CityNet on Tuesday said it has secured $175 million in its second round of financing and another $100 million in debt financing, which is a loan the company plans to pay back later. The company previously received $100 million in its first round of funding last year.
The 2-year-old start-up builds fiber-optic networks directly to city buildings, then leases its network to telecommunications service providers that offer high-speed Net access to businesses.
A CityNet spokesman said the company will use the extra funding to expand its network. The company, which builds the fiber-optic networks through city sewer systems, will share its profits with the cities they build their networks in. So far, CityNet has struck deals with the cities of Indianapolis, Albuquerque, N.M., and Omaha, Neb.
CityNet is the latest telecommunications start-up to capture interest from venture capitalists and corporate investors despite a tepid market. GiantLoop Networks, which uses gigabit-speed Ethernet and optical technology to provide fast Net access and private networks to businesses, recently raised $120 million in its third round of financing. Similar start-up service providers Yipes and Telseon recently received about $200 million each in additional funding.
CityNet's investors in its second financing round include Berkshire Partners, Trimaran Capital Partners, Great Hill Partners, and Fay Richwhite.