In the early commercial days of the Internet (1997), traffic was doubling every three months. This created an urgent need for an ultra-high-speed backbone to carry the multimedia traffic of data-hungry applications. Only photonics could do it. The leaders in photonics were Drs. Eric Delevaque and Sylvain Boj. They had spent a decade in the laboratories of France Telecom R&D Center (CNET) where they acquired an international reputation for expertise in optical components. Eric and Sylvain identified a portfolio of photonics patents in the CNET and negotiated their transfer to a newly formed company. Realizing the power of the technology and the quality of the entrepreneurs, we helped Eric and Sylvain assess the market potential and launch a company to develop and commercialize the technology. Highwave Optical Technologies was founded in 1998. Dr. Ossama Hassanein provided the seed and expansion financing, and eventually joined the Company as Chairman of the Board.

Highwave grew at a dazzling pace. In its first few months of operation, the Company sped up the creation of production facilities and secured large procurement contracts. The Company's customer base, totaling over 50, included some of the world’s major telecom equipment manufacturers including ADVA Optical, Alcatel, ECI Telecom, Marconi, NEC, and Siemens. The Company established an international reputation for manufacturing superior products that met stringent standards set forth by both customers and industry associations.

Highwave grew in revenues from zero to more than $70 million in two years and went public at a market value of $422 million in June 2000. Post IPO, our investment of $1.6 million was worth over $73 million - nearly 46X return to our investors.

By 2001, the Telecom market began a steep decline. Highwave retrenched from 1,000 to 250 employees, with products in two markets, four manufacturing plants, and a strong base of tier one customers. With the apparent stabilization of the market at much lower revenue levels, we identified a strategy of consolidation and rationalization of the industry’s excess capacity using Highwave as the platform. We structured a financing vehicle (PIPE) with significant downside protection, created a syndicate that included a Tier-1 investor for transactional support, and three of our partners took seats on the Highwave board, chaired by Ossama Hassanein.

After some initial operating successes, the industry went into a second steep decline, at the end of which the market had shrunk from over $5 billion to less than $200 million annual revenues. As a result, we helped the Company change course and embark on another cost-cutting effort, shrinking Highwave to a single market which required only 65 employees and a single manufacturing facility. The Company’s operations were stabilized, and we were able to exit the investment through the public market at a 20% profit in one of the bleakest years in the high tech melt down. Good results, considering that the sector had suffered overall a drop of 95% in market value!!