While investors may not be finding gold any longer in Nortel Networks Corp. shares, startups continue to emerge from the beleaguered networking giant, the latest Seaway Networks Inc., which announced $18-million in financing yesterday.

The Ottawa-based company, which was once called Camelot and was founded in early 2001 by 13 former Nortel engineers, said the cash will come from Montreal-based Novacap Inc., seed investor Venture Coaches and JK&B Capital, which funded the likes of Commerce One Operations Inc.

The financing for Seaway follows similar news from Ottawa-based Innovance Networks Inc., which was founded by former Nortel employees and received $88-million in venture capital earlier this year.

Seaway was launched in February, 2001, by engineers who were working on semiconductor technology for Nortel. When Nortel began cutting jobs and divisions, the engineers became concerned the networking company was no longer interested in their technology.

Rather than wait for the axe to fall, the engineers quit their jobs and, without funding, started Camelot in a living room. They finally landed $1-million in financing from Venture Coaches, sought office space and licensed the technology they were developing from Nortel.

Seaway's microprocessor technology is used for high-performance content processing, and will be part of the company's "system on a chip" to be launched by the end of the year. The technology should make content-heavy applications, like Web browsing, faster and easier to use.

Kit Fung, Seaway's president, said the company spent most of last year trying to land financing in an increasingly difficult market. The $18-million the company has received should see it through until it starts selling its microprocessor technology.

"We are pleased to