The addition of U.S.
investor Rho Ventures to an Israeli syndicate backing Tel Aviv-based
Celtro Ltd. upped the stakes for the once-relatively modest equipment
startup, more than doubling its invested capital with a new $20 million
round.
It also landed Celtro a valuation of more than $100 million,
thanks to the rapid growth of wireless data traffic in Europe, Latin
America and Asia-Pacific, and the anticipated expansion of services in
the U.S.
Spinning off technology from Israeli telecommunications equipment
vendor ECI Telecom Ltd. in 2003, founders of Celtro figured they could
turn core technology developed there into products for a healthy niche
market in cellular backhaul switches. Wisely, ECI kept some stock in
the company as it spun it off with backing from Israeli venture firms
Genesis Partners and the Cedar Fund, along with spinoff specialist
Momentum Group and the affiliated Israel Discount Capital Markets &
Investments Ltd. Fund. Company executives and investors
universally express surprise at how fast and how robustly the market
has grown.
"We focused on optimizing throughput for cellular backhaul, but the
market is much bigger than we anticipated because of 3G and data
services," said Celtro CEO Ron Zor. "The market for switches is now $2
billion in sales to mobile operators, and we believe our switches have
the ability for better throughput and multiplexing."
Wireless carriers require backhaul services to route network traffic
on leased or built networks of wired or wireless high-volume
connections, and the need for switches to handle traffic was clear from
the beginning. But the acceleration in traffic caused by the rapid
deployment of new data and media services has vastly expanded the need
for handling backhaul traffic efficiently to maximize bandwidth.
Faster-than-expected growth in the backhaul market has allowed
Celtro to get close to positive cash flow on previous investments, but
Zor said the new round will allow the company to accelerate global
expansion and turn profitable soon. The company is aiming for a public
offering to provide its next round of capital, as it establishes a
strong presence in the U.S. as demand grows for wireless data
services.
Genesis managing partner Eyal Kishon noted that the firm invested based on a recognized need for creating backhaul.
"We were lucky," Kishon said. "We really didn't think it would grow as fast as it has." - Clifford Carlsen
See May 13 press release from Celtro Ltd.
For more, see GigaOm and CommsDesign
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