Terawave's Hushed-Up Funding
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