Optical components

Xanoptix Lands Cash, Launches Product

Xanoptix Inc., a startup specializing in massively parallel transceivers, has scored $40 million in a second round of funding, bringing its total to $70 million (see Xanoptix Scores $40 Million).

Xanoptix says the money will be used to roll out a new line of optical transceivers, including the company's first product, a high-density transceiver announced last year (see Xanoptix Launches Transceivers and Xanoptix's Strange Story).

"This substantial round will take us through the next couple of years to cash-flow breakeven and perhaps even to IPO by the end of 2003," says CEO James Norrod.

Norrod says he won't use the money to add to the Merrimack, N.H., company's tiny staff of 50 or so employees. So far, he says there has been no need to grow much beyond this, nor to layoff any workers. "The management team and founders are intact," he asserts. Only a VP of sales remains to be hired.

Xanoptix's claim to fame has been a new method of combining integrated circuits with Vertical Cavity Surface Emitting Lasers (VCSELs) (see Surface-Emitting Lasers Threaten to Edge-Emitting Lasers for Intermediate Reach). By eschewing old-fashioned methods of linking the VCSEL to the electronic portion of the chip via tiny wires, in favor of "doing it all in the IC," Xanoptix says it's conquered a major hurdle to creating compact, high-speed transceiver chips for use in optical networks.

Xanoptix's new line is based on its flagship, originally dubbed the XTM-1 but now renamed the XTM-72, a single-connector 72-channel transceiver chip capable of an aggregate rate of 245 Gbit/s (72 channels of 3.4 Gbit/s each) at distances exceeding 1 kilometer. This chip can be used to create high-speed switch fabrics, links among routers and switches in high-speed networks, and links among line cards and the backplanes of network devices.

Now the company offers XTM-12, XTM-16, XTM-32, and XTM-48, each with a channel count corresponding to its name. Xanoptix says all the chips are based on the same manufacturing processes as the high-end XLM-72.

"We proved we could do the hard stuff first. Now our product suite addresses smaller customers with lower bandwidth requirements, too," says CTO John Trezza.

Both Trezza and Norrod acknowledge that prevailing economic conditions will make smaller-channel-count chips, particularly those with two and 12 channels, the most likely bestsellers for the next 12 to 18 months.

Xanoptix faces growing competition from established players such as Agilent Technologies Inc. (NYSE: A), as well as other startups, including TeraConnect Inc. (see Agilent Adds High-Density Transceivers and TeraConnect Ships 120 Gbit/s Modules).

Even though all the competitors can't claim channel counts as high as Xanoptix's, their ability to meet the current market demand will certainly challenge the startup to assert itself in this growing market.

It may help that Xanoptix has other sources of revenue: It's engaged in a series of agreements to license some of its technology for use by other vendors, including suppliers of passive and active components (see Xanoptix Teams With Alcoa/AFL, Xanoptix, US Conec Team Up, Xanoptix, Vitesse Combine on Switch, Xanoptix, Corning Demo Transceiver, and Xanoptix Goes With Mapics).

When Xanoptix burst on the scene last March, tongues wagged over the startup's origins. Xanoptix's Trezza admits he ruffled some feathers when he took his entire team wholesale from Sanders, a subsidiary of Lockheed Martin now owned by BAE Systems, a maker of electronic warfare and information systems.

There also were rumors that Xanoptix had been started by venture capitalists who were sore at being turned down as investors in TeraConnect.

Norrod and Trezza say this isn't true, that Xanoptix was founded prior to TeraConnect. Norrod's not willing to reveal the names of the original investors, though. "They were mainly individuals; there were no institutional investors," he says. "Those individuals prefer not to be named."

This round's investors include leader MMC Capital, as well as William Blair Capital Partners, EuclidSR Partners, Envest Entrepreneurial Investments, Optical Partners, and Corning Innovation Ventures.

— Mary Jander, Senior Editor, Light Reading
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Physical_Layer 12/4/2012 | 11:01:00 PM
re: Xanoptix Lands Cash, Launches Product Wow - 72 parallel channels is impressive but who makes the interconnect cables to plug in? MTP cables do 12 channels standard, and I know Tyco and others have done work on 24 (2x12) and other larger arrays, but I don't think a 72 channel cable is anywhere close to production!

