Funding for startups

Tachion's Final Chapter

Tachion Networks may be dead, but its legend lives on in bankruptcy court. Lawyers and creditor representatives met this week in a New Jersey bankruptcy court to discuss the failed startup's assets, the first such meeting since Tachion filed for Chapter 7 bankruptcy protection in mid December.

The meeting's minutes were unavailable, but Tachion's latest bankruptcy filing did detail some of the smoldering remains of the startup that attracted some $86 million in funding and boasted a battle-tested board of directors that included CEO Jeff Matros, former Williams Communications (now WilTel Communications Group Inc. [Nasdaq: WTEL]) board member Roy Wilkens, McLeodUSA Inc. (Nasdaq: MCLD) chairman Clark McLeod, and Mike Odrich, head of the private equity division of Lehman Brothers.

Tachion's Chapter 7 filing lists its number of creditors at between 16 and 49, its assets at between $100,000 and $500,000, and its debts at between $1 million and $10 million. Among its debts is a claim by Tachion's old landlord for $88,000 alleging damage to the premises.

The company was founded in 1996 and once employed more than 225 people. Its product was originally marketed to be a "collapse central office" switch that combined Frame Relay, IP, ATM, SS7 signaling, voice services, and an integrated Sonet add-drop multiplexer; but the startup ultimately produced more press clippings than actual products. After several setbacks, Tachion claimed to be shipping its product as an Internet offload device – a box that helps carriers move Internet data traffic away from their circuit-switch networks.

Remarkably, Tachion managed to garner product awards from some trade publications. It also publicly announced three carriers as customers. Some months later, however, it quietly acknowledged that it had never shipped equipment to the customers as announced, despite claiming that one of the contracts was worth $40 million (see Another Tack for Tachion).

Still more amazing was the financial support Tachion continued to win from top-notch investors, in the face of its failure to demonstrate traction with carrier customers. In December 2000, after its CEO told the press it was raising a $75 million round, Tachion announced a $50 million round from Lehman Brothers Venture Capital Group, Goldman Sachs & Co., J.P. Morgan Chase Bank & Co., J.P. Morgan Chase Bank & Co., Morgenthaler, Walden International Investment Group, and Singapore's EDB Investments.

By the summer of 2001, the startup had fired its employees and closed.

Entities owning five percent or more of Tachion include Morgenthaler and Walden International, each with 18.9 percent. Lehman owns 17 percent, followed by Goldman Sachs, which owns 6.1 percent, and J.P. Morgan, with a 5.5 percent stake.

As perhaps a fitting end to Tachion's saga, the bankruptcy filings list the value of Tachion's intellectual property as "unknown."

— Phil Harvey, Senior Editor, Light Reading
Page 1 / 3   >   >>
ThouShaltNotJudge 12/5/2012 | 12:51:05 AM
re: Tachion's Final Chapter ... is what Phil Harvey has by reporting:

"Remarkably, Tachion managed to garner product awards from some trade publications.".

given the recent upbeat press in LR about equally misguided startups.

DCITDave 12/5/2012 | 12:51:04 AM
re: Tachion's Final Chapter re: "the recent upbeat press in LR about equally misguided startups"

Don't be so vague. If you're going to take us to task for getting something wrong, just do it.

jackall 12/5/2012 | 12:51:03 AM
re: Tachion's Final Chapter
I've been reading LR for a while and I don't
remember them giving out prestigious awards for
non-existent products.

I'd like to here the specifics too.
billy_fold 12/5/2012 | 12:51:03 AM
re: Tachion's Final Chapter I guess the message board traffic is a little light these days. Time to dredge up an old topic that has been dead and buried for almost two years. See if that will generate any posts.

BugEater 12/5/2012 | 12:51:01 AM
re: Tachion's Final Chapter I guess the message board traffic is a little light these days. Time to dredge up an old topic that has been dead and buried for almost two years. See if that will generate any posts.


mmmm... apparently their diabolical plan worked.
USA 12/5/2012 | 12:50:59 AM
re: Tachion's Final Chapter The Tachion messages had to be the most entertaining stuff I've ever read on a message board.

Bring 'em back !!
lightmaster 12/5/2012 | 12:50:57 AM
re: Tachion's Final Chapter Stuartb...

No one can fault LR for having a few misses given the bubble effect. Some would argue that there were never 10 good companies to choose from. However, I agree that some were just too obvious to miss. Add to your list of companies who made the list based purely on slideware:

(Phil, don't get upset. You guys have been very up front with your mistakes.)

Tropic Networks (made top 10 in October, announced big layoff in December.

Jasmine - hype based purely on the claim "We will be fastest to IPO in history." The technical story about "putting a service layer into ASICs" made absolutely no sense. Announced company in November, made top 10 list in December, taken off list in March.

stuartb 12/5/2012 | 12:50:57 AM
re: Tachion's Final Chapter My guess Phil is that he's refering to the numerous flubs on the "Top Ten Private Co's" List, such as Ellacoya, Appian, Lightwave Micro and several others.

Even two of the three in the liquidity bin are jokes. Unisphere is the only half-way "correct" pick thus far, and from what I remember they didn't appear until after the Juniper acquisition rumours surfaced.

my 2 pence mate
optical_man 12/5/2012 | 12:50:55 AM
re: Tachion's Final Chapter The messages from the ex-Tachion folk were pretty funny.
After about a month, I figured out that people with that much wit weren't heavy duty Telco engineers which is what Tachion could have used to keep up with the ever increasing fibs being told by the Executives.
A massively smart BellHead engineer wouldn't have seen the humor in most of the posts (thank God!). He, being more focused, and smarter than most of us, would have missed it, but would have actually built what Tachion was promising.
Bottom line: Tachion was funded, managed, staffed by, engineered, and designed by "internet bubble wanna be's" who might be entertaining (and sometimes damned funny), but should be back in Television Production or Marketing at Proctor and Gamble where they came from.

xyz 12/5/2012 | 12:50:46 AM
re: Tachion's Final Chapter Man, I thought LR was a rag before I read this "NEWS" and now I know they have reached a point lower than the supermarket tabloids.

Tachion had some funny stuff postings, many stories on LR etc... like over a year ago.

Is this story news ?? Tachion is just a dead and gone startup on the rust heap with some clock that must have run out in bankruptcy court, long after they went under and LR picks it up as news and runs it ?????

phillip,really, how can you hope to be considered legit when you call this news ??

OH I KNOW ! You don't want LR to be legit, sorry...... never mind
Page 1 / 3   >   >>
Sign In