Northstar Photonics gets $11 million venture capital funding
Steve Alexander
Star Tribune
Published Oct 3 2001
Telecommunications-component supplier Northstar Photonics
Inc. is expected to announce today that it has raised $11 million
in its second round of venture capital funding.
The financing, along with $10 million raised in preliminary and
first-round funding since mid-1999, is expected to carry the
26-employee, privately owned firm until it begins selling its
product, said Tom Oliverius, Northstar's finance vice president.
But he said the Maple Grove-based company hopes to raise an
additional $5 million in this financing round.
Northstar's device is a component of a fiber-optic
telecommunications line that helps boost speed and carrying
capacity. It is expected to begin producing revenue in the second
quarter of 2002, Oliverius said.
While telecommunications companies are out of favor on Wall
Street, St. Paul Venture Capital of Eden Prairie contributed $6
million to Northstar's fund-raising on the theory that such
investments will pay off in a year or two, said William Cadogan,
a general partner of St. Paul Venture Capital.
Cadogan predicted that Northstar Photonics' device will draw
sales because it is a comparatively inexpensive way to boost the
carrying capacity and speed of today's fiber-optic
telecommunications lines.
Northstar's strategy of boosting fiber carrying capacity will not
be derailed by a reported glut of long-distance fiber-optic
cable, Cadogan said. That's because it would cost more to bring
the excess fiber into use than it would to upgrade today's
working fiber-optic lines with the Northstar product.
"Excess fiber capacity and overinvesting are temporary telecom
issues that may hold down the market for six to 12 months,"
Cadogan said. "We feel strongly that the opportunity [for
investors] in telecommunications has been pushed out six to 24
months, depending on the application."
There were five other venture contributors to Northstar. Two
were identified: CIT Venture Capital of New Jersey and
InnoCal Venture Capital of California.
-- Steve Alexander is at
alex@startribune.com .
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