VC Money Chases OpVista
OpVista reports its total funding at around $90 million with this round, which was led by new investor ComVentures . (See OpVista Receives Funds.)
To hear OpVista tell it, optical is so hot that venture funds are constantly calling to ask about giving money, sort of like reverse telemarketers. ComVentures partner David Britts says his firm started chasing OpVista after hearing the name come up in multiple discussions with carriers and MSOs.
"They were not going around looking for money. We sort of preemptively did this," Britts says.
Could the optical sector be that hot? OpVista's story gets more believable when you consider there aren't many optical-systems plays that are this far developed. Most of its contemporaries got starved out during the downturn or snatched up by larger players.
As a result, OpVista stands out when investors think optical, especially in the case of reconfigurable add-drop multiplexers (ROADMs). In addition to just being alive, OpVista has secured Cox Communications Inc. and Time Warner Cable Inc. (NYSE: TWC) as customers, and it ranks third in the ROADM market behind Cisco Systems Inc. (Nasdaq: CSCO) and Fujitsu Network Communications Inc. , according to Infonetics Research Inc. (See Startup Company Profile #9: OpVista Inc. and OpVista Touts ROADM Rank.)
Money does seem to be headed optical's way lately, with Azea Networks Ltd. and Transmode Systems AB each getting deals in March, and the possibly optical-related startup Cyan Optics Inc. drawing $8 million last week. (See Subsea Firm Azea Raises $20M, Transmode Bags $12M, and Cyan Gets Some Green.)
Britts and OpVista CEO Karl May happen to be old buddies, but May says OpVista looked through several options before settling on ComVentures.
"When you're growing rapidly, you still need some capital. It's not just to fund R&D. It's working capital as well," Britts says.
In other words, the money is earmarked for sales-force expansion, as OpVista wants to start chasing more of the optical buildouts carriers are planning. "In 2006, we did the entire year on an average of about 4.5 salespeople, which is unsustainable," May says.
With OpVista's $28 million round a year ago, May had said the company was nearing break-even and might not need more money. (See OpVista Racks Up $28M.) But he's now saying the company would be open to raising even more.
Shareholder dilution is always an issue when a private company adds another round, so OpVista was "quite careful" with this round, May says. "We easily could have taken $25 million or $30 million. That, I agree, would have been somewhat foolish."
— Craig Matsumoto, West Coast Editor, Light Reading