2Wire gets through by partnering

2Wire, the private San Jose company that provides a combination modem and wireless router said French company Alcatel has agreed to acquire a 25 percent stake.

This makes sense. Earlier this year, we pointed to 2Wire as a good example of a company that is forced to build coalitions of partners, including allying with SBC, to get by. 2Wire helps the phone giant offer satellite TV and Internet video and music to its customers. It was also a bidder to supply SF with a wireless network.

Om has more about 2Wire, and asks whether the latest news represents a stealth buyout.

He rightly says that deal might represent some sort of a closure for the likes of Venrock, Oak, TCV and Doll Capital. They and several others pumped in about $196 million into the company over six rounds of financing. You’d think they may have made money now that the company is rumored to be worth $500 million. But most investors got hit badly in…

the 4th round, during 2001, when the company’s valuation was cut in half and existing investors saw their ownerships stake evaporate accordingly — and most of the money has been tied up for four to five years, some of it longer. So we’re not sure if many of these guys made money — yet, at least. TCV and Granite Global Ventures, however, will have faired much better, as they came in later and have enjoyed the subsequent increase in value, according to our sources.