinera claimed that their DTN (O-E-O) is cheaper than all optical approach. Meaning that
they do not need EDFA/OAD/OCCS, instead, they will do O-E-O at every node yet still cheaper. Of course, once they drop each channel to electronics, they can do add/drop and
cross-connect at electronic level, STS1?
even though they still need electronic framer,
point processor, grooming device,
are those all together cheaper than a WDM EDFA,
OAD?

Look at their technology, it is InP based
integration of both optical transmitter
(LD, Modulater, wavelength locker, etc) and
receiver (APD). They can inetgrate both active
and passive component into one smallchip (how
about surrounding driver circuit for each
channel? do they need control circuit? can they build all 10 ch driver and electronic amp and
control circuit into that chip also? how can they make their final card (10 ch card) small
enough? which carrier want to have 10 ch card?
one channel fails means all fail , and they claimed that they can do 10 channels 10 G data signal into one chip. This is what have been hot before, 20 years ago Bell lab people tryed to do this and publish a lot of papers. Many start ups
did trial before for InP based modulater, optical switch/crossconnet, etc, but all failed.
The loss is big refractive index difference is too big for this waveguid, and can not be thought for real.
How come this company can do it now? what is the
different between previous guys and this Infinera? can a startup do every thing from
bottom level basic material, packagiong, component, sub-system, and all the way up to full system?
Even if they can do it, how come they can get
is component cheap? remember that only one customer can use this , that is themself.
For 10 channel stuff integarted on one small
chip, what is power consumption? is that over
heat? how can they make all 10 ch stable interm
of wavelength, popwer, current, etc. How do they packaing for so many fibers with wavelguid? how can they make this kind of density with so many
fiber pigtails? loss is ok? cost is not an issue? IF they can
do it, where are those module guys like JDSU,
Opnext? If Infinera can really make it, they should be a first component/module company and
beat JDSU, Avanex, Opnext etc. A lot of system
vendors should be their customers immediately.
What do you think?
OpticOm 12/5/2012 | 1:09:54 AM
re: Infinera Raises $52M More I think they are onto something big, very big.
They maybe amongst the very few start-ups to survive the nuclear winter in telco.
Do not forget that the founders are very much related to Lightera.
Do you remember?
Lightera...Ciena...Core Director...
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