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Sabeus Photonics Gets VC Funding, New Valley Home

Sabeus Photonics Gets VC Funding, New Valley Home By CARLOS MARTINEZ Staff Reporter November was a good month for Sabeus Photonics Inc. It completed its move from Long Beach to Chatsworth and received $16 million in venture capital funding. The fiber optics company has moved its manufacturing operation into MiniMed’s former 55,000-square-foot building that features 10,000 square feet of clean rooms and 1,000 more square feet of labs. “We saw that some of their lab requirements were similar to ours, so with some additions and some changes, it was better than building a whole new facility from scratch,” said Sabeus CEO Andre De Fusco. The company moved to the Valley mainly because it needed more space, but also because it would be served by the Los Angeles Department of Water and Power, De Fusco said. “If you don’t have a stable power supply and you have brownouts or failures, you could lose a $50,000 crystal,” he said, referring to the materials used in manufacturing fiber optics. Brad Jones, a partner with Menlo Park-based Redpoint Ventures which provided part of the $16 million in venture capital funding to Sabeus, said, “Not only does it have breakthrough technology that will sustain its market position for years to come, it is already shipping products that are acknowledged the very best in their category.” Jones also cited the company’s management philosophy of gradual growth and building relationships with customers as pivotal in the company’s future. Redpoint is among the small group of venture capitalists that provided the $16 million investment capital. Others are TL Ventures, Digital Coast Ventures, CSFB Ventures and Anthem Ventures. “Innovation is clearly important to us, but we feel they have a sustainable advantage over their competition because of their technology, and that is incredibly attractive,” said Massoud Entekhabi, managing director of TL Ventures. Sabeus’ move to the Valley is in keeping with its larger plan to develop and market an array of low-cost fiber optic components. “We don’t like to make ‘me too’ products,” said De Fusco, who added that the new funding would move the company’s latest product a filter that can increase capacity on each fiber by a factor of 100 closer to market. “It’s the next step in the evolution process of this industry,” said De Fusco, former CEO of Calabasas-based ACT Networks Inc., now owned by the Clarent Corp. Beginning next year, the company plans to develop high-end, low-cost components such as dynamically tunable filters that can be adjusted for certain wave lengths; bandpass filters, which allow only certain wave lengths; and field-programmable components. “We’re trying to make fiber as cheap as copper so that optical networks can be used by everybody, people at home, people in small businesses and fiber networks,” he said. David Rozelle, CEO of Glendale-based Altrio Communications Inc., blamed costs and equipment availability for keeping fiber optic networks from developing faster. “You have to have millions upon millions of dollars available or you’re not going to go anywhere,” he said. Sabeus, which is derived from the Latin word for knowledge, was established in 1999 by a group of USC scientists, led by Dmitry Starodubov, formerly of the Russian Academy of Science in Moscow; Jack Feinberg, a leading fiber optics expert; Dhiren Patel, a leading fiber optics manufacturing expert; and Bill Morey, a pioneer in fiber optic grating. The group conducted research and development before selling their first fiber optic products last year, following an initial funding round of $8 million. “We came just after this tech boom, so we didn’t come from this dot-com culture,” said De Fusco. “We had this carefully executed strategy that we wanted to do. We didn’t hire 300 people and we didn’t value our company at $200 million so we avoided a lot of problems.” After heading broadband equipment-maker ACT Networks for six years and holding other positions with Nortel Networks Inc. and the MaxCom Corp. previously, De Fusco was looking for a new challenge when he met with Starodubov and the other scientists heading Sabeus last year. “I was really impressed by them and the vision they have for the company,” he said.

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