Telecom Startup Draws $435M In Venture-Capital Funding - InformationWeek

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Telecom Startup Draws $435M In Venture-Capital Funding

A telecom startup shed the veils of stealth mode in dramatic fashion Friday with a $435 million round of funding from 10 investors, the third-largest venture-capital round on record. The news bucks conventional wisdom on two fronts: that VCs are now scared of big deals and that they won't fund companies that lack revenue.

Sigma Networks Inc., a network services company providing broadband interconnect services within metropolitan area networks specifically for carriers and hosted applications providers, plans to disclose its first customers this week.

Sigma says it's the first independent provider that, unlike traditional networks designed to bring all traffic to a backbone network, can link digital subscriber line, cable and wireless networks, and nationwide hosting facilities with people and businesses.

President and CEO John Peters expects the near-record round of fund raising to be Sigma's only one. "Its important today to be raising as much as you need to get to some stage of profitability," he says. "The bad news is it's tough to raise money. The good news is those of us able to raise it have fewer competitors to deal with, because fewer companies are getting funded."

The company--which already has 115 employees and whose board includes Netscape co-founder Marc Andreessen and Reed Hundt, former chairman of the Federal Communications Commission--will use the proceeds to develop software and to purchase equipment and real estate to house that equipment nationwide.

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