Lumentis Beams In $19M
There are a couple of reasons why the news is of note.
First, an undisclosed amount of this cash (which comes partly from equity finance and partly from loans) has come from a strategic investor -- Japan’s Santec Corp. Santec has managed to escape coverage by Light Reading until now, but it was established way back in 1979 and Lundberg calls it “the Rolls Royce” of optical component vendors.
Santec already supplies some of the components used in Lumentis’s metro DWDM equipment. However, Lundberg is keen to point out that they’re standard components that could be bought from any supplier and that Lumentis uses other vendors’ components as well. He contends it’s the way Lumentis uses the components, rather than the components themselves, that holds the key to Lumentis’s claims of slashing installation costs by eliminating amplifiers (see Lumentis Cuts Metro Costs and Lumentis Faces Metro Challenge).
Even though Santec is a component manufacturer, it’s aiming to help Lumentis sell its equipment to carriers in the Far East. Santec is very well connected in the region and is thus in a good position to introduce Lumentis to local distributors. Santec may also sell direct to service providers.
Lumentis plans to find “one or two” system vendors interested in distributing its equipment in the U.S. by the end of the year, Lundberg adds. The company is hoping to find a partner in Europe at the same time.
The other noteworthy point about Lumentis’s funding announcement, Lundberg points out, is that it’s “a clear, clear up round." In other words, unlike many other startups, the company’s valuation has gone up since its $10 million first round, raised in October 2000 (see Swedish Startup Completes 1st Round). At that time, according to Lundberg, Lumentis had a post-money valuation of $22 million. He declines to give the current valuation.
“We already had one dream partner, with Deutsche Bank,” he says. Right from the start, Deutsche Bank AG committed to funding Lumentis until it reached positive cash flow, subject to its meeting certain milestones. Lumentis now has 38 on staff and plans to open another 10,000 square feet of manufacturing space next month. It also hopes to announce its first customer at about the same time.
The latest round -- from Deutsche Bank and Santec -- “is for value development and ramping up production. It’s working capital,” says Lundberg. All three companies share the same philosophy, he adds. “We’re building a company for the long term."
— Peter Heywood, Founding Editor, Light Reading