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Optovation Brings in $20M

Light Reading
News Analysis
Light Reading
11/20/2001

Optovation, an Ottawa-based startup developing an optical performance monitor and wavelength converter, closed a $20 million second round of funding today (see Optovation Raises $20M).

The $20 million, though not a massive amount, is notable in this current market. It also keeps alive pieces of the startup formerly known as Roshnee, which were used to build Optovation. Former Roshnee founder and Chairman Raj Singh is the chairman of Optovation.

Roshnee, which focused on building an all-optical switch for the metro market, was split into two companies back in September 2000: Optovation and Inara Networks (see Roshnee to Split in Two). Back before the breakup, Roshnee had two facilities, a team in Ottawa developing optical components and a team in San Jose, Calif., working on system-level design. The team in Ottawa became Optovation, and the team in San Jose became Inara, which has since folded.

According to Rob Coneybeer, partner at New Enterprise Associates (NEA), who sat on Roshnee’s board and now sits on Optovation’s, Optovation received all the intellectual property and funding that Roshnee had raised up until September 2000. This included the remaining cash from the $11 million equity round raised in the previous spring (see Roshnee Raises $11 Million in Financing and Assembles Team).

When word first leaked out that Roshnee was breaking up, many in the industry likened the situation to the split of another startup, Fiberlane. That startup spawned two other startups, Cerent and Siarra, which were sold to Cisco Systems Inc. (Nasdaq: CSCO) and Redback Networks Inc. (Nasdaq: RBAK), respectively, for a total of about $11.3 billion.

In the end, the breakup of Roshnee was no Fiberlane. Inara, which recruited former Cyras CEO, Steve Pearse, as its chairman, was actually shut down last month (see Ex-Cyras CEO Joins Roshnee Spinoff). The company had been developing a core optical switch and had raised $10 million. Singh, who had invested in Inara, said in an email that the company was unable to find additional funding and so was forced to close its doors for good.

Meanwhile, Optovation has made progress. The company’s roadmap calls for two products, an optical performance monitor and an all-optical wavelength converter. The optical performance monitor is already generating a small amount of revenue, as samples ship to six customers, with orders from another six in the pipeline, says Kevin Forbes, the company’s CFO.

Although he wouldn’t specify the names of any of these customers, it is likely that Nortel Networks Corp. (NYSE/Toronto: NT) is among the first six. This wouldn't be entirely surprising, given that Ottawa is home to both Optovation and Nortel’s optical division. What’s more, several members of Optovation’s management team are ex-Nortel employees, including CEO Larry Tarof; vice president of business development Wade Daley; vice president of manufacturing Ed Cremer; and director of product line management Bob Dittburner.

"It would probably be safe to guess that all of the major DWDM transport companies are interested,” says Forbes. “And it would be a good guess that the bigger players are likely our customers.”

Optovation claims that its performance-monitoring component measures the actual transmission of the optical signal and determines whether bits have been lost in an optical transmission, without converting the optical signal into an electical one. The product is unique in that current monitoring systems for DWDM systems only measure power and signal strength. Having this type of performance monitoring is important, because it provides DWDM designers with the same level of redundancy found in Sonet equipment.

"From an investment perspective, this company has a real product and real revenues," says Coneybeer. "It’s a meat-and-potatoes kind of technology. It isn’t the sexiest thing out there, but every company building a next-generation transport platform needs it.”

Forbes says that for 2002 the company plans to generate most if not all of its revenue from the performance-monitoring components. But its roadmap also calls for the development of an optical wavelength converter. This product is currently under development and uses a chipset licensed from Alcatel SA (NYSE: ALA; Paris: CGEP:PA).

"If all optical networking really takes off, this will be a booming business for us in the future," says CEO Tarof.

The lead investors in this round were Altamira and Newbury Ventures. Other contributors included New Enterprise Associates (NEA), Redwood Venture Partners LLC, Desjardins Venture Capital Group, the Ottawa office of Investissement Desjardins Inc., and BMO Nesbitt Burns Equity Partners.

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com

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realoptics
realoptics
12/4/2012 | 7:32:38 PM
re: Optovation Brings in $20M
An OPM single product company does not worth that much of investment at one time! According the news from the comapny website, they have raised total $34M(I hope that is in Canadian Dolloars) so far!

The news may be good for the employees of the company, but not good for the investors, there are at least 10 comapnies delivering verious optical performance monitors, BaySpec, Axsun, JDSU, Cidra, Kymata, Bookham,... etc., just name a few, and they are all quite similiar(2- 3 general types anyway). Especially compare to the Fremont CA company, BaySpec. BaySpec's athermal high efficient volume optics engine in combine with their investor's, Finisar's InGaAs arrays(Finisar is the one of two companies in the world delivering good 256 InGaAs arrays and the only one delivering 512 arrays), provide athermal, ultrafast optical performance monitoring, so how anybody else can compete in both the performance and, more important, pricing.

These investors do shit due diligence and risk that much money in such an ordinary technology?
ricdef
ricdef
12/4/2012 | 7:32:33 PM
re: Optovation Brings in $20M
One issue with using linear arrays of detectors, is that you must split the spectrum up to make decisions on each individual channel, you must then use a dispersive system, such as an AWG, or FBG.

Optovation's solution (at least it seems to), or acousto-optic solutions can tune to a single channel, and use a single, higher bandwidth detector (spending more of the production cost on that component, hence enabling, for the same cost, delivery of some higher-level control electronics).

They claim to not go back to the electrical world, henceforth, it would be a good educated guess to believe they are using Q-factor analysis (their product IS bit-rate dependent, depending on the model number, which involves a single clock-generation system).

This seems, in principle, similar to Acterna's Optical Q-factor meter OQM-200 module, except that you can have one in every box.
http://www.acterna.com/product...

Just my 2-ó
lmtis
lmtis
12/4/2012 | 7:31:33 PM
re: Optovation Brings in $20M
Sounds to me like you work for one of the "at least 10 companies". The specs and features on their OPM at ECOC was quite impressive.
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