Iris Group Wilts; Metera Next to Shutter
The Iris Group is a loose-fitting group of companies that included Coree Networks Inc., Iris Labs, Metera, and Latus Lightworks Inc., all of which raised some $90 million in funding last year in an ambitious play to build a coordinated optical network architecture (see Iris Group Unveils Network Architecture and Iris Group Shuffles Executives).
As recently as a month ago, however, the group's plans started to fall apart as executives at the companies failed to secure additional funding to keep things moving along.
So, where are they now?
Latus Lightworks: The Richardson, Texas-based DWDM equipment maker closed its doors on September 21, leaving about 125 people without jobs. The company couldn't find the funding it needed nor could it locate a buyer able to move fast enough to bail it out (see Lights Dim at Latus).
Metera Networks: This Richardson-based metro optical equipment maker is set to close on September 28, leaving about 118 people in Texas and 20 in Ottawa without jobs, according to sources at the company. Though the company was only weeks away from customer trials, its founders and venture capitalists couldn't agree on a way to keep it afloat.
"We tried to come to a resolution in terms [with the investors], but we couldn't find anything acceptable to all parties," says Hamid Rezaie, Metera's cofounder and vice president of product planning. "Everyone involved tried very hard."
Metera is letting employees into its offices this week to conduct job searches.
Coree Networks: This New Jersey-based core switch maker never really got off the launch pad before it resized itself. The company still employs about 12 people who are continuing to study whether it's feasible to restart the core switch maker in a few months, according to William Szeto, president and CEO of Iris Labs (see Coree Networks Raises $30 Million and Coree Cuts Back).
Coree employed about 50 people when it announced its first round of funding in February.
Iris Labs: This Plano, Texas-based company is the only one of the four Iris Group companies that is still fully operational, Szeto says. It employs about 30 people. Iris Labs was founded to provide consulting and network software support to the Iris Group companies.
Some months ago, however, it began to focus on companies outside its doomed circle of kindred startups. The company has raised $7 million to date and is currently seeking between $10 and $15 million.
The venture capitalists involved in the various Iris Group companies include Hook Partners, Mayfield Fund, Sevin Rosen Funds, Vortex Partners, and Lightspeed Venture Partners (disclosure: Lightspeed is an investor in Light Reading).
As Metera and Latus decided to close, employees at both companies griped about feeling abandoned by investors that had recently pledged support. "They asked us to agree to all kinds of things [to get more funding] and we complied," says a source close to Latus Lightworks. "It didn't amount to a hill of beans. We still don't have our funding."
Others, however, are taking the Iris Group’s failures in stride, realizing that while the economy has slowed too quickly for investors to hang on to month-old promises. "As long as you're VC-funded, the world can change very fast," says Iris Labs' Szeto. "The last time I checked, venture capitalists aren't in the business of running charitable organizations.”
Michael Zadikian, cofounder of the Iris Group companies, couldn’t be reached by press time. Zadikian founded Monterey Networks, which was bought by Cisco in 1999 and shut down earlier this year (see Iris Group Attracts $60M and Optical Mania in Texas) and What Cisco Stepped In).
Richard Couch, CEO of Diablo Management Group (really!), has been hired by Latus' and Metera's investors to help sell each company's assets and intellectual property, according to people close to Metera and Latus. Couch did not respond to a request for comment.
Sevin Rosen's Jennifer Gill Roberts and Mayfield Fund's Todd Brooks, through their respective representatives, declined to comment for this article. Lightspeed's Barry Eggers and Christopher Schaepe also declined to comment.
- Phil Harvey, Senior Editor, Light Reading