Picolight Picks Up $13M
The $13 million round was led by Coral Capital Management and included prior investors BA Venture Partners and Vesbridge Partners LLC. Coral managing director Todd Ortberg has joined Picolight's board. Picolight expects to extend the round to include another $4 million to $7 million in "cushion money" aimed at any expansion the company might need, CEO Steve Hane says.
As a sign that the components market is improving, Picolight says its valuation increased with the extra funding. The company claims business for the first quarter of 2005 was up 125 percent from the same quarter last year.
The $13 million announced today is intended to drive Picolight to profitability, hopefully "by the end of this year," Hane says.
Picolight has now raised more than $90 million since being launched during the dotcom bubble. The company was an early entrant in the Vertical Cavity Surface Emitting Lasers (VCSELs) market, trying to put lasers into a smaller and more easily manufacturable form. Its prospects probably aren't as lofty as they appeared during the bubble, but the company has a solid technical pedigree, including CTO Jack Jewell, who helped pioneer VCSEL research outside of Japan.
"Any startup that's lasted through the last six or seven years and survived all this gets a grade of a 'B' at least, I'd say," says analyst Jeff Montgomery of ElectroniCast Corp. "We've been impressed with them."
VCSELs were a new idea when Picolight started, but, like tunable lasers, they've gained accepance even through the downturn. "There's a higher level of integration going into transceivers, and that certainly fits well with VCSELs," Montgomery says.
Picolight's problem was that it tried to expand beyond VCSELs. Like most optical firms, Picolight believed the key to better revenues was better product breadth, and that meant building such things as small-form pluggable (SFP) modules using other companies' lasers. Those products, which weren't very successful and had lower margins than the VCSEL-based modules, have been jettisoned, Hane says.
Picolight continues to focus on storage, data center links including 10-Gbit/s connections, and parallel optics (see Picolight Preps Parallel Push). In carrier circles, the company has decided to avoid the Sonet market and concentrate on IP networks instead. "Sonet and SDH are places where market share changes hands more slowly," Hane says.
— Craig Matsumoto, Senior Editor, Light Reading