Israeli company Constellation 3D is about to complete a financing round in which it will raise more than $50 million in a private placement. The round will be held at a company value of $600 million. Constellation is traded on the OTC Bulletin Board (symbol: CFMD), at a company value of $800 million, which means that the financing round is being held at a 25% discount compared to the share's market price.
Lev Zaidenberg and Prof. Yaakov Malkin set up Constellation in 1995. The company develops 3D optical fiber memory based on fluorescent light technology that enables higher disk storage capacity. The company manufactures the first prototype of a 40 gigabyte disk, whose capacity is ten times larger than CD disks.
Last March Constellation raised about $4 million, having ended Q1 with a $6.5 million loss. The present financing round apparently indicates that the company had a similar cash problem in Q2 as well. The company would not comment on the amount the company is seeking to raise in its present financing round, but he said that the money would be used for further development and the manufacture of products.
Constellation's shareholders are mostly private investors, including a group of investors from Vancouver, who put $3 million in the company. Israeli venture capital fund Formula Ventures invested $2 million in the company for 8% of its shares in the past. Company staff and founders hold the remaining shares.
Constellation planned to raise $35 million in an IPO on NASDAQ this year. The company, however, now estimates that the issue will be held only at the beginning of next year. According to him, the private placements are intended to ensure that the pace of development is not held up. He added that Constellation might forge a business partnership with Dell.
Constellation, which has 70 staff, operates four branches: at the Rabin Science Park in Ness Ziona, at Moscow University, in Lwow in the Ukraine, and in California.
Published by Israel's Business Arena on 17 July, 2000