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Financial

Hyperchip Lands $43M in Financing

Hyperchip Inc. said Friday that it has secured another US$12.4 million in venture funding and about $31 million in repayable loans from the government of Quebec. This brings the company's total funding to date to about US$136 million.

The company says its router, designed to handle up to 65,000 OC192 (10 Gbit/s) interfaces per system, is in trials with one large carrier (see Hyperchip Hypes Its Hardware and Hyperchip Raises $67 Million ).

"We've completed our first beta trial and were pleased with the results," says Hyperchip CEO Brian Barry. "Now we're hardening the product -- testing and retesting it to make absolutely sure it is what it should be."

The company is planning additional trials with an unnamed carrier and will release its product later this year.

Hyperchip's funding round, its fourth, was led by TechnoCap with investments from Vertex Technology Fund, Advent International, Optical Capital Group, JT Ventures, Artémis, and Pilgrim Baxter.

The company has grown to 280 employees so far, several having joined recently, when IP Optical went under (see IPOptical Fades, Hyperchip Feasts and Hyperchip Hires Hershey).

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
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skeptic 12/4/2012 | 11:03:39 PM
re: Hyperchip Lands $43M in Financing I suppose Skeptic has to be true to his name, but I wonder how someone so clearly misinformed can make such grandiose statements. If Hyperchip lacks a beta system, then what exactly was or is in trials? A mock-up? They did show a functioning box at Supercomm 2001.
----------------------------

Sir,

You have called me "misinformed", but in return
you have provided no information to show on what
basis you make that claim.

Have you actually seen a "functioning box"?
I keep hearing they are in "beta trials", but
see no evidence that they have actually
produced a system. Have you? Did you see what
was at supercomm?

As far as your other statements, a 12 million
dollar round for a company this size is not
"doing well", it is embarrasing. Most of the
capital raised in this round is that of
taxpayers in canada. Do you think that raising
money in the form of government loans is a sign
of strength and market confidence in a startup?

As far as clarification, I welcome hearing from
anyone exactly what their "beta trial"
actually consists of. And unlike you, I'm not
interested in taking their word for it without
any explaination.




cowboycarl 12/4/2012 | 11:03:39 PM
re: Hyperchip Lands $43M in Financing I suppose Skeptic has to be true to his name, but I wonder how someone so clearly misinformed can make such grandiose statements. If Hyperchip lacks a beta system, then what exactly was or is in trials? A mock-up? They did show a functioning box at Supercomm 2001.

By every measure, this company seems to be doing exceedingly well: still attracting investment capital, still hiring, still making huge waves at trade shows. And they have a system in customer labs.

I don't want to be as blind in my optimism as Skeptic is in his pessimism. Hyperchip is still at the beta phase, and I would assume has no revenue. Their CEO has announced a product release by the end of this year. I'll reserve my judgement of their viability until such time as I have all the facts.
skeptic 12/4/2012 | 11:03:39 PM
re: Hyperchip Lands $43M in Financing
Its sad that Light Reading bought into their
phony "beta trials" stuff. How are they
conducting beta trials without a beta system?

You also made no indication of their valuation
in the article.

And as far as their prospects, their round was
really 12 million dollars which says something
about their popularity in the investment
community.

The rest is canadian taxpayer money foolishly
wasted. I mean loans? The government is risking
the entire debt amount on the downside with
an upside guarentee of almost nothing.

Caspian would be doing alot better if they
had a government bail-out as well.
joe_average 12/4/2012 | 11:03:38 PM
re: Hyperchip Lands $43M in Financing I agree with Sceptic on the funding aspect of this story.

It is a total abuse of taxpayer money to subsidize a company to the tune of $30M! What is the upside? Absolute best case would be 2000 more jobs? How long before the tax revenues come close to balancing the risk?

One would think that there would be some international uncompetitive practice law violated here somewhere.

Oh well, the Quebec gouvernment is known for making incredibly stupid decisions. This one is just another.

BTW I sure wish that the gouvernment of California would take a personal interest in my company!
MKTG_Hack 12/4/2012 | 11:03:37 PM
re: Hyperchip Lands $43M in Financing Hold on, Joe.
How different is this from the US government bailing out the airlines? Or subsidizing the farming, logging, and oil industries? Or providing tax rebates to stimulate the economy? States are continually providing tax credits and other incentives to lure and keep companies.

joe_average 12/4/2012 | 11:03:35 PM
re: Hyperchip Lands $43M in Financing You are absolutely right about the US government subsidizing other industries.

That's why there are dozens of trade disputes every year with international courts, etc.

My issues with Hyperchip's funding are:

1) The Quebec gouvernment has entered into a *very* speculative investment. Far more than the caretakers of public trust should attempt. If VCs aren't ready to fund this company, why should M. & Mdme. Tax Payer?

2) I'll admit to being human: I'm jealous that my company isn't receiving similar treatment from my gouvernment!
MKTG_Hack 12/4/2012 | 11:03:34 PM
re: Hyperchip Lands $43M in Financing 2) I'll admit to being human: I'm jealous that my company isn't receiving similar treatment from my gouvernment!

And you're right to be jealous. After all, it was misguided and rather inept government policy that created this mess in the first place!
skeptic 12/4/2012 | 11:03:34 PM
re: Hyperchip Lands $43M in Financing 1) The Quebec gouvernment has entered into a *very* speculative investment. Far more than the caretakers of public trust should attempt. If VCs aren't ready to fund this company, why should M. & Mdme. Tax Payer?
--------------------

And I would add to this that although Quebec is
bearing nearly all of the risk, it doesn't get any
equity or access to the speculative long-term
profits that could come out of Hyperchip.

If Hyperchip IPO's, the investors will make
a huge amount of money and the most the government
will get back is the money from the loan.

talos 12/4/2012 | 11:03:32 PM
re: Hyperchip Lands $43M in Financing Personal income taxes are significantly higher in Quebec than in California. Provincial income taxes run at near 17%. On that basis, it would require a payroll of 300 people earning an average of about $60k each to repay the $31M investment over 10 years in income taxes alone.

I know I'm simplifying it, but it is something to take into account.
angus 12/4/2012 | 11:03:31 PM
re: Hyperchip Lands $43M in Financing Both. 1Can$ = 0.63US$
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