Syndeo Hears A Fortune Pour In

In a deal that rekindles the go-go era of 1998-99, Syndeo Corp., a voice-over IP switching network, secured a whopping $75 million in its Series C round. According to VentureXpert, it is the eighth largest deal completed this year.

The Campbell, Calif.-based company’s technology allows cable companies to offer telephone service, rather than just cable and Internet services. Syndeo’s product, the Syion 426, is designed to support regulatory services such as 911, operator services, and carrier pre-select, enabling cable operators to offer primary line voice services, which is unique.

“Cable companies want to add services to their network and voice is one of those services. We provide the switch for them to do that,” says Ted Griggs, chief executive of Syndeo, adding that the competition can’t integrate the service like Syndeo does.

The deal, co-led by Comcast Interactive Capital and IUGO Ventures, includes participation from AOL Time Warner, Cox, Rogers and Shaw through their respective venture arms. Other investors include Critical Mass Ventures, Intel Capital, Invemed Fund LP, Meritech Capital Partners, Presidio Venture Partners, Redpoint Ventures, Scientific-Atlanta, Sumitomo Corp., Sun Microsystems, WK Technology Fund and YAS Broadband Ventures.

The round took over 14 months to complete. Louis Toth, principal of Comcast, says it is unusual to see so many cable operators band together. “A number of us have come together around this company. That really says something for Syndeo and the fact that cable operators are taking voice-over IP seriously now,” he said.

Toth and Francois Laflamme, of IUGO, have joined Syndeo’s board of directors as a result of the round.

Looking ahead Syndeo is expected to spend the bulk of the next year developing and testing products. Although some products are already being used, every new customer has to go through the lab trial and development period. The company has been seeing revenue for six months and expects to hit profitability in 2003.

As for a next round – with $75 million – there isn’t going to be a next round. “This is our last round. We look like a good company for the public market, but you never know. We built this as an operating company, which leaves us with opportunities to get involved with a strategic partner or something else,” Griggs says.

To date the company has raised approximately $98 million. Its first round, which coincided with the company’s founding, yielded $5 million. Brentwood led that round. Then in April 2000, Redpoint led an $18 million Series B round.

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