Jan. 22, 2002 -- Sigma Networks is discontinuing operations and liquidating, ending a high-profile venture to provide interconnections in major metro hubs.
Sigma's shutdown comes less than 11 months after it launched with more than $450 million in venture capital backing, and barely a month after it completed its five-city network build-out.
"We are closing down," said Sigma spokesperson Laura Segal, who said the shutdown would be accomplished through a process known as an Assignment to the Benefit of Creditors (ABC), rather than a bankruptcy filing. The company has 110 employees.
Sigma counts some of Silicon Valley's marquee names among its board members and backers, and its customer list includes heavyweights such as AOL and Cable & Wireless.
Segal said the company's decision was driven by difficult business conditions in the telecom and connectivity market.
"It was based on the market not developing as quickly as we anticipated or hoped," said Segal. "We expect the market will recover, but not before the end of the year or early 2003. That's a long time to run a business (under these conditions)."
San Jose, Calif.-based Sigma offered high-speed connections to carriers and other bandwidth-intensive businesses. The company built a network connecting 52 carrier hotels and data centers in five major markets - the New York metro, greater Washington, Dallas, Los Angeles and the San Francisco Bay area.
Segal emphasized that the network would continue to operate while Sigma seeks buyers for its assets. "No one's going to be left in the lurch," said Segal, who said Sigma has about 10 active customers and agreements with about 20 additional companies.
The liquidation process will be managed by Sherwood Partners, which specializes in crisis management and asset disposition. Segal said Sigma is receiving strong interest from potential buyers, including some with an interest in purchasing the network intact.
Sigma's board includes the company's three high-profile founders, former FCC Chairman Reed Hundt, Benchmark Capital Partner Andy Rachleff, and Concentric Network cofounder John Peters.
The board is rounded out by browser pioneer Marc Andreessen, co-founder of Netscape and Loucloud, Sigma CEO John Peters, and partners with venture capital firms Frontenac Partners, Hummer Winblad and Oak Investment Partners.
Frontenac was Sigma's lead investor, with other equity holders including Oak, Benchmark, Technology Crossover Ventures, Capital Research, Salomon Smith Barney, Charter Growth Capital, and Epoch Partners.
The company's debt holders included Comdisco, Sand Hill Capital, Cisco Capital, and EMC Corporation.
In addition to AOL and C&W, Sigma has agreements with Telia, Covad, Broadwing, Universal Access and Equinix.