Bandwidth Startup’s Big Plans Hit By Credit Crunch
Darkstrand, a Chicago-based startup planning to commercialize the fiber network built as part of the National LambdaRail (NLR) project, is — like most of its telecom brethren — facing a rocky road. NLR is a federally funded network that connects about 30 universities across the country; Darkstrand won the rights to offer commercial services on it in May 2008. But the company, which needs to raise more capital to upgrade the NLR network in order to meet commercial needs, is being challenged by a moribund economy, which is turning sales cycles into the equivalent of the steep Alpine climbs that mark the Tour de France.
Back in October, Stacey spoke to the 3-year-old company’s CEO, Mike Stein, who told her that Darkstrand would need to shell out some $24 million in capital payments for the network, plus $2 million-$3 million a year to maintain it. Even more money would be needed, Stein said, to keep the company (and the network) growing. He affirmed as much during a conversation I had with him last week as well, adding that not only has the current economic environment made raising money a challenge, but it’s having an impact on the company’s valuation.