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Funding for startups

Zepton Has an $86M War Chest

Zepton Networks Inc., the stealthy startup backed by a number of top-tier VCs, is quietly building up a healthy stash of cash. The company has bagged $86 million in venture capital funding since the beginning of this year.



In only two funding rounds -- a $50 million Series A round in April and a $36 million Series B some months later -- Zepton has amassed quite a war chest in a year when convincing venture capitalists to part with their money has been as difficult as teaching a mermaid to do the splits.

What's even more impressive are the names behind the company. Zepton's funding came from several investors, including Accel Partners, Applied Materials Ventures, Benchmark Capital, Juniper Networks Inc. (Nasdaq: JNPR), Kleiner Perkins Caufield & Byers, Sprout Group, Venrock Associates, and WorldView Technology Partners. CommVest LLC says it provided some debt financing for the company in June.

So, what is Zepton doing? Sources remain tight-lipped, and the company declined to return phone calls. But given the backgrounds of Zepton's managers, it stands to reason it would be a new kind of optical transport system with proprietary component-level technology.

It's clear that one reason the VCs involved are so giddy about the company is because of its management team. When times are tough, it's easier to bet on someone with past successes.

Jagdeep Singh, Zepton's founder and CEO, co-founded Lightera Networks (now a part of Ciena Corp. [Nasdaq: CIEN]). Later, he helped start a metropolitan area service provider company called OnFiber Communications Inc., which also attracted investments from KPCB (see Kleiner Perkins Scales Back).

The rest of the team is a combination of people that had worked with Singh on his two previous companies and others from large component and software companies. Drew Perkins, another Zepton founder, followed Singh from his two previous startups (see Zepton: Take Me to Your Leaders and OnFiber: Bottoms Up!).

"The majority of optical startups should not have been funded because they have no differentiating intellectual property to add to the industry," says Venrock's Tony Sun. "The problem is that there is too much capital available in the venture industry and every fund believes they are funding the winner. We believe Zepton is one of the few winners in the industry."

The company opted to close a second round partly because "they were being proactively contacted by interested investors and interested partners who wanted to invest," says Peter Wagner, a general partner at Accel. "Obviously, it's important to have the cash to fulfill your [business] plan and, given the interest that was there, it seemed sensible for the company to bring in some of these folks onto the team."

Founders Singh, Perkins, and David Welch; Benchmark's Alex Balkanski; KPCB's Vinod Khosla; Applied Materials' Dan Maydan; and Juniper's Pradeep Sindhu sit on Zepton's board.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
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Bill Johnson 12/4/2012 | 7:23:55 PM
re: Zepton Has an $86M War Chest "Bill -- which competitors would you say are a head of them in the same field. ---------------------------------------------
abouttofoldnetworks.com"

Hey everybody! HarveyMudd has competition. Someone as ignorant but wait, this one can spell. 8point, I apologize if you were being humorous. If you were merely trying to be clever, than I stick to my HarveyMudd comment.

8point 12/4/2012 | 7:24:07 PM
re: Zepton Has an $86M War Chest ---------------------------------------------
Bill -- which competitors would you say are a head of them in the same field.
---------------------------------------------

abouttofoldnetworks.com
Scott Raynovich 12/4/2012 | 7:24:09 PM
re: Zepton Has an $86M War Chest >Wish that I could reveal their names; however, I >have signed an NDA and respect their choice to >remain in stealth mode at this point.

Bill--okay. Do you have any distant cousins with Hotmail accounts? If so, tell them to pass the news on to me at [email protected]
Bill Johnson 12/4/2012 | 7:24:11 PM
re: Zepton Has an $86M War Chest Scott,

Wish that I could reveal their names; however, I have signed an NDA and respect their choice to remain in stealth mode at this point.
Jahnun 12/4/2012 | 7:24:16 PM
re: Zepton Has an $86M War Chest They are doing Indium phosphide stuff- late in the game - oh-hum
boson3 12/4/2012 | 7:24:45 PM
re: Zepton Has an $86M War Chest They are going to try and build smaller optically based (light switched) systems such as ADM and Routers. They plan to play in Metro Space and CO enviroments

So what's wrong with pink flamingos?
Scott Raynovich 12/4/2012 | 7:24:50 PM
re: Zepton Has an $86M War Chest Bill -- which competitors would you say are a head of them in the same field.
theanswer 12/4/2012 | 7:24:51 PM
re: Zepton Has an $86M War Chest They are going to try and build smaller optically based (light switched) systems such as ADM and Routers. They plan to play in Metro Space and CO enviroments.
photons-r-us 12/4/2012 | 7:24:54 PM
re: Zepton Has an $86M War Chest Zeptons has a a very powerful and distinguished management team and financial backers. They understand the nature of the current downturn. They would not start and/or fund anything that is incremental. Look for a powerful company with new ideas and products in the future.
hogdog 12/4/2012 | 7:24:59 PM
re: Zepton Has an $86M War Chest Very well thought out 8point.

Do you want to go visit our boy Harvey Mudd at the new Dell Taco today?

I'm very pleased to say, Mudd was hired as a an assistant manager. Store 509 in San Jose.

Have you checked out that new Usher CD?
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