Metawave Captures $91M in Fifth Round

As cellular penetration rates continue to rise and handheld devices begin to offer advanced services, such as Internet connectivity and data transmission, cellular operators have to harness more bandwidth capability.

Metawave Communications Corp. of Redmond, Wash., provides antenna systems that allow cellular operators to increase network capacity while using existing infrastructure.

Late last month, the company raised $91 million in its fifth round of venture capital financing. The investment represents the largest single round of private equity ever raised by a communications manufacturing company, according to the MoneyTree survey by PricewaterhouseCoopers.

Metawave filed for an initial public offering in July 1998, but the company withdrew the offering due to the sour market conditions of last October.

“We went all the way through the SEC process, but decided to pull the offering because of the dismal market,” Hunsberger said. “Rather than wait and see the market improve, we decided to raise another private round to take the company to the next level.”

Oak Investment Partners of Palo Alto, Calif., through the $600 million Oak Investment Partners VIII fund, led the Series B round, and is the leading investor in the company. Other investors include first-time commitments from two Merrill Lynch & Co.-affiliated private equity funds and General Motors Investment Management Corp. Existing investors Sevin Rosen Funds, Venrock Associates, Integral Capital Partners, Worldview Technology Partners and Bowman Capital participated in the round.

To date, Metawave has raised more than $140 million in venture financing.

“Antennas by themselves are just bent metal,” said Chief Executive Bob Hunsberger. “The electronics we install is where the intelligence is … to enhance the cellular site and provide more capacity.”

With Metawave technology, operators need not build new towers and antenna infrastructures, but can seamlessly operate within their assigned frequency.

Proceeds from the investment will be used to retire $33 million in senior debt and to expand to new systems in both domestic and international markets.

Metawave antenna systems are currently deployed with 75 operators in the United States, Europe and South America. Hunsberger said the company will establish sales offices in Taiwan and Shanghai.

“We are excited about Metawave because it is one of the only companies in the space clearly responding to the lack of bandwidth,” said Principal David Walrod. “Their antenna systems will increase operator efficiency.”