VC watch: Mahi Networks raises $75 million

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• Mahi Networks raised $75 million in a fourth round of funding, bringing the company's total financing to more than $185 million. The Petaluma, Calif.-based company makes optical equipment for metropolitan telecommunications networks, which handles voice and data traffic within urban areas. It plans to use the funding to introduce its gear to the market. Mahi's main product, the Mi7, is in lab trials with four telecommunications carriers. The company expects to make revenue from the switch this summer, when carriers will use the gear to carry live customer traffic on a limited basis. New investors in the financing round include Rho Ventures, Oak Investment Partners, Jerusalem Venture Partners, Wasserstein Ventures and St. Paul Venture Capital, which led the round and gained a seat on the company's board of directors. Previous Mahi investors that also participated in the round include Berkeley International Capital, Mitsui, Anschutz Investment and Van Wagoner Capital Management.

• PortalPlayer, whose chip powers Apple Computer's iPod, has received $42 million in fourth-round funding. The lead investors in the latest round of funding were J.P. Morgan Partners, Investcorp International and Shamrock Capital Advisors. Other investors in PortalPlayer include CIBC World Markets, Linear Technology, LSI Logic, the Band of Angels Fund, Thomas Spiegel and Portal Partners. PortalPlayer, which was founded in May 1999, designs chips and software for digital audio players. So far the company has no announced customers, although its work with the iPod is well documented. The Santa Clara, Calif.-based company has 170 employees, including those at its headquarters, as well as offices in Seattle; Hyderabad, India; and Charlotte, N.C. A PortalPlayer representative said the new funding, which follows the $38 million raised in prior rounds, is designed to be the last round of financing before the company files for an initial public offering, although the company does not have a time table for going public.

• Broadview Networks raised $40 million in its sixth round of funding, bringing the communications provider's total equity financing to $235 million. Investors in this round include Baker Capital, ComVentures, New Enterprise Associates, Lightspeed Venture Partners and TIAA-CREF. The recent funding will be used to help integrate the acquisition of Randolph, Mass.-based Networks Plus, a local carrier start-up that Broadview bought last March, its fourth acquisition in less than eight months. New York-based Broadview offers local, long-distance and international phone and data services as well as dial-up and high-speed Internet access using DSL (digital subscriber line) technology. It serves small- to medium-sized businesses and residential customers in the northeastern and mid-Atlantic United States.

• Picolight took in $27 million for its fourth round of funding. The company makes optical components for telecommunications and computer data storage gear and will use the cash to continue to move toward volume manufacturing of its products. New investor St. Paul Venture Capital participated in the round along with previous investors Bank America Venture Partners, Charles River Ventures and Pequot Capital, all three of which contributed to the company's $38.9 million third round in October 2000 along with Cisco Systems and Corning. The recent round brings the total funding for Boulder, Colo.-based Picolight to about $80 million and gives St. Paul Venture Capital a seat on its board of directors.

• Inphi raised $24 million in its second round of funding, bringing the high-speed telecom chipmaker's total funding to $36 million. Walden International led the round, and Dali Hook Partners participated; both were new investors in Inphi. Tallwood Venture Capital and Mayfield also contributed to the recent round and invested in the company's first round in December 2000. Inphi, based in Westlake Village, Calif., plans to use the funding to develop new technology and move toward volume deployment of its existing optical chip products. The company is working on chips for optical equipment that run at 10gbps (gigabits per second), 40gbps and other speeds.

• Kasenna pulled in a $22 million second round of financing led by new investor Dresdner Kleinwort Wasserstein with contributions from other new investors such as The Entrepreneurs' Fund, CIR Ventures and Sun Microsystems. Investors in the recent round that also pitched in for Kasenna's $13.6 million first round in January 2000 are SGI, U.S. Venture Partners and Alloy Ventures. Kasenna makes video-on-demand software that manages, distributes and delivers video over IP (Internet Protocol), cable and wireless networks. The Mountain View, Calif.-based company plans to use the new funding to further develop and market its software.

• Filanet announced that it has raised $15 million in a third round of funding, led by previous investors Lightspeed Venture Partners and Canaan Partners. The round brings the company's total financing to about $40 million. Filanet raised an $18 million second round in December 1999. The new cash will be used to expand Filanet's sales, marketing and product development efforts. The Sunnyvale, Calif.-based company makes networking hardware for small- to medium-sized businesses or for remote offices of larger business. The gear provides services such as Internet routing, VPNs (virtual private networks) and firewall security.

• XtremeSpectrum closed a $12 million third round of funding. New investor POD Holding contributed to the round as did all the company's previous investors including Cisco Systems, Motorola, Alliance Technology Ventures, Texas Instruments, Granite Ventures and Novak Biddle Venture Partners. The Vienna, Va.-based company is developing chips that run on ultrawideband technology, a potential wireless networking standard that could allow consumer-electronics devices such as camcorders, laptops and digital cameras to send and receive video or audio data at high speeds. XtremeSpectrum plans to use the new funding to expand its customer support capabilities and to launch its products. The company expects to start shipping its initial products in the third quarter of this year.

• Mazu Networks raised $12 million in a second round of funding. New investor Pilot Ventures Group led the round, which included participation from the company's first-round investors Greylock, Matrix Partners and Benchmark Capital. Cambridge, Mass.-based Mazu Networks makes network-security software for businesses and will use the new financing to support its sales and product-development activities.

• CellGlide attracted $10 million from investors in its most recent funding round. TLcom Capital Partners led the round and gained a seat on the Israel-based company's board of directors. CellGlide makes equipment that wireless carriers use in networks that run on GPRS (General Packet Radio Service) technology. The company had previously raised money from Magnum Communications Fund, a venture capital fund that includes investments from companies such as Deutsche Telekom, KPN and Sonera, which is an independent shareholder in CellGlide.

• Broadband hardware maker Viadux received $10 million in its most recent round of funding, which was led by Ampersand Ventures and The Edgewater Funds. The company, formerly known as RC Networks, has raised more than $40 million in four rounds. It will use the latest proceeds to finance its sales and marketing activities and product development. Shares issued in the previous three rounds will be converted to common stock, while shares in the recent recapitalization round are preferred stock. Common stockholders usually have voting rights in a company, while preferred stockholders have preference over common stockholders in the payment of dividends and the distribution of proceeds from the liquidation of assets. The San Diego-based company makes broadband equipment that delivers high-speed voice, video and data services. Cable and telecom service providers install the gear in small- and medium-sized businesses or apartment buildings.