The big-name backers joined Finisar, Intel Capital and TriQuint Semiconductor in the Series C round of financing. Gemfire, a start-up, has raised a total of $85 million, taking into account earlier backing from Kleiner Perkins Caufield & Byers, Mohr Davidow Ventures, Spring Creek Partners and Hook Partners.
Gemfire, which will formally unveil its plans Monday, makes optical-networking components--one of many start-ups attempting to exploit what is expected to be a lucrative niche. The company intends to integrate the functions of several parts in its components and will introduce two new products Monday.
Some of the company's investors, which also include Eastman Kodak, Microvision and Ricoh Silicon Valley, among others, believe Gemfire's parts will lower the cost of optic systems because the components are capable of performing multiple functions.
"Optical components are a very scientific field. They require Ph.D.s. They're very small, specialized pieces of equipment," said Marc Liggio, vice president of broadband research at Allied Business Intelligence, a market analysis firm. "So in that respect they can work as a small company.
"You don't have to be Lucent to find a niche in this market," Liggio said. "With guys like this you're investing in brains and in the number of patents they have."
Gemfire is the latest example of an optical-networking company securing funding despite the difficult environment for venture capital. As the economy slows and investors become more cautious, many are scrutinizing start-up companies like never before.
Still, many in the market believe that communications infrastructure companies, particularly optical start-ups, remain a strong bet.
For example, Onetta recently received $56 million in funding, and several tunable optical laser companies also have received funding in recent weeks. Other communications and networking infrastructure and software companies have continued to obtain financing.
"The reality is that for the companies that are in a position to do so, this is an opportunity to gain an early stake in a market that will be big," said Rick Tompane, chief executive at Gemfire.
Founded in 1996, Palo Alto, Calif.-based Gemfire has about 100 employees. The company also plans to introduce samples of two of its products Monday and expects to tout them more broadly at the upcoming OFC 2001 conference in Anaheim, Calif., later this month.