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While long-time investors in Atrica Inc. must have winced at the reported $100 million sales price for the optical networking startup, more recent backers are breathing a sigh of relief after Nokia Siemens Networks picked up the seven-year-old company in a deal to bolster its metro-ethernet capabilities. Atrica raised more than $180 million over five rounds going back to 2000, as the late-bubble company promised to avoid pitfalls of older networking players and develop products for a changing marketplace. Atrica even landed a healthy $75 million second round in February 2002 in a climate where plenty of more highly capitalized peers were getting haircuts to stay afloat. In that round, the company drew capital from St. Paul Ventures (now VesBridge Partners) as lead investor and eight other new investors, along with five returning backers. Its strategy at the time: drive profitability by developing products compatible with existing telecom infrastructure, a departure from bolder startups pushing the networking frontier. But with the nuclear winter in carrier spending extending even to compatible upgrade technology, Atrica limped along, with investors putting up a final $28 million in debt and equity in a fifth round in April 2006. Long-suffering VesBridge co-led the recapitalization in that round, along with new investor GunnAllen Venture Partners and strategic backer AT&T Corp. Although the deal is no great coup for Atrica and its investors, Nokia Siemens' interest as a buyer does validate more recent investments that are staked on the future of ethernet technology for carriers. Om Malik points out that the strength of new ethernet technology in telecom networks may be especially promising in emerging markets. - Clifford Carlsen See Oct. 25 story from Reuters See February 2002 story from TheDeal.com See May 2002 story from TheDeal.com See April 2006 story from The Deal.com See Sept.6 story from The Deal.com See Oct. 25 post from GigaOm
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