By Sean Wolfe
It's not often a venture capitalist invests in a telecommunications infrastructure company, which is why Onset Ventures announcement today of a $7.1 million first round of financing for a Campbell-based company is so unusual.
The company, Brilliant Telecommunications makes a device that measure time down to the picosecond, and its aim is to disrupt markets dominated by companies like Symmetricom, IDT, and others.Asset Management, Draper Associates, Draper Richards and Intellect Capital Ventures also participated in the round.
Tier 1 telecommunication firms and cable companies use time-synchronization solutions to support applications related to network security, billing systems, electronic transactions.As major carriers contemplate advanced services like media delivery using Internet protocols, timing and synchronization become even more important.
Onset’s bet is that the need for infrastructure upgrades will fuel demand for Brilliant’s products.Susan Mason, general partner at Onset, said the opportunity is spurred by the need for traditional networks to interface to Internet Protocol-based networks, without dropping calls.That Brilliant has been able to pull that off is a key achievement.
“The networks have discovered that the users of the world want things instantly, so batch or delay in signal isn’t possible,” she said. “The carriers know there’s a need for timing synchronization, and the question they ask is ‘is this the right one for me?’ With Brilliant, the checkout time is really rapid, less than 90 days, so they can get it through lab trials and into operation quickly.”
That plug and play aspect is key, because telecom and cable companies are (again) trying to beat each other to market with advanced services.
“They have a lot of these cool applications coming down the pipeline, and the infrastructure needs to be upgraded quickly, because what has been used in the past is really archaic.”
“The players in space been around for 50 years, and there hasn’t been a tremendous amount of competition or strong advances in the space. They’re big, they have a captive audience, but we intend to be a disruptive influence,” said Link Verstegen, VP of sales at Brilliant.
Besides vying to offer greater accuracy than its competitors, Brilliant’s other selling point is ease of installation. Providers like Symmetricom typically uses a product that comes in two parts—a global positioning receiver antenna, typically shielded by a weatherproof enclosure, and a massive cable that drops from the antenna to a rack-mounted server.
“It’s a rigid cable, it’s tough to install, it has a wide bend-radius, and you have to bore huge holes through floors just to get the GPS signal inside,” Mr. Verstegen said.
“Ours has zero-footprint. It’s a standard Ethernet cable that goes direct to the datacenter, which you can toss over rafters or drop down a heating duct.”
But disrupting the businesses of established players won’t be easy. For one, Symmetricom has a market cap of around $400 million, and a price to earnings ratio of 433.5, indicating investors are expecting exceptional earnings growth in the future.The annual (2006) figures for Symmetricom show a company whose revenues have been largely flat year-to-year, hovering around $188 million. But its cash flow has fallen off dramatically, from $17.9 million in 2005, to $3.8 million in 2006.
Earlier this month, the company acquired Camarillo, California-based QoSmetrics for $16 million.That company makes testing equipment used to monitor IPTV, VoIP and video-on-demand streams.Prior to the sale, QoSMetrics had received venture backing from CDC Enterprises Innovation, Innovacom, and TechFund Capital.