reprint
back

Aloha Networks Greets $7M in Recap Round
By Giada Cardoletti
3/10/2004
San Francisco -- Aloha Networks, a developer of a wireless telecommunications system that enables operators to provide Internet access using satellites, said it closed a $7-million recapitalization round
that will convert $5 million of debt into equity. An additional $2 million is new capital.

This is a down round for the eight-year-old company, which received a $12-million post-money valuation in Novemeber 2001 after raising a $6 million Series C round. Ken Burkhardt, Aloha's president and chief executive officer since 2000, declined to disclose the latest post money valuation.

The bridge financing and new funding was provided by new ivestors including Acorn Technology Fund, Sixela Venture Leasing, and several individual investors. Draper Fisher Jurvetson and HMS Management Group did not reinvest in the company.

Mr. Burkhardt blamed the down round on the difficult venture capital market saying that even though the company today is much better positioned than it was four-years-ago the market is very different from how it was in 2000.

The four-member board of directors will remain unchanged including Mr. Burkhardt, Richard Moser formerly with the Acorn Technology Fund; Bob Mugeot, retired CEO of publicly traded Hawayan Electric Industries.

Proceeds from the new fundraising effort - about $2 million - will be used to expand Aloha Networks' sales and marketing teams as well as finance inventory to support continued worldwide growth, the company said.

In related news, the company said Andesat Corporation, a satellite communications service provider, has agreed to use Aloha's SkyDSL network to provide networking service to Central and South America.

The multi-year agreement, valued at more than $8 million dollars over three years and estimated at $1 million dollars over the next twelve months, will enable Andesat to deliver SkyDSL IP networking services to Central and South America through their broad dealer network.

Aloha Networks shipped its first system in June 2002. Since then the company has developed several customers among satellite service providers around the globe. A deal is currently in the making with a satellite service provider in Europe, Mr. Burkhardt said.

The company stands out among sector competition by providing equipment that thanks to the company's seven patents requires about half the cost to operate, Mr. Burkhardt said.
He added that Aloha's technology is superior to the competition because it provides instant access to bandwith.

Aloha is expected to break even by the end of the year, Mr. Burkhardt said.




http://www.alohanet.com