Tejas Networks gets $15m in 3rd round funding

Set to become OEM supplier to global network major

Tejas Networks, which makes boxes (as proprietary hardware is called) used by telecom companies to transmit optical signals, has won a third round funding worth $15 million, from a US-based venture firm Battery Ventures.

Tejas will use the money to buy/develop technologies within the segment it operates, and to go in for international partnerships, Sanjay Nayak, the startup's managing director and chief executive officer told reporters here on Thursday.

This latest round takes money invested in Tejas by various venture funds to nearly $30 million. Battery Ventures, which is providing the funding, will have one of its partners, Carl Stjernfeldt, on Tejas' board of directors.

"There is a shift in the business models of large telecom companies in the US," Stjernfeldt said, "part of which is a recognition that a lot of work can be done in India."

Tejas, a four-and-a-half year old startup, wants to make products for original equipment manufacturers with global reach to grow its business. "We want to see if we can conceptualise, design, develop, manufacture and then sell a product successfully in India.

After that we want to take that product global," says Gururaj (Desh) Deshpande, chairman of Tejas. Dharwad-born Deshpande, who has made Canada his home, was one of the poster boys of the dotcom boom. Sycamore Networks, an optical networks company which he still heads, at the peak of the boom made him one of the richest people in the world.

Tejas' 160-member staff fully design the optical signal transmission boxes whose manufacturing is then outsourced. This makes the company a 'fabless' manufacturer, that is the fabrication is done by another party.

The software and hardware design are very sophisticated and helps a telecom company route signals through networks and allocate bandwidth on demand.

"We don't have the capability to go after billion dollar deals ourselves, but our partners will. We will then be suppliers to them to the tune of say $50 million for every billion dollar contract they win to set up optical networks," Deshpande says. Western telecom equipment vendors, who now have to compete directly with China, will prefer to work with companies like Tejas as their OEM suppliers.

The Indian market too presents big opportunities, for in the coming years it will explode, he says, alongside China. India was not far away from that 100 millionth cell phone.

The next opportunity was in providing broadband connections. "Cell phone volumes will grow easily now, but the real challenge and opportunity is to take India to the 100-million broadband connection stage," he says.

Other investors in Tejas include IL&FS Investment Managers, Intel Capital, Sycamore Networks and ASG Omni. Indian customers of Tejas include RailTel, MTNL, BSNL, Tata Tele and VSNL.