In an unanticipated return to the private equity market, Luminous Networks recently raised $80 million in an oversubscribed Series D round of funding. Last May, the Cupertino, Calif.-based issuer raised a $60 million round that it expected to be its last, but market conditions forced the company to stay its IPO plans indefinitely.
Pyramid Technology Ventures led the new transaction with a $10 million commitment. Other first-time investors included C.E. Unterberg Towbin Advisors, CIT Venture Capital, Crown Advisors, Easton Hunt Capital Partners, Firsthand Capital Management, Kingdom Capital, Pacific Venture Group, Rosewood Capital Management, Sternhill Partners, Hakuto Co. and Samsung Corp.
Previous investors that jumped on for what is expected to be Luminous’ last ride on the VC train included Scientific-Atlanta, Doll Capital Management, DynaFund Ventures, Morgan Stanley Venture Partners and Vanguard Venture Partners. Robertson Stephens placed the deal.
Luminous, which developed an optical Ethernet platform for metropolitan area networks that aims to solve the 50-yard bandwidth bottleneck for telecommunications carriers and cable service providers, doesn’t plan on rushing back to the public markets. “Without Luminous’ technology it’s like having highways and no on- or off-ramps,” said John Hamburger, Luminous’ director of marketing. He added that the round was expected to take Luminous to profitability.
Currently, the company is focused on shipping products and building a strong revenue base domestically and abroad, which is what made Pyramid an attractive lead investor. With offices in San Francisco and Paris, the VC can bring Luminous potential customers through its limited partners, which include European telecom conglomerates.
Even without the help of Pyramid, however, Luminous is already shipping to China NetCom Corp. Ltd., the third largest carrier in China, and is in talks with other carriers in the U.S., Europe and Asia.
Even though the company’s VC money has been flowing generously, no one is denying that there is serious competition in the sector from companies like Multiplex Inc., which raised $105 million last month. “There is lot of competitors because it is a competitive market, but that is what we’re about. It’s fun,” said Marc Cellier, a partner with Pyramid. “The main challenge Luminous faces is managing its growth, which can be difficult.”
The new capital is expected to last 18 to 24 months and will be used for the development of hardware, software, and customer service. Luminous had only planned to raise another $60 million round, but received interest for more than $120 million.
Contact Danielle Fugazy at: Danielle.Fugazy@tfn.com