Telica gets $60 million round

Telica yesterday announced it has received $60 million in its third round of funding, which company officials believe will be enough to finance the next-gen switch vendor to profitability.

CEO John St. Amand said Telica initially was seeking $40 million in the round but opted for $60 million when it was clear that investors were willing fund the additional amount. With the extra $20 million, Telica is funded into 2004 even in the “worst-case scenario” of a continued slump in telecom spending, St. Amand said.

“It’s pretty evident that 2002 is going to be a slow year and that the first half of 2003 is going to be tough, too,” he said. “So we decided an extra $20 million in place would act as a large insurance policy protecting the long-term viability of the company.”

Investors were willing to increase Telica’s funding largely because of its relationships with customers such as Verizon Communications, the largest carrier in the U.S., and a worldwide OEM agreement with a large equipment vendor that will be announced within the next five months.

While other companies are getting funding, most of the financing activity has been happening only after a company restructures to drastically reduce its expenses. But Telica was able to secure the $60 million round because it met the criteria for today’s investors: revenue generation from credible customers with “very good margins,” St. Amand said.

These same characteristics also are the features Wall Street likes, which is why St. Amand wants to take the company public--possibly within the year. Meanwhile, Telica plans to develop more services to its Class switch and expand its customer base to international markets.