Wavtrace Rakes In $24M Third Round

In what should be the company’s last private round prior to achieving positive cash flow, Wavtrace Inc. of Bellevue, Wash., raised $24.2 million in late June from strategic and venture investors.

Strategic investor Harris Corp. of Atlanta invested $10 million to lead the round. In addition, the two companies struck an agreement through which Harris will resell Wavtrace’s products and collaborate on marketing, customer support and technology development.

The company’s existing investors contributed the balance of the financing that closed in late June, said Thomas van Overbeek, president of Wavtrace. Vulcan Ventures Inc., Crosspoint Venture Partners, Advent International, Information Technology Ventures, Alta Partners, Bay Partners, J.F. Shea & Co., New York Life Ventures and Hambrecht & Quist Ventures have invested more than $21 million in Wavtrace since 1996.

Proceeds from the offering will fund operating losses, which are expected to continue until the end of 2000. Overbeek said the company is approximately two months from shipping its first product, which is currently in beta testing.

Wavtrace has developed a wireless broadband access system that is based on time division duplexing (TDD). TDD permits data to be delivered in two directions over a single channel, as opposed to frequency division duplexing that requires two channels and a guardband.

“The company was founded because the technology was based around the existing infrastructure, [but] Internet traffic, unlike voice, is asynchronous,” Overbeek said.

Customers will include competitive local exchange carriers or service integrators that put telecom systems together. Overbeek said the company will draw recurring revenue from its customers as new TDD hubs are installed that increase the capacity of each system.

He expects this round, combined with a debt financing, to support the company’s operations through self-sufficiency.