CyOptics Inc. Receives More Than $16 Million in First-Round Funding

Company Develops High-Performance Optoelectronic Components for 40Gbps and Ultra-long Haul Optical Communications

Los Angeles, CA. CyOptics Inc. today announced the completion of its first round of financing. Funding of $16.3 million was provided by Soros Private Equity Partners LLC and by The Sprout Group, the venture capital affiliate of DLJ, as well as by the company s seed investors, including Jerusalem Venture Partners, Innovacom, SCD and Eurofund.

The monies will be used to fund product development and marketing, and to expand the company s manufacturing infrastructure. Farrokh Billimoria, general partner at the Sprout Group, and Jonathan Bilzin, partner of Soros Private Equity Partners, will join the board of CyOptics.

"New optical networking systems are being designed to achieve ever higher transmission speeds, and longer transmission distances," said Eran Yarkoni, president of CyOptics. "CyOptics products enable the move to higher transmission speeds, at 40Gbps, and beyond, and to ultra-long haul transmission through the use of highly compact, high performance Indium Phosphide technology.

"We are delighted to have this distinguished group of investors join our team," added Yarkoni. "The caliber of our investors attests to the market importance of CyOptics solutions and to the quality of our technology and our team." "CyOptics is addressing one of the fastest-growing segments of the optoelectronic component market with devices that advance the state of the art in terms of performance, size and flexibility," said Jonathan Bilzin, partner of Soros Private Equity Partners and a CyOptics board member. "Soros Private Equity is very excited to partner with such a fast-moving company."

"While many optoelectronic startups are addressing the market for lower cost commodity devices and passive components, CyOptics is unique in its focus on the fast-growing market segment of high-performance active devices for very high performance optical networking and has a world-renowned team to make this happen," said Farrokh Billimoria, general partner at the Sprout Group and a CyOptics board member.

"JVP first invested in CyOptics in early 1999, when the exceptional technological capabilities of its founding team and the vast potential of the market that they are addressing drew our attention," said Glen Schwaber, principal at JVP and an original CyOptics board member. "CyOptics is a unique startup, owning all the technologies required to develop and manufacture advanced optoelectronic components -- including state-of-the-art semiconductor and packaging processes. We ve been delighted to see CyOptics rapid development into an aggressive company with innovative products and exceptionally high levels of market interest."

About CyOptics

CyOptics was founded in early 1999 and is headed by veterans of Lucent, Intel, and Lasertron. It has a superlative technical team, including leaders in the field of Indium Phosphide optical component development and manufacturing and optoelectronic device packaging. The company has headquarters in Los Angeles with a sales office in Burlington, Mass., and research and development facilities in Israel. CyOptics has full optoelectronic component manufacturing capability, including Indium Phosphide wafer fabrication, regrowth, and characterization, as well as microelectronic packaging and test & qualification facilities. Visit the Web site at www.cyoptics.com.

About Soros Private Equity Partners LLC

Soros Private Equity Partners LLC, an investment affiliate of Soros Fund Management LLC, is responsible for making direct equity investments on behalf of Quantum Industrial Partners LDC, a $3.5 billion investment fund and one of the Quantum Group of Funds. Soros Fund Management is the well known investment advisory firm founded by George Soros. The Quantum Group of Funds is not generally available to U.S. investors. About the Sprout Group

The Sprout Group is one of the oldest and largest venture capital firms in the United States. Since 1969, Sprout has helped finance more than 300 companies with combined sales exceeding $40 billion. With offices in Menlo Park, Calif., New York and Chicago, Sprout focuses on helping to grow technology companies in communications, e-commerce, and e-healthcare. Active investments include Astral Point, Avici, Blue292, CheMatch, Corvia Networks, eHealthInsurance.com, Ennovate Networks, Family Education Network, FogDog (Nasdaq:FOGD), GlobeSpan (Nasdaq:GSPN),  GroceryWorks.com, Healtheon/WebMD (Nasdaq:HLTH), iAsiaWorks, MarketFirst, Mondera.com, mySimon (acquired by CNET), Netcore Systems (acquired by Tellabs), NetEffect Corporation, NetLibrary, Paradyne (Nasdaq:PDYN), Perfecto Technologies, Quintus (Nasdaq:QNTS), Rhythms NetConnections (Nasdaq:RTHM), Rotor Communications, Silicon Access Technology, Tavolo, Torrent Networking Technologies (acquired by Ericsson), and Worldwide Fiber. Visit the Web site at www.sproutgroup.com.

About JVP

With $260 million under management, Jerusalem Venture Partners (JVP) is a leading international venture capital firm focusing on early-stage investments in the fields of communications, software, Internet and e-commerce. Since the formation of its first fund in 1994, JVP has invested in more than 25 companies, including Netro (NTRO), Chromatis Networks, Teleknowledge, Bridgewave Communications, Celltick, Cogent Communications, Jacada (JCDA), FundTech (FNDT), Paradigm (PGEO), Summit Design (SMMT) and Scorpio Communications. JVP s limited partners include first-tier international strategic investors and financial institutions such as MIT, Horsley Bridge Partners, Reuters, Flag Venture Partners, Boeing, AXA, Merrill Lynch, Invesco, France Telecom, Access, Jafco and others. Visit the Web site at www.jvp.co.il.

About SCD

SCD is a worldwide supplier of infra-red detectors for the commercial aviation and military industries. CyOptics was spun out of the telecommunications group of SCD in early 1999. CyOptics retains long-term rights to use certain SCD manufacturing facilities, including parts of the SCD cleanrooms and equipment.

Contact:
CyOptics Inc.
Hava Volterra, 310/914-0155
hvolterra@cyoptics.com
or
AccessMillenium 3 Inc.
Diane Smith, 562/597-8086
diane@access-pr.com