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Credit crunch for start-ups
Investing in R&D remains a continuing problem for optical networking companies both large and small, and the fact that venture capital firms like Europe's 3i Group plc now says it will stop investing in early stage start-up companies will not come as welcome news for the industry.
You can see it from 3i's point of view though. Past investments in optical components makers include Intense Photonics, Indigo Photonics, Kamelian, ilotron, and Polatis. Intense survived by diversifying, and Polatis is still out there building its optical switches, but neither has made it to IPO or acquisition, while Indigo, Kamelian and ilotron called in the administrators. That's not to say there haven't been any successes for 3i in the optical arena — planar lightwave circuit maker Kymata was sold to Alcatel (as it then was) for $119 million — but I suspect that VC firms usually aim a little higher.
On the other hand, as the financial industry is so fond of telling us: past investment performance is no guide to the future. It's a shame that 3i is quitting on start-ups at a time when R&D investment is so sorely needed.
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