SolarFlare Heats Up Local Venture Funding with $17.5M Round
By ANDREW SIMONS
Get out the gift basket: Orange County’s first venture funding of the year has arrived.
Irvine-based SolarFlare Communications Inc. last week closed on a $17.5 million second round of funding, more than the company previously said it was seeking.
The round was led by Santa Monica-based Anthem Venture Partners and included a chunk from Intel Corp.’s venture arm.
Other investors were Corona del Mar’s Miramar Venture Partners, San Diego-based Windward Ventures and two firms from SolarFlare’s first round, Foundation Capital and Sequoia Capital, both of Menlo Park.
SolarFlare scored its first round of funding,$12.3 million,in 2001. In late November, the company said it was looking to raise $13 million.
Venture funding has been scarce for startups. Investors put just $4.5 billion into emerging U.S. companies in the third quarter, the lowest level since 1998, according to a joint study by PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association.
The county’s share of the funding was $140 million in the quarter, 10% less than the year-ago quarter’s total.
And it appears that OC fundings were slim in the fourth quarter, too, though the tally won’t be available for a few weeks.
Where money once flowed into companies that do business over the Internet, what funding there is has shifted to companies that make the pieces of data networks.
Among those are designers of communications chips,SolarFlare’s specialty.
SolarFlare said it will use the funding to push development of its chips, which it hopes will allow current networking gear, which transfers data at around two gigabits per second, to interact with newer gear, which will transfer data at 10 gigabits per second.
The company hopes to cash in on companies’ need to transfer data around their networks at much faster rates without replacing expensive equipment.
Storage networking gear companies, such as Costa Mesa’s Emulex Corp. and Aliso Viejo’s QLogic Corp., have been upgrading to 10-gigabit gear.
A challenge for SolarFlare will be to keep the cost of its chips low.
The company plans to use contract manufacturers to produce its chips, which makes it essential for the company to design chips using cheaper materials.
All of SolarFlare’s management team hails from PairGain Technologies Inc., the former Tustin-based company that’s now part of ADC Telecommunication Inc.
Irvine-based Broadcom Corp. founders Henry Samueli and Henry Nicholas also worked at PairGain.
Though the company won’t talk about its plans, SolarFlare’s chips could be attractive to networking chipmakers such as Broadcom or Newport Beach-based Conexant Systems Inc.
