01 May Corona Optical Systems continues to excite investors
Lombard, Ill.-based Corona is a manufacturer of dime-sized fiber optic modules for telecommunications equipment. The three and a half-year-old company, which runs its engineering design operations out of Eau Claire, has strung together an impressive list of funding and capital partners in the middle of the telecommunication industry’s worst drought ever.
Earlier this year, Corona secured a third round of funding—a $7.5 million infusion from a group led by Megunticook Management Inc., Boston and Sterling Holding Company, Westlake Village, CA.. This latest venture capital coalition also included Intel Capital, Santa Clara, Calif., which led the company’s first two rounds of funding; and KB Partners LLC, Chicago.
The company is using the new cash to add new customers for its initial product, the OptoCube™ 40, a parallel optical transmitter and receiver housed in a 13-by-13 mm case that can handle about half a million-phone calls at once. The company also plans to use the money to develop its next product, which will be a small, dense fiber optic module, said Corona Co-founder and Chief Marketing Officer Bryan Gregory, who declined to elaborate.
And as it turns out, locating the company’s engineering office in Eau Claire turned out to be ideal for a company that has to cram so much performance into such a little box. Why Eau Claire, as opposed to the tech-rich “Silicon Prairie” of Chicagoland?
“There are just lots of people there who know how to do very unusual packaging and make very dense, high-speed circuits and various elements,” said Gregory, who started the company with engineering group chief Randy Wickman. “There’s a great technology base in Eau Claire that’s kind of hidden. If you’re inside the industry, there aren’t that many [people there] who know, either. But we’re certainly aware of it, and we really enjoy working with people from Wisconsin.”
“The genesis was supercomputers [from Cray Research], and then it branched out from there; but they specialized in exotic packaging,” Gregory said. “You know, have it smaller and denser and pull the heat out and have the high-speed signals between electrical components. And they’re very good at those basic sets of skills.”
So just what is it that attracts investment in a component manufacturer such as Corona from gun-shy investors these days? At least four keys, all of which Corona has, said Robert Garber, managing director of KB Partners.
Large customers who have designed your product into theirs. (“In this market, if you’re looking for investment opportunities, people are less and less willing to take a risk in terms of customer adoption,” Garber said. “You have to prove someone is going to buy this from you. Corona was in a position that they did have customer acceptance in a verifiable way.”)
A core team of people dedicated to the flagship product. (“They have about 20 people focused on that one product, and they’ve done a good job,” said Garber.)
A competent management team that has gained the confidence of its people and partners. (“You [have] a management team that executed well and had people
Cash consciousness. (“Right now, capital efficiency is about as important a thing as you can look for,” Garber said.)
“In this market, those things are prerequisites,” said Garber, whose company specializes in investing in early stage, Midwestern tech companies. “You used to be able to get by with one or maybe two of those; now you need to fill out that picture as much as possible; even then, it’s far from a sure thing that you’ll get funded.”
The way things are going, though, Gregory and his colleagues have reason for nothing but optimism. Well, reasonable optimism, anyway.
“It’s a market to be cautious in,” Gregory said. “Regretfully, I can’t tell you we’re going to hire 1,000 people in Wisconsin this year, because we’re not. The company’s relatively stable, meaning we’re not expanding dramatically, but we’re certainly not contracting, either.
“We were fortunate to close a round [of funding], and many of our competitors were not so fortunate,” he added. “We’ve definitely seen consolidation in the market. To be honest, it benefits us.
“As we go forward, we’ll make these fiber optic transmitter and receiver modules. We’ll take them, and we’ll make them faster, we’ll add more channels, we’ll move them into data communications, as well. We’ll continue to move around in the [market] space, but we’ll continue to make fiber optic modules. That’s our focus.”
Lincoln Brunner is a Stevens Point, Wisconsin-based freelance writer and a regular contributor to the Wisconsin Technology Network. He can be reached at Lincoln@wistechnology.com.