Founder Of Siara, Cerent Unveils Next Startup
roshnee.com
By Om Malik
Roshnee, which literally means light in Hindi, is coming out of the dark.
The Los Altos, Calif.-based startup founded only six months ago announced this morning it received $11 million in funding from an assortment of Silicon Valley veterans and top-tier venture capital firms.
Roshnee, which has been keeping a low profile for the past six months, was cofounded by Rajvir Singh, a general partner at the venture firm Redwood Ventures; Vinay Kumar, the Roshnee chief executive; and other executives at the company.
Singh has been on one heck of a roll. The 53-year old native of India was also the founder of StratumOne, Siara Networks and Cerent. Siara was sold in November to Sunnyvale, Calif.-based equipment maker Redback Networks (Nasdaq: RBAK - news) for a whopping $4.3 billion. That deal came a month after Singh sold Cerent for $6.9 billion to Cisco Systems (Nasdaq: CSCO - news).
Singh and his partner Raj Parekh have decided to turn their venture capital company into a telecommunications incubator modeled after CMGI (Nasdaq: CMGI - news), which will be headed by Sanjiv Ahuja, until recently president of Telcordia Technologies.
Roshnee is focusing on the optical-networking equipment for the service provider market. Roshnee's backers include Redwood Ventures, New Enterprise Associates (NEA) and Raza Venture Management--the venture firm started by Atiq Raza, former chief operating officer and president of Advanced Micro Devices (NYSE: AMD - news). Roshnee is headed by Vinay Kumar, who until recently was a general manager at Picturetel, a videoconferencing software and hardware maker.
Roshnee is one of the many optical startups, which are finding easy funding from the venture capital community. Optical networking is one of the hottest areas of investment for the venture capital community. Nearly $849 million was invested in optical networking startups in 1999, up from $329 million in 1998, according to Venture Economics/Thomson Financial, a Newark, N.J.-based market research company.
The state of optical networking funding is akin to the late '80s when dozens of local area networking companies were funded, although only a handful survived and emerged as leaders. With no clear leaders in the optical-networking space, venture capitalists are betting on almost any and every interesting startup.
Optical networking is being viewed as the holy grail for eliminating bandwidth constraints that have arisen due to explosion in data traffic, which is fast outpacing voice traffic on the public networks.
Network operators like AT&T (NYSE: T - news) and Sprint (NYSE: FON - news) need to boost capacity of their networks, and optical-networking technologies are one way of unclogging the pipes.
Until recently, fiber-optic cable could carry data at speeds of 10 billion bits per second. However, thanks to dense wavelength division multiplexing technology, the capacity can now be boosted tremendously. DWDM technology can be used to split the light beams, much like a prism, into 10 to 30 streams.
This means that the capacity of a single cable can be increased ten- to thirtyfold. It is now an essential piece of the new generation networks being put in place with companies like Williams (NYSE: WM - news) and Qwest Communications International (NYSE: Q - news).
More and more startups are working on new equipment, which will boost the data traffic flow on the networks even further and at some point help replace the copper cables with pure fiber altogether.
While many of the optical-networking startups are months away from delivering any actual products, investing in them is equivalent to pumping money into dot-com companies in 1999. Venture capitalists are betting that one of their companies will emerge as the next Cisco or Sycamore Networks (Nasdaq: SCMR - news).
Roshnee is developing equipment focused on next-generation, all-optical networks, which will allow customers to get as much bandwidth as they need with one click of a mouse. This is a holy grail for most of the networking startups, given that it takes more than three months for a corporate customer to get a dedicated high-speed data line from the service providers. One of the leaders in this space is Sycamore, which is betting that it would have products ready by 2001 that guarantee bandwidth on demand.
According to RHK, a San Francisco-based market research firm, the market for optical-networking equipment such as Roshnee's will grow to more than $6.5 billion in 2003.
``We see Roshnee as a Juniper Networks-class startup--an experienced team that is willing to do the tough work to fundamentally change the networking landscape,' says Rob Coneybeer, partner at venture firm NEA.
And if it does not deliver Juniper-type stock market returns, then Coneybeer and his co-investors could sell Roshnee to Cisco or Nortel Networks (NYSE: NT - news) and make a tidy profit on their investment, … la Cerent.
Related stories: The Fiber Raj Life After AMD: Raza Wants To Be A Venture Capitalist Optical Networking Is No Mirage
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