Startup

Actelis Networks

will shortly be announcing completion of its third financing round. So far it has secured $26 million according to a post-money company value of $116 million, TheMarker.com has learned, but it may not stop there.

The round was led by the

Carlyle Group

, which contributed $10 million. The rest came from shareholders, including

Vertex Management Israel

,

Walden Israel

,

U.S. Venture Partners

and

New Enterprise Associates

.

Until a few days ago, it seemed that Actelis would have to settle for raising only $10 million from shareholders. But then it brought in Carlyle, and in any case, it has not yet finalized the round. The startup is leaving room to bring in strategic partners. Ultimately it might secure as much as $35 million.

Actelis develops technology to transmit data over the copper wire used by phone companies at especially high speeds. Its system is designed to supply the broadband with reliability almost equivalent to that of costly optic fiber networks.

xDSL lines also rely on copper infrastructure to transmit data at high speed. But Actelis manages to speed transmission up much more, while ensuring broadband by means of Quality of Service components.

Actelis' first commercial product is planned to offer transmission speeds of 45 megabits per second. By 2003, the company believes it can achieve speeds of 300 megabits per second over copper. The ceiling is apparently over 600 megabits per second.

The startup's target market is of course telecommunications companies whose end users are businesses that need broadband access to Internet. In other words, telcos that would otherwise have to lease optic infrastructure. It also hopes to sell its products to telcos that want to deploy multiple DSL lines over long distances, which is today an impossible mission. DSL lines today are designed for short distances of a few kilometers. Actelis will be offering solutions involving a single line for areas still deprived of broadband service over copper wire.

Studies Actelis presents indicate that by 2010, 40% of America's businesses will be connected via optic fiber. It means to offer alternative service at a far lower cost.

'Unusually successful' field tests

Strategic partners recently concluded preliminary field tests of the Actelis systems. Sources near the company claim the tests were unusually successful.

To date orders have been symbolic only. Substantial commercial sales are not expected until year-end, or early 2002. The sources believe however that within its first year of selling, Actelis will be able to book tens of millions of dollars in sales.

Actelis was founded in 1998 by its CEO, Yuval Baron; Kamran Elahian, its chairman; and Tuvia Barlev, its CTO.

Baron formerly served as deputy CEO at

RiT Technologies

(Nasdaq:RITT). Barlev headed the R&D department of U.S. company Teledata and Elahian is a well-known serial entrepreneur who founded CAE Systems, Cirrus Logic, NeoMagic Corporation and Centillium Corporation, among others.

Actelis employs 100 people, mostly at its R&D center in Petah Tikvah. The company also maintains corporate offices in Fremont, California, and sales offices in Alexandria, Virginia, and in Douglasville, Georgia.

Its previous funding round secured it $20 million according to a post-money company valuation of $85 million. Actelis has forged business relations with several of the world's biggest telcos, including

Deutsche Telekom

(NYSE:DT),

GTE

,

France Telecom

(NYSE:FTE),

British Telecom

(BUE:BTY.BA) and U.S. West.

Aside from representatives of investors, Actelis' board includes Marty Kaplan, who has a long history in telecommunications and most recently served as executive VP at

SBC Communications

(NYSE:SBC). Now that Carlyle has come on board, it will also be appointing a director, possibly its chairman Frank Carlucci.