New York - Four of Nortel Networks' best and brightest optical networking minds, who left the company a few months ago, have just snagged $75m in financing for a photonic networking startup they have named Innovance Networks. This brings the total investment in the new venture to $95m. Not bad in a market saturated with companies all doing the same thing - and at the same time that the carriers they hope to sell to are slowing down their capital expenditure. Moreover, analysts that cover this space agree that funding for optical startups is unlikely to dry up. After all, what else can VCs invest in right now? The quartet of Nortel optical heavyweights includes Peter Allen, James Frodsham, Alan Solheim and David Nicholson, who will be joined on the executive team by former Lucent Technologies engineer Lucas Hsu, former Credit Suisse First Boston financial analyst Kenneth Friedman and former Wasserstein Perella financial analyst Todd Kimmell. Targeting global backbone carriers and regional networking service providers, CEO Allen says the funding is enough money to see the company through to a finished product, timed for 2002. He said it may raise more cash at that stage for production and other costs. The ex-Nortel executives are largely responsible for delivering the world's first 10Gbps optical transport system, which might offer a clue into what Innovance is developing. The company remained silent on its plans, except to say in a statement that it will "shape and direct technology to respond quickly to customer needs," which sounds like setting up and tearing down wavelengths with tunable lasers and receivers. We'll have to wait and see. Former JDS Uniphase CEO Kevin Kalkhoven's company, KPL Ventures, is an investor in Innovance. The latest round was led by Morgenthaler Thomas Weisel Partners, which was joined by Advanced Technology Ventures, Bank of America and Azure Capital Partners - the lead investor in the company's previous seed round of $20m.

Jo Maitland