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Zettacom Set to Score $47.5M

Light Reading
News Analysis
Light Reading
6/18/2001

High-speed networking chip startup ZettaCom Inc. is planning to announce its second round of funding tomorrow -- $47.5 million, bringing its total funding since its 1999 founding to $58.5 million.

"We'll use the money to help us transition from development to generating revenue," says CEO Daryn Lau. His goal is to bring Zettacom to "cash-flow breakeven" within 18 months.

Lau says Zettacom's immediate agenda includes getting samples of its first two products into the hands of "over 15" beta-site customers (identities undisclosed). The products include the ZEST-200 switch fabric and the ZEN-QM-200 traffic management chip.

Details of both products were announced in May (see ZettaCom Advances With ZEST (& ZEN)). The ZEST-200 is a switch fabric with 1.7-Tbit/s capacity, according to Lau -- enough to fuel 64 OC192 (10 Gbit/s) switch ports. The ZEN-QM-200 is aimed to allow system vendors to assign packetized traffic to different buffers, enabling management and QOS (quality of service) functions.

Lau says samples of these two products will ship this summer, with a third product, a switch with an integrated serializer/deserializer (SerDes), to be offered by year's end and a separate network processor by early 2002.

The release of the SerDes should dispel at least one strike against Zettacom -- namely, that it lacks the integration of SerDes and switch fabric à la competitors like Vitesse Semiconductor Corp. (Nasdaq: VTSS). Indeed, Zettacom will offer two product versions -- a chip with integrated SerDes and one with SerDes on the side. There are a number of companies that prefer both options, Lau says.

Experts say it remains to be seen just how easily Zettacom's new chips will facilitate the creation of terabit routers, given line-card limitations and other requisites. But Zettacom's undeterred by negative talk. "We have design wins in metro edge, metro core, metro Ethernet, storage area networking, and multiservice provisioning platforms," Lau asserts.

This round won't be Zettacom's last -- which Lau says explains a list of investors that would do justice to a Hollywood epic. Fourteen firms, led by Granite Global Ventures, are listed as contributors.

"We adopted this strategy because of economic conditions," Lau says. "We hope that with more investors we'll have more potential interest in the next round."

The third round, at an unspecified future date, Lau hopes, will be the last before IPO.

- Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com

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