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Optical components

Zenastra Photonics: RIP

Zenastra Photonics Inc., a once-promising integrated components startup, has gone into bankruptcy.

Company COO Peter Brownhill confirmed reports that the startup, founded in 1999, has closed up shop and let go its 90 remaining employees. But he refused to discuss details.

Zenastra board member Timothy Lee, an investment manager with VenGrowth Investment Fund Inc., one of the firms that initially funded Zenastra for $40 million, confirmed that the startup was unable to get further funding.

"Nobody's more depressed than we are," he says. Apparently, Zenastra's third-round funding attempts failed when investors got cold feet, despite the company's promising start (see Zenastra Ships First Products).

"At the end of the day, even though [Zenastra] was shipping products to customers, the market would not let go of any more capital," Lee says. It was just too early in the company's life cycle to produce the hard evidence of market presence that investors were insisting upon.

"VenGrowth just couldn't fund Zenastra on its own," Lee says.

Other investors in Zenastra's original funding included Bank of Montreal, Business Development Bank of Canada, Eastern Technology Seed Investment Fund, and Ventures West. It's not known which of these, if any, were potential contributors to the startup's last round.

Lee denies stories in the Ottawa business press last night that indicate Zenastra is in receivership. "This isn't receivership, there's no protection, it's bankruptcy," he says. He confirmed that financial services firm PricewaterhouseCoopers has been commissioned to sell Zenastra's assets and intellectual property.

Zenastra's demise was anticipated back in August, when the firm laid off over 60 percent of its staff and canceled plans for its own fabrication plant (see Zenastra Zaps Employees).

At that time, industry sources speculated that the startup had wound up devoting much of its precious capital to "me too" products while focusing on integrated components, during a time when arrayed waveguides (AWGs) continue to dominate the market.

Sources also compare Zenastra's plight to that of Nanovation Inc., which also bet on integrated optical components made of new materials, then wound up in dire straits when faced with what amounted to a long-term research project with little prospect of immediate financial gain (see Nanovation Files for Chapter 11 and Nanovation Up For Sale).

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
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LightBeating 12/4/2012 | 7:45:51 PM
re: Zenastra Photonics: RIP Excuse me, but $40M is an awful lot of money! It takes a huge amount of incompetence to burn that within a couple of years, and end up with no business at all! What do these people think?

Hard to believe the arrogance and incompetence of these so-called entrepreneurs. And the VC's who funded them are just as stupid!

LB
laughingboy 12/4/2012 | 7:45:50 PM
re: Zenastra Photonics: RIP You are ill informed.

Yes, it is a substantial amount of money. In the context of what was set out to be accomplished in the economic climate of 2000, I disagree that there was incompetence.
LightBeating 12/4/2012 | 7:45:48 PM
re: Zenastra Photonics: RIP Laughingboy,

No context is any excuse for burning $40M. The money has been spent freely, thinking that there would always be more. That's no way to run a startup company, or any company for that matter.

For one, you should develop a product and make sure it is saleable before building huge infrastructures like manufacturing plants. That can usually be done with much less money ($5M-$10M), and a pilot plant can generally be more than enough in a ramp-up phase. If the money is managed carefully, you can make it last for quite a long time in case devleopment takes longer than expected, or the market isn't quite ready for your product. That gives you the opportunity to turn around, and maybe do something else.

The arrogance is in thinking that your product is better than any other product, before you've even made one! And then placing all your bets on it.

I would be interested to see how much of that money was purely wasted on useless stuff. Posh executive offices, company cars and the like...Business class travel maybe?

Arrogance and incompetence, I don't see any other words for it.

LB
laughingboy 12/4/2012 | 7:45:47 PM
re: Zenastra Photonics: RIP Arrogance and incompetence? I disagree.

In your message I see speculation and information extrapolation.

Again, you are ill informed.
drone387 12/4/2012 | 7:45:38 PM
re: Zenastra Photonics: RIP Rumor had it that they shut down operations this week.

Pseudopersonality 12/4/2012 | 7:45:36 PM
re: Zenastra Photonics: RIP WOW!

That would be the fastest burn rate on record.

http://www.lightreading.com/do...
laughingboy 12/4/2012 | 7:45:35 PM
re: Zenastra Photonics: RIP I choose not to.

My bit is done by highlighting that your comments are only speculation, not factually based.

Last word.

LightBeating 12/4/2012 | 7:45:35 PM
re: Zenastra Photonics: RIP Laughingboy,

Well, then, please inform us!

LB
77thlightguy 12/4/2012 | 7:45:32 PM
re: Zenastra Photonics: RIP Zapton, Zenastra...is there a connection?
LightBeating 12/4/2012 | 7:45:31 PM
re: Zenastra Photonics: RIP Laughingboy,

I can only presume that you were (are?) working for Zenastra, or at least that you are close to people who work (worked?) there.

I find it very sad for all the people who worked there. I personnally know at least two people there (but haven't talked to them for a while). Who knows, maybe you're one of them?! In which case I'm sorry for you!

Your discretion honours you, but does no good to the curious reader... Maybe Lightreading could inquire a bit further into what really happened at Zenastra?

LB

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