Ottawa-based Meriton Networks, which scored a huge coup last month when it won part of BT's US $19-billion next-generation network contract, has raised US$54 million in private equity. This the biggest VC deal done by a Canadian company this year. It also suggests VC money is starting flow back into the Canadian telecom sector in a big way. In April, Solace Systems, which develops multiservice message router technology provides intelligent routing of application traffic, raised some serious cash from a group of investors that includes Terry Matthews.
Meriton was originally targeting about US$30-million but strong demand from investors and growing interest in the metro-optical market persuaded Meriton that adopting a more aggressive approach was a better route. The company, which plans to double its workforce over the next 12 to 18 months, develops technology that helps carriers make their fiber-optic networks more efficient - a key issue as demand for broadband services increases traffic. Meriton's "secret sauce" is software that lets carrier tweak their networks from a central location rather than having to do a truck roll. This gives carriers more control while reducing costs. The BT deal was major breakthrough from Meriton, which had mostly done deals with second and third-tier carriers. The latest financing round was led by two new investors - VantagePoint and Nomura. If Nortel is looking to make a technology-related acquisition, it should loook close to home at Meriton. Nortel also plays in the metro optical market but Meriton clearly ha something carriers want. Two key questions, however, are whether Nortel has the cash and the strategic appetite to get into the acquisition of start-ups again given its terrible track record during the telecom boom.