Despite the battering broadband stocks have received in the public markets, a pair of late-stage, privately held companies in the space managed to pull in more than $131 million worth of new money from the venture community within the past month.
First up is broadband content provider 2Wire Inc., which recently soaked up $65 million in its fourth trip to the private equity pool. The company is expected to announce publicly within the next two weeks that the deal has officially closed.
New investor Technology Crossover Ventures co-led the transaction, investing alongside repeat backer Oak Investment Partners. Among the other disclosed investors were Doll Capital Management, Meritech Capital Partners, Pilgrim-Baxter Hybrid Partners II, Venrock Associates, Chancellor V LP, EuroMedia Venture Fund and Invesco Private Capital, which pumped $2 million into the round.
“Later stage deals are more difficult to close, so it is a good sign that two investors wanted to lead. This company has a first-class management team with a large opportunity to gain traction in the [broadband] field,” said one investor familiar with the deal.
Another investor said he believed that this latest infusion would take the San Jose, Calif.-based company to the break even point within the next year. This round brings the company’s total venture capital take $142 million to date.
You’re Not Alone
2Wire business partner General Bandwidth also recently landed $66 million in a Series D round of financing. The Austin, Texas-based telecommunications equipment provider deploys voice over broadband technology for regional bell operating companies (RBOCs) and inter-exchange carriers (IXCs) like Verizon Communications Inc. and Sprint Corp.
Hoping to take advantage of that burgeoning market before its competitors get a chance to, General Bandwidth is focusing exclusively on offerings for those groups.
In addition to being business partners, 2Wire and General Bandwidth also share a common investor. 2Wire backer Invesco led General Bandwidth’s transaction with a $10 million contribution, and was joined by new investors Wheatley Partners, Granite Global Ventures and strategic player Texas Instruments.
An additional $43 million came from repeat backers Sevin Rosen Funds, Sequoia Capital, Oak Investment Partners, Venrock Associates, Trellis Partners, CIT Venture Capital, HLM Management and Thomas Weisel Capital Partners, which also placed the deal. General Bandwidth has raised more than $150 million worth of venture capital since its 1999 inception. The company raised $12 million in first round financing in September 1999, followed by $24 million in February 2000 and an additional $47 million last August.