Resonext Makes $25M Connection

Fabless semiconductor company Resonext Communications Inc. wants people to be able to connect to the Internet using technology other than the Ethernet jack in their cubicles. To that end, the company is expected to announce today that it scored $25 million from its venture backers to make the next generation of wireless local area networks (WLAN) a reality.

Invesco Private Capital and WK Technology Fund led the Series C deal. Rounding out the syndicate were existing investors Norwest Venture Partners, Bessemer Venture Partners and Oak Investment Partners.

Resonext is developing chipsets for the new 5GHz market using 802.11a protocol, says David Tahmassebi, chief executive officer at the company. Current WLAN products operate on a 2.4GHz band using 802.11b protocol. Resonext’s chipset provides WLAN users with more bandwidth and faster data transmission rates, he adds. The company is targeting potential customers such as original equipment manufactures, computer manufacturers and consumer electronics companies looking to capitalize on WLAN technology.

“They are playing in the enterprise space and more businesses are going to want to add mobility to their local area networks so employees can move their laptops from room to room, which means this is a real high-growth sector,” says Promod Haque, a general partner at Norwest. “A lot of products operate in the 2GHz space, so that area is really crowded, whereas the 5GHz space is not very crowded. You get better performance and less interference there. Businesses don’t mind paying more for this.”

The company will use the recent capital infusion to complete product development, ramp up production and build out its sales and marketing channels, as well as begin developing a future generation chipset, Tahmassebi says. The company plans to begin production of its first-generation chipset by the second half of this year, he notes. He declined to say when Resonext would reach break even or profitability, however.

For now, the company’s future financing plans remain up in the air. “We hope this is the last private round, but it is hard to project that. It depends on the economy and the growth in the WLAN market,” Norwest’s Haque says.

No thought has been given to the company’s exit strategy yet, either, as Resonext’s management team is simply focusing on moving quickly and getting its chipsets to market so it can begin winning customers, Tahmassebi says.

Alistair Christopher can be contacted at:

This is a free sample of content available to paid subscribers of Private Equity Week. Click here for more information.