In 1999, we were actively involved in supporting and financing select European research institutions. In this context, our partner Thao Lane created ETIC, an incubator in Rennes, France. Eric Berthaud was a resident entrepreneur at ETIC. He identified an exciting opportunity based on technology developed at EPFL (Ecole Polytechnique Fédérale de Lausanne). His vision was to use the technology to create products and solutions required for fast broadband distribution over existing wire line networks. The principle behind this approach was simple: to capitalize on existing infrastructure to avoid expensive re-cabling. With modest initial seed financing, Laboratoire Européen ADSL (LEA), was founded.
In 2000, its first year of operation, LEA introduced its first suite of products. Volume shipments began in late 2000 to customers including Alcatel, Nortel and France Telecom. Backlog grew rapidly to $10 million. To finance the growth of the company, Ossama Hassanein stepped up to lead a $9 million financing with a diverse group of foreign investors.
Unfortunately, 2001 proved to be a challenging year in which carriers cancelled purchase orders by the hundreds and LEA suffered along with everyone else. We lobbied Alcatel incessantly to re-issue their cancelled purchase orders which they eventually retracted. (Alcatel eventually accounted for 40% of LEA's revenues.)
We worked closely with LEA's CEO to reduce the Company's operating expenses, renew its efforts to secure ADSL contracts, and acquire another company to diversify its product line. The concerted effort paid off. LEA multiplied its sales by more than eighteen times between 2001 and 2004, from $3 million to $56 million and market share grew from single digits to 90 percent in France, 60 percent in Europe and 25 percent worldwide.
In May 2005, LEA announced an agreement to be acquired by HF Company, a publicly traded French company that specializes in the design and sale of equipment for home automation. We helped Eric Berthaud conclude an agreement that returned $80M to LEA's shareholders.
