Firstwave Given Second Wind
RFI, which was the sole backer of Firstwave, says it participated in the refinancing with ComVentures and Sevin Rosen Funds. Again, according to the Raza Website: "Lambda OpticalSystems develops all-optical Dense Wavelength Division Multiplexing (DWDM) switching technology for next generation optical networks which are capable of supporting Ethernet bandwidth capacities of up to 40 Gbit/s over existing fiber optic lines."
The new backers have put $10 million into the refreshed company, according to a source familiar with the situation. The source also says that John C. W. Taylor has taken the reigns as CEO, at least temporarily. There's no Website yet, but the domain name, www.lambdaoptical systems.com, is registered to the same Web development company formerly used by Firstwave.
A filing with the Virginia State Corporation Commission says that Sevin Rosen partner Amra Tareen and Mark Spoto, a mergers and acquisitions lawyer with Cooley Godward LLP, are listed as officers of Lambda Optical Systems.
Taylor's involvement in Lambda Optical Systems is a bit surprising. He was the former Firstwave CEO and board member that his successor, RFI partner Donald G. Basile, blamed for the company's misfortunes. Basile once told Light Reading his tenure was consumed with "winding down the company" and getting payment for a contract with the U.S. Naval Research Laboratory (NRL) (see VCs to Revive Firstwave). Firstwave first boasted that the NRL contract was worth $29 million, but it wound up being closer to $7.6 million (see Firstwave Follows the Feds).
Taylor, Spoto, and others involved with Lambda Optical Systems did not return calls seeking comment.
The startup, in its old iteration, ran into contract troubles with its customers and labor disputes with employees. Firstwave began life in 2000 as Princeton Optical Systems, a Raza-backed startup that kept offices in Virginia and New Jersey. The company went quiet in April 2003 after several months of battling labor complaints from former employees (see Firstwave's Lost Pay). On June 10, the New Jersey Department of Labor announced it had recovered $866,501 in unpaid wages for 57 former employees.
The Virginia Department of Labor says it closed 22 wage complaints against Firstwave early in 2003 because the employees opted to use arbitration, not litigation. It's not known what the employees were owed or what amount they settled for when the dust cleared.
— Mary Jander, Senior Editor, and Phil Harvey, Senior Editor, Light Reading