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Matisse, An Optical Startup, Gets $45 Million

bigfootmoney.gifLarge funding rounds for startups dabbling in optical technologies were a regular affair back in the late 1990s, but lately they’ve become about as common as a Bigfoot sighting.

Today, Mountain View, Calif.-based Matisse Networks announced that it has raised $45 million in fresh capital from Merrill Lynch PCG ($35 million) and existing investors Menlo Ventures, Walden Intl., Woodside Fund and Monitor Ventures. The latest round brings the company’s total funding to date to $80 million.

Matisse is targeting the metro networks with what it calls “optical burst switching” technology. It’s a combination of two boxes: one is a photonic switch, the other, an Ethernet switch (with packet smarts) that maps packets to wavelengths. Based on where the traffic is going and the quality of service associated with the packets, the system assigns a wavelength in less than 50 nanoseconds.

Sam Mathan (who in his past life started and sold Amber Networks to Nokia (NOK) for $421 million in July 2001), told us in an interview that Matisse’s products are ideal for those who are looking to replace SONET and other legacy technologies.

Large telecom carriers, thanks to the growing demand for bandwidth (driven in part by video), are showing an increasing interest in optical Ethernet technologies, prompting equipment vendors to build what analysts refer to as “optical networking platforms.” With the consolidation in the carrier market, the equipment vendors find themselves on the back foot these days, often making deals that defy logic.

Still, Matisse counts Alcatel-Lucent (ALU), Fujitsu (FJTSY) and Ciena (CIEN) among its competitors, and as such is going to have to its work cut out for it in trying to convince carriers to do business with a startup.

* Cuban’s Theory & The Internet Infrastructure Questions.
* Divergent fortunes for optical hardware makers.

4 Responses to “Matisse, An Optical Startup, Gets $45 Million”

  1. Om,
    What do you think about Matisse now? They entered into a partnership agreement with South Korea-based iCRAFT, provider of core backbone network infrastructure and access migration solutions, for reselling and supporting its product line. But so far, it seems to be their only channel. They seem to be having a rather difficult time getting new customers.

  2. Om,

    I was a principal at Lantern – we were able to make a decent exit at $20M+ in 2004. Ours was great optical technology – I still swear by it. It was the business of selling large boxes to large, slow moving carriers that killed us.

    Matisse will have it’s task cut out. Many a startup has failed at selling to large customers – those who succeeded only did so because a large vendor got interested and acquired them (think Timetra).

    Those who succeeded by selling to small IOCs, are barely squeezing by. Not interesting enough to be acquired, not losing enough cash to die quickly (think Turin, Calix).

    And the list of dead optical startups can put shivers up any Entrepreneur’s spine – Tropic, Luminous, etc… Fire sales all…

    Best of luck Matisse – I wish you succeed where so many have failed!