Besides - wouldn't you still save a ton of cash by going to higher speed serial transmission with a lower number of parallel channels?
bubbleboybeet 12/4/2012 | 11:00:58 PM
re: Xanoptix Lands Cash, Launches Product Inside. Upper management already sliced off millions of the VC cash into their pockets. This company is not about making real products or sales. It orginated with the internet "optical" buzz word craze prior to the crash. Their pitch to VC's were optical company A,B,C went IPO for $5-10 billion, why not us.

Getting the IPO cash in would only be a bonus for management here. It is a con game left over for the bubble technology.
bubbleboybeet 12/4/2012 | 11:00:58 PM
re: Xanoptix Lands Cash, Launches Product Good sign for start ups that there are still VC's out there that can be convinced via their own stupidity or believe in the IPO gamble for investment return.

The next step would be if the investment craze that drove the IPO valuations of the pass will occur again in 2003 when they attempt to cash in with small sales and no real performing products.

faxcoverpage 12/4/2012 | 11:00:57 PM
re: Xanoptix Lands Cash, Launches Product No products? Saw this co with working product at OFC last year.
bubbleboybeet 12/4/2012 | 11:00:57 PM
re: Xanoptix Lands Cash, Launches Product Staged smoke and mirror demo's at shows don't count for a real product. It is very easy to rig up a limited demo. Tell me, what did they demo. A digital TV signal going through one channel of their product ? Or was it 2-3 signals ?

One. Can you buy anything from this group that meet consistent engineering specifications ? answer = no.

Two. Anyone buy or is using their products ? Answer = no.

This is a VC / IPO / suck the cash management.

WRSOPCHAK 12/4/2012 | 11:00:56 PM
re: Xanoptix Lands Cash, Launches Product Getting closer everyday...

Follow this link to see where you can get the high density interconnect assemblies...


LoDan's contact info is availible at...

bubbleboybeet 12/4/2012 | 11:00:52 PM
re: Xanoptix Lands Cash, Launches Product Norrod and Trezza say this isn't true, that Xanoptix was founded prior to TeraConnect. Norrod's not willing to reveal the names of the original investors, though. "They were mainly individuals; there were no institutional investors," he says. "Those individuals prefer not to be named."

Wrong. Trezza was able to get $2 million from current VCs to start and a load of stocks. TeraConnect VC's did not give a great deal to Trezza. The deal was orginally via Lockheed corporate with TeraConnect VC's. Trezza dealt a side deal with current VC's and scored the cash bonus. $2 million was given to Trezza to "shared", of that, 1.5 million he pocketed, 400K went to his buddy, 100K was split between ~5 junior & ~5 senior people that they stripped from Lockheed Sanders.

The 72 channel decision was made since there were other people with the same technology out there already in smaller arrays. The market didn't want or need 72 channels. They jumped to 72 for the VC cash / marketing frenzy / story. No logical marketing behind that decision. They wanted to IPO by now and cash out, but the market collapse and changed that plan.

This Norrod guy is a VC cash sucker genuis during the bubble. Good story teller with the ability to get the VC cash. He had success in cashing in the boom for another NH telecom company that is not bust, but he made a shit load using other peoples money. This time, hopefully people will wise up and not be suckered into this IPO junk. Than again, most of it is all crooked he might score again.
faxcoverpage 12/4/2012 | 11:00:42 PM
re: Xanoptix Lands Cash, Launches Product See http://www.xanoptix.com/xtm72%....

245 Gb/s and only 14mm H x 25mm W x 67mm D.
bubbleboybeet 12/4/2012 | 11:00:34 PM
re: Xanoptix Lands Cash, Launches Product How many X72's have you sold ?

How many products are they going to be in / contract wins ?

gigahunter 12/4/2012 | 10:59:47 PM
re: Xanoptix Lands Cash, Launches Product Hard to beleive that VC's are still this dumb but if you factor in that they are from the same ilk as Wall Street analysts then it is believable.

As usual the smart people get the shaft and the ones who can talk a good game get the cash$$$$$

Anybody got a half baked idea? I want $40M too!!!! Who cares about shipping anything?
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