In a climate where big money is hard to come by, Celox Networks recently managed to nab $80 million in its third round of financing as it continues to develop equipment for telecommunication companies.
Led by Putnam Investments and Firsthand Capital Management Inc., the Series C deal brings the company?s total funding since its founding in January 1999 to $154 million. In September 1999 the company raised $7 million and then in April 2000, Celox landed almost $67 million.
In addition to Putnam and Firsthand, other new investors in this round include Dain Rauscher Wessels, JPMorgan Capital, Pacesetter Capital, SG Cowen and Thomas Weisel Partners.
Along with the new backers, many of the company?s existing investors from its first two rounds re-upped, they included: ABS Ventures, Adams Street Partners, A.G. Edwards, Apex Investment Partners, Bank One, Bay Partners, Hexagon Investments, Pilot House Associates, Rosewood Capital and Texas Pacific Group.
With a valuation in the hundreds of millions of dollars, Celox expects to be cash flow positive by the second half of 2002. An IPO is the desired next step but CEO Kent Mathy said the market will dictate when that happens. He added that AT&T Corp. and three other big telecom firms are currently testing of the firm?s products. Mathy, a former AT&T executive himself, said Celox hopes to log its first sale in the fourth quarter of this year. Celox?s SCx 192 is designed to enable inter-local exchange carriers, Internet service providers, application service providers, greenfields and cable operators to aggregate and deliver value-added IP services over any access connection.
“[Celox has] a sustainable technology advantage and a clear path to profitability,” said Rick Wynn a vice president at Putnam. “We believe they have a very strong position.”
IBM has also become an investor in Celox Networks, expanding its current technology and services relationship with the company.
Bruns Grayson, a managing general partner at ABS Venture said, “As many competitive carriers have disappeared, Celox Networks? focus on the immediate needs of service providers has created a market opportunity for the company. That?s why we invested in Celox Networks? second round and doubled our investment in the third round.”
The Southborough, Mass.-based company touts 285 employees. It plans to use the proceeds of this round for ongoing product development and to ramp up production of the Celox SCx 192 in anticipation of shipments to customers later this year.
Mathy feels this rounds not only gives Celox a fully-funded business plan but it also “puts us on the industry?s fast track, [as the] first customers are starting to test Celox SCx 192 with other trials to follow this summer. First shipments to customers for revenue are expected later this year.”
Contact Danielle Fugazy: Danielle.Fugazy@tfn.com