Start-up service providers capture more funding

GiantLoop Networks and Intellispace are the latest start-up communications service providers to receive large sums of venture capital funding.

GiantLoop on Tuesday announced it has raised an additional $120 million from venture capital firms and technology companies, including Nortel Networks, Sycamore Networks and Cabletron Systems. Intellispace on Tuesday said it raised an additional $60 million in funding, including investments from J.P. Morgan Partners and Cabletron.

The two companies are the latest in a new breed of service providers that continue to capture the interest of venture capitalists and corporate investors, showing that despite the slowing economy and the dot-com failures, they are willing to invest in communications companies that have compelling business plans.

GiantLoop and Intellispace use gigabit-speed Ethernet and optical technology to provide high-speed Internet access and private networks to businesses at prices cheaper than what traditional phone companies can offer. They compete against Yipes and Telseon, two start-up service providers that announced last week that they received about $200 million each in additional funding.

GiantLoop, which also offers voice and storage services to businesses, is a ten-month-old start-up that has now raised a total of $160 million in three rounds of funding. The company said the extra money will be used to improve its professional services, among other needs.

Intellispace has raised more than $100 million in its five years of existence. The extra funding will help the company offer new Internet-based services to its customers, company representatives said.