The fibre-optic industry is in the depths of a sales collapse, but some big players are rallying around a promising Ottawa startup.

JDS Uniphase Corp. and Corning Inc., the giants of the optical component and fibre industry, joined several earlier investors yesterday in pumping another $88 million into Innovance Networks.

Innovance, which has cut staff by about 25 employees since January to conserve cash, has now raised $240 million, second only to Catena Networks' $307 million among Ottawa startups. The Canadian Venture Capital Association said $4.9 billion was invested in Canada last year, down 27 per cent from a year earlier.

But communications companies such as Innovance generally kept their share of the pie. Brand-new startups were the big losers as follow-on investments to established startups rose to 70 per cent of all funding. Ottawa companies attracted $1.1 billion and withstood a sharp decline of funding to other Ontario startups.

Sales of optical systems around the world fell another 26 per cent during the December quarter to $2.8 billion U.S., the worst decline since the industry went into a tailspin a year ago.

Innovance is one of a handful of well-funded startups that appear to have the best chance of surviving the market collapse.

Since November, Innovance, Catena and Accelight have raised $300 million in fresh funding as patient venture capitalists have increased their bets that demand will return.

But they have had to accept much more onerous terms than during the boom of a year ago.

Rising layoffs, lower company valuations and diluted founders' stakes have become the price of survival.

Innovance said the investments will support the launch of new products following the completion of trials with some North American service providers.

Besides Corning and JDS, seven venture capital companies participated in the new funding round: Advanced Technology Ventures, Morgenthaler, Thomas Weisel Capital Partners, Azure Capital, Banc of America Securities LLC, Kalkhoven, Pettit & Levin Ventures and Archery Capital.

Kevin Kalkhoven, the former chief executive of JDS Uniphase, has been an investor in Innovance since the launch of the company.

The largest investor in this round was ATV. Jack Harrington of Advance Technology Ventures will join Innovance's board of directors.