Consider KPL Ventures (no Web site), the firm led by former JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) executives Kevin Kalkhoven and Dan Pettit. Now called KPLJ, with the addition of Russell Johnson (a fellow JDSU vet, not a castaway), the firm has seen its optical portfolio wither from world-saving heroes into potential has-beens.
KPLJ Ventures partner Kevin Kalkhoven himself has been popping on and off of Light Reading's Top 10 lists, vanishing for a while after leaving JDSU and then reappearing as a money man. Sadly, it might be time to drop him from the list again, because the optical downturn has taken its toll on KPL's portfolio.
In more ways than one, KPLJ was a product of the bubble. The company's funds come from the pockets of its partners, whose fortunes in turn come from JDSU's former success. And its portfolio companies hit the market during the bubble with sweeping, world-changing plans, most of which are now dashed.
Some saw their target markets evaporate with the bubble. Innovance Networks was building a core box, a segment that collapsed quickly. Iolon Inc. was going to be a hero delivering tunable lasers to simplify DWDM operations -- but tunables weren't ready in time for the bubble, and the need for them cooled down afterwards.
WaveSplitter Technologies Inc. focused on components for the then hungry long-haul space. The company was even planning an IPO but had to backpeddle as the long-haul market collapsed (see Wavesplitter Files for $155 Million IPO and IPO Window Shuts Tighter). At least one of the portfolio companies is sticking to its guns. Optium Corp. still sees hope for its transceivers, but the company is facing a tough, overcrowded market.
It's unclear what happened to Blaze Network Products Inc., but competitors have presumed the transceiver company dead for more than a year. It's rumored Blaze is subsisting with a skeleton staff; occasional calls to the company during the past few months have gone unanswered.
Here's a look at the numbers, with headcount figures linking to the most recent Headcount reports on each firm.
Table 1: KPLJ Optical Investments
|Company||$ raised||Latest round||Headcount*|
|Innovance Networks||$130M||Feb. 2002||50|
|WaveSplitter Technologies Inc.||$124M||Dec. 2002||50|
|Iolon Inc.||$85M||Apr. 2002||41|
|Optium Corp.||$55M||Feb. 2003||not available|
|Blaze Network Products Inc.||$55M||Nov. 2000||unknown|
|* last reported figure|
Obviously, KPLJ isn't on the hook for every dollar in that table; the figures represent the total funding raised by each company.
Like most optical companies that got their start during the bubble, these firms have had to scale back their ambitions. They might survive, but they're not going to change the world.
The news isn't all bad. Optium got a $12 million infusion in February, and Innovance is reportedly in the running for a Verizon Communications Inc. (NYSE: VZ) RFP. (See Optium Raises $12M, and Analyst: Verizon Optical Shopping.)
Of course, that's just the optical part of KPLJ. The company has other irons in the fire, such as an investment in LGC Wireless, a startup dabbling in cellular technologies. Even in 2001, Kalkhoven was stressing the potential of access devices and the need to develop new platforms (data-ready cell phones, for example) to deliver data (see Kalkhoven's Five-Year Plan).
Kalkhoven and his partners were all out of the office and couldn't be reached for comment. But they don't seem to be deterred -- and neither are other components magnates. Don Scifres, another former JDSU exec, has started SDL Ventures; and Hatch Graham, who's headed companies including Arroyo Optics and Bandwidth9 Inc., says he's starting a VC firm.
— Craig Matsumoto, Senior Editor, Light Reading