Picolight Turns On $38M Series B Deal

With venture investors hedging their bets against the dotcom fallout in the telecom infrastructure space, optical components manufacturer Picolight Inc. cashed in last week, scoring $38.9 million in a Series B deal.

The most recent round of funding was completed in two tranches: Bank of America Ventures, Charles River Ventures and Pequot Private Equity LP came into the deal in August, while strategic investors Cisco Systems Inc. and Corning Inc. announced their involvement just last week. Michael Karfopoulos, general partner with Pequot, took a seat on the company?s board as part of the transaction.

Bank of America and Charles River seeded the company with a $10.85 million Series A deal in November of last year. Bank of America was also Picolight?s angel, investing $3.5 million in January 1998.

With headquarters in Boulder, Colo., Picolight currently manufactures transceivers, integrated circuits that deliver gigabit-level bandwidth to telecommunications switch and storage-area customers.

“This is fairly salt of the earth stuff. This is not out there, out on a limb. This is a standard part of the market,” said Chris Baldwin, partner with Charles River and a member of Picolight?s board.

Although Picolight has no formal business relationships with either Cisco or Corning, they are expected to develop over time, Baldwin said. And while the company ships ten of thousands of lasers and even more transceivers per month, neither Cisco nor Corning are Picolight customers.

Both, however, have a stake in expanding the interconnectivity at the edge of fiber optic networks to include the metropolitan access and storage access network providers Picolight serves.

“What Cisco wants to do is invest in innovative optical components companies because it doesn?t have optical components capabilities,” said Picolight Chief Executive Stan Swirhun. “It?s interested in the vitality of other optical businesses.”

Not only will the added equity infusion go toward driving sales and marketing efforts for the existing product line, but it also will be invested in developing new technologies ? faster and wider fiber optic transceivers. It will also be used to ramp up manufacturing capabilities.

The most recent equity infusion will give the company sufficient time to consider other financing options, Swirhun said, although there are no immediate plans for either another round of venture financing or an initial public offering. The company is looking to reach profitability over the next 12 months.