Equipe cuts staff to raise cash

ATM switch start-up Equipe Communications has confirmed published reports that it cut staff in a bid to secure additional funding.

The Boston Globe reported on Wednesday that Equipe laid off 15 employees in order to lower the company's burn rate and appease investors, as it looks to fund its third round of financing. Burn rate refers to the amount of cash a start-up company spends monthly or quarterly to fund product development and marketing, payroll and overhead.

Equipe president and CEO Dennis Rainville confirmed the report. "We understand what the burn rate needs to be and we went off and reduced," he says. "We went off and reduced capital, reduced [prototypes], then went off to address it on the headcount side."

He would not disclose Equipe's burn rate before headcount was reduced nor what it is now. "We're well within their limits now," he says.

Equipe is hoping to raise between $60 million and $70 million in its third round of funding from organizations including its current venture capital investors, as well as third-party and "strategics," Rainville says. The strategic investors may include service providers or a partner that would help Equipe crack the European and Far Eastern markets.

Current investors include Battery Ventures, Matrix Partners, North Bridge Venture Partners, Pequot Capital and Worldview Technology Partners. Rainville could not say when Equipe would close its third round of funding.

Equipe is developing an ATM/IP Mulit-protocol Label Switching switch for the core of carrier networks that's designed to help carriers grow their current ATM and frame relay service revenue while gradually migrating to support IP and MPLS-based services. The company hopes to tap the installed base of Lucent's CBX 500 and GX 550 platforms.

Equipe will begin beta trials with a major carrier at the end of this month.

Contact Edge Managing Editor Jim Duffy

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