Ikanos Nets $25M Series C

Despite so-called tough times in the fund-raising trenches, at least one pre-revenue start-up recently managed to nab new money.

Fremont, Calif.-based Ikanos Communications Inc., a developer of next-generation broadband silicon solutions, is expected to announce today that it has raised $25 million from both new and existing investors in its Series C round.

To date, the firm has secured more than $42.5 million worth of venture financing.

Targeted at the telecom/datacom market, Ikanos’ chip sets are specifically for use in fiber-bandwidth over copper applications. Its product is intended to serve global broadband market applications in a single chipset, thereby slashing time to market and development costs for equipment vendors, the company claims.

For a two-year-old company to command $42.5 million in financing from the likes of new backer JPMorgan Partners, as well as existing investors Sequoia Capital and Greylock Partners “underscores what investors think of this company,” said Rajesh Vashist, president and chief executive officer with Ikanos. “We were clearly able to demonstrate that we bring significant value to our customers.”

Newcomer Walden International led the round, and was joined by first-time investor Ridgewood Capital. Returning players included Anthelion Capital and Telesoft Partners.

Danial Faizullabhoy, a partner at Walden International, has also joined Ikanos’ board of directors as a result of the financing.

Ikanos said it would use the capital to continue to fund research and development for next-generation chip sets, as well as build a sales team and acquire new customers.

Show Of Faith

The participating VC firms each had their own reasons for investing in Ikanos.

“Our thesis is of a large worldwide copper infrastructure that will demand high-speed broadband services, while fiber penetrates a fraction of the global market in the next decade,” said Faizullabhoy.

He added that Ikanos’ product architecture is “ahead of the competition. “

Sequoia, which has participated in every round of funding since the company’s 1999 inception, sees a huge market potential for Ikanos’ solution.

Ridgewood Capital Partner Joerg Sperling added that Ikanos’ experience in the semiconductor, telecommunications and data-networking industries gives the company a “unique, well-rounded approach to the marketplace.”

Vashist, a former executive with Adaptec Inc., said all three VC rounds have been oversubscribed “because new and existing investors clearly realize that we have the best broadband silicon in the marketplace.”

Ikanos also plans to make an eventual run at the public markets. “As we all know, the public markets are in painfully bad shape, but clearly the value we generate in this space will help us down the road,” he said.