Funding for startups

Khatod Ventures Into Software

A year after leaving Nortel Networks Corp. (NYSE/Toronto: NT), Anil Khatod has turned up as a venture capitalist (see Atlas Venture Hires Anil Khatod ). And he's got one word for the opportunity he sees -- software.

Khatod says software, in the form of provisioning, billing, and other "service commerce" tools that support the rollout and maintenance of data networking services, will be key to making the most of telecom gear that's already installed worldwide.

"One of the telecom industry's biggest problems is that it's difficult for carriers to roll out new services," he says. Software that speeds up service rollout is a market begging to be addressed.

Dividing his time as a private angel investor and as a new partner at Atlas Venture, Khatod aims to scout companies that can fill the need for software. But he'll be going at it selectively. He's focusing only on Europe and the U.S. And he's likely to keep his investments conservative.

"The days of people raising $70 million to $100 million to start a company are gone," he asserts. He says startups need solid, believable plans for generating revenue without burning through tons of resources. That usually entails at least one large customer willing to sponsor development and to sign on when it's done.

Why won't Khatod venture in Asia? Isn't that one region where growth in telecom hasn't fallen as drastically as it has stateside? "It's a question of how far you can meaningfully expand. The field [in Asia] is seriously crowded with a few venture firms." Atlas Venture plans to take advantage of its locations throughout Western Europe and the U.S. instead of spinning its wheels against the competition in Asia, he indicates.

Khatod is clear that he doesn't expect his venture efforts to grow the way many startups did in the boom time. Indeed, he doesn't see any meaningful recovery from the present downturn until 2004 at the earliest. By that time, an ongoing shakeup in the carrier market will have helped surviving carriers whittle down their debt and start addressing what he sees as ongoing demand for bigger bandwidth.

Khatod left Nortel in July 2001, just shortly after assuming the post of chief marketing and strategy officer. While he denies any negative feelings about his former workplace, he says he needed a change. Apparently, he'd been chomping at the bit after 19 years at the company. "It wasn't fun anymore."

Khatod's Nortel jobs included president of the Optical Internet, Wireless Internet, and Global Internet Solutions groups; and senior VP, marketing and sales. He says his promotion just four months prior to his departure really was an extension of what he'd been doing for awhile.

In a way, Khatod's returned to what he likes best. Even at Nortel, he invested as an angel in several startups in various parts of the world, albeit in market areas in which he says Nortel didn't compete. He'd rather not specify the startups, but he's on the board of directors of OmniGuide Communications Inc., an air-filled fiber company launched in 2000 by well known optical entrepreneur Mukesh Chatter (see A Fiber Filled With Air, Stealthy Startup Leads With Layoffs, and OmniGuide Puts Khatod on Board). According to SEC documents, he also held shares in Alteon WebSystems (Nasdaq: ATON) prior to that company's purchase by Nortel in 2000.

Khatod started his career as a management consultant in 1976 after graduating from business school in India. He founded a semiconductor module company in 1980 in California and joined Nortel in 1982.

— Mary Jander, Senior Editor, Light Reading
Page 1 / 2   >   >>
MrLight 12/4/2012 | 9:36:13 PM
re: Khatod Ventures Into Software Nortel is still offering the following products from the Alteon acquisition:

1. Alteon Web Switches ( Layer 2/3 and Layer 4-7 switching)

2. Alteon Switched Firewall System (uses Check Point FW-1 NG software)

3. Alteon SSL Accelerator (SSL offloading improves and Layer 7 filtering)

4. Alteon Content Cache (content caching and streaming )

5. Alteon Content Director (delivers user-aware request-to-content routing and global load-balancing based on Layer 3-7 protocol attributes )

6. Alteon Content Manager (single point of management for up to 2,000 Alteon Content Caches )

7. Alteon Web OS Traffic Control Software (supports firewall, load balancing, application redirection, wireless access, and RTSP etc across Alteon 180-series, ACEDirector series, and Web switching modules for Passport 8600 platforms)

8. Alteon Web Switching Module (WSM) (direct interface to the Passport 8600 Routing Switch backplane to extend capabilities of Alteon Web SwitchesGÇöLayer 4 through 7 switching through four external Gigabit Ethernet or 10/100 TX ports)

They were in the Nortel booth at SuperComm 2002. Did Nortel need to buy Alteon to get them? I don't know.

MrLight :) adding some light on the subject
knowitallme 12/4/2012 | 9:48:40 PM
re: Khatod Ventures Into Software
Do the math; the Alteon acquisition was about 3% of Nortel's market cap, paid in shares, equivalent to $120M today. And a lot of folk in Alteon hung on to their shares and sure as hell did not 'make out like bandits.'

With 20-20 hindsight it seems every armchair analyst here sounds like a genius.
Iipoed 12/4/2012 | 9:49:18 PM
re: Khatod Ventures Into Software light headed i took my 15m and walked to preserve my health and sanity. Now I merely post so people like you can waste your time responding to my posts.

Yeah I did know about Nortel's interest. Also knew BJ would not ever do business with that group, once was enough. As to 12 to 13 billion, dream on. Of course Everything is for sale for a price, and that would have been an accepted price.

btw since you seem to know me who are you? or do you merely insult people and hide behind your posts.
light-headed 12/4/2012 | 9:49:20 PM
re: Khatod Ventures Into Software Scott... I mean Iipoed...

Pull your head out of your ass already. Bay/Nortel tried to talk to FDRY about OEM leading to buyout several times but your glorious CEO wouldn't do it. They even flew in from Canada once and he blew them off... wouldn't even meet with them.

And by the way, they would have paid a lot more than 7B for FDRY, try 12-13B on for size.

Rumor is he turned down JNPR too. For a senior salesguy you seem to have had no clue what was going on in your own company.
netskeptic 12/4/2012 | 9:49:22 PM
re: Khatod Ventures Into Software > It's a complete SHAM and in the end the exec's
> made out like bandits and the worker bee's got
> screwed.

It was Joe Investor who footed the bill and got screwed in the process, worker bees got their (naturally small) share of the proceeds from these (supposedly illegal) activities.


dodo 12/4/2012 | 9:49:27 PM
re: Khatod Ventures Into Software " Nortel says it will pay $7.3 billion for Alteon, which last quarter nearly doubled its revenues to $51.5 million"
This is from the announcement of July 28, including this comment from CC:

"In the new economy, the value and richness of content across the Internet is increasing on a massive scale," said Clarence Chandran, Chief Operating Officer, Nortel Networks. "Our acquisition of Alteon WebSystems will accelerate the delivery of an Internet data center capable of moving content seamlessly and rapidly across high-performance optical Internet and 3G wireless networks."

And then the optical world started to crumble in OCT 2000 and Anil found a nice hiding place in Personal Internet for himself and his ilks.
Iipoed 12/4/2012 | 9:49:29 PM
re: Khatod Ventures Into Software The alteon deal was the worst decision made if they did in fact pay 6b for alteon. They could have bought Foundry for that. Foundry would have brought a far superior and more cost effective load balancing solution with much greater market share. And guess what they would have picked up some pretty good L2 L3 products along with an outstanding customer base.

Of course Nortel via bay had done a deal with the Foundry execs previously, Centillion was acquired by bay, and was founded by the same Foundry execs.
jamesbond 12/4/2012 | 9:49:29 PM
re: Khatod Ventures Into Software Executives at large and small companies swapped spit by being on BOD's, TAB's...


Real question is -- is this stuff legal? if
not why isn't SEC investigating it?
Lightmare 12/4/2012 | 9:49:30 PM
re: Khatod Ventures Into Software 2bits, open your eyes a little and you'll see this behavior was SOP at nearly all high tech companies in the 90's.

Executives at large and small companies swapped spit by being on BOD's, TAB's...

Systems vendors exec's would be given stock from the component vendors in exchange for approval to use their parts in their system.

Customers were given stock from the systems companies in order to get an approval to use their HW (Williams, qwest...)

Billions were made via cross polination.

It's a complete SHAM and in the end the exec's made out like bandits and the worker bee's got screwed.

Some wonder why the industry is in the shitter.
2bits 12/4/2012 | 9:49:30 PM
re: Khatod Ventures Into Software Earlier posts mentioned that Nortel paid $2B for Alteon. In fact the purchase price was over $6B. I remember the difficulty Nortel exec's had answering reporters questions about why they would pay $6B for a company when the total annual market for its product was less than $1B (!)

As to AK's personal involvement (owning a venture stake prior to acquisition). The Alteon acquisition closed on October 5, 2000 and one month later (Nov 14th, 2000), AK was named head of Nortel's Personal Internet group with the president of Alteon reporting to him. This cannot be called an arms-length relationship. AK is now a wealthy angel investor and we're beginning to see how this came to be.
Page 1 / 2   >   >>
Sign In