Terawave's Hushed-Up Funding

Terawave Communications appears to have scored $14 million in Series E funding, but the vendor of access gear isn't saying much about it.

A report in this morning's VentureWire Alert online newsletter said the company's latest round closed last month, bringing its total funding to about $141 million. The round included a slew of existing investors -- Bessemer Venture Partners, EDB Investments, KTB Venture Capital, and Morgenthaler, to name a few. Also kicking in again were Samsung Corp. and Singapore Telecom, according to the newsletter.

Terawave was among the first companies to promote the use of PON (passive optical networking, a technique that uses passive optical splitters to siphon bandwidth among multiple endpoints and save fiber) for business applications. Like chief competitor Quantum Bridge Communications Inc., Terawave developed its wares using ATM-based specifications. As the telecom downturn has reduced spending on PON but focused attention on the access market, the company has changed its pitch.

Terawave's Website features gear that offers point-to-point transmission equipment for multiprotocol access, as well as PON platforms.

Unfortunately, it's tough to probe the change of strategy, or the latest funding. The vendor's last press release is months old (see Terawave Breaks 1,000). Its latest marketing VP, Robbie Forkish, departed months ago.

After several unsuccessful attempts to contact Terawave execs and VCs, Light Reading received an email from CEO Ray Lin, confirming the funding and divulging the following information: "This funding should take the company to profitability in 2004. We have shipped over 2000 optical nodes to over 30 customers since [general availability] shipments of our products in Q1 of 2002. We achieved over [$14 million] in revenue last year... versus $300,000 in 2001. We expect substantial revenue growth in 2003 with profitability in 2004."

But at least one industry source says the news may not be as good as it looks. "This likely gives them enough money to make it to 2004, but I can only imagine how low the valuation was," writes analyst David Gross of Communications Industry Researchers Inc. in an email today. "I wouldn't call it a strong endorsement of APON [ATM-based PON] or of Terawave."

Gross says that despite their claim to exceed the PON charter, Terawave continues "selling to the same segments as other PON vendors: municipalities and rural independents."

Still, that segment's picking up, according to other PON proponents, who maintain a perennial optimism against all odds (see PON Believers Hang Tough). "Terawave's funding represents an emerging uptick in interest in broadband access, PON, and FTTx," writes Jeff Gwynne, senior VP of marketing at Quantum Bridge. He says the recent FCC ruling on broadband has stimulated RBOC interest in PON (see Verizon Lauds FCC on Broadband Call and Will RBOCs Spend More on Broadband?).

"It's all good," he says.

But established PON players face challenges, including new PON techniques that could throw existing wares for a loop (see Pining for PON). Nonetheless, Terawave's funding is a sign that some formidable industry forces haven't turned away from the vision of ATM-based PON gear.

— Mary Jander, Senior Editor, Light Reading

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zettabit 12/5/2012 | 12:18:27 AM
re: Terawave's Hushed-Up Funding Fast forward to April 1, 2008:

An optical start-up so stealthy it does not yet have a public name announced today they have raised $21 Million in new Series P funding. This brings the total money raised to date to over $872 million.

With the new funding the company, whose name it yet to be disclosed to protect the sensitive nature of its technology, also announced that industry veteran - insert name from list below -

- Don Green
- Carl Russo
- Ray Kao
- Desh Despande

will join the company as its newest, and 11th, CEO.

The latest round consisted entirely of the 47 previous institutional investors. Industry sources indicated that the company had to go through a "wash out" round, making this the 7th recapitalization for the company, and previous, existing, investors.

"With this investment, I believe our company, which I cannot yet name, is well positionned to ride out the current telecom winter, and ensure that our product strategy remains aligned to the changing needs of our customers, which we are still trying to pin down" said the company's new CEO in a press release.

Good luck Terawave - how long has it been that PON deployments are "just around the corner"?
whyiswhy 12/5/2012 | 12:18:24 AM
re: Terawave's Hushed-Up Funding traunched-washout: verb 1) to be strung up by ones balls, 2) to kiss the butt of the new renta-CEO, 3) boy-investors driving their Mercedes while fiddling with their Blackberries, 4) theft
BobbyMax 12/5/2012 | 12:18:21 AM
re: Terawave's Hushed-Up Funding The PON tecnology has been with us for a long time. Unless the RBOCs or some other big service provider takes interest, the PON technology would remain committed to the Labs.

It appears Terawave does not have any customer. The last round of funding is not enough to do development and marketing work.

The Premys was a family business. The company was mostly selling in Singapore.
optical Mike 12/5/2012 | 12:18:15 AM
re: Terawave's Hushed-Up Funding Here is a list of case studies which show that FTTH is a solid buisness plan

optiplayer 12/5/2012 | 12:18:12 AM
re: Terawave's Hushed-Up Funding Lucent had point to point FTTH in the late 80s while Raynet had PON shortly thereafter. Lots of Press Releases from Bell South, Bell Atlantic, NYNEX and US West at the time on how FTTx was a big part of their plans.
fundamental_guy 12/5/2012 | 12:18:04 AM
re: Terawave's Hushed-Up Funding PONS = People who are Optically Nuts
fundamental_guy 12/5/2012 | 12:18:04 AM
re: Terawave's Hushed-Up Funding O-Mike, sure they have a business case.
They (forums and councils) are the manufacturers of the kool-aid that the PON vendors have been trying to sell.

Kool-aid is tough business.
DKP 12/5/2012 | 12:18:02 AM
re: Terawave's Hushed-Up Funding
I heard Terawave had >$10M sales last year, not a bad start, and I am impressed with a late funding round. Much of the FTTH deployment in the US is going to Optical Solutions, and they are PON based, so I don't agree with the "nuts" acronym. Alloptic announced a few customers in the past month. It is happening slowly, but the trend is there.
optical Mike 12/5/2012 | 12:17:54 AM
re: Terawave's Hushed-Up Funding O-Mike, sure they have a business case.
They (forums and councils) are the manufacturers of the kool-aid that the PON vendors have been trying to sell.

Kool-aid is tough business.

What do you mean when you say GÇ£kool-aidGÇ¥ is that a reference to the Jonestown, Guyana incident? Because that has never been proven some sources say it was Kool-Aid; others say FlaVor-Aid-«

Scroll down to the Quote of the week then show me a better technology and explain why our latest customer didnGÇÖt select another technology


Or if you wanted to take this off line I can be reached at [email protected]
optical_optimist 12/5/2012 | 12:17:52 AM
re: Terawave's Hushed-Up Funding I don't think David Gross of CIR has done his homework on Terawave. He claims they are selling to the same segments as other PON vendors: municipalities and rural independents. However, at a minimum they are selling into Comcor in Russia as stated in their Nov, 2002 press release. The press release also mentions cable MSOs.

Hey Light Reading:

Did you ever think that maybe startups and their investors don't want to speak to you because they don't want to lose their competitive advantage ??
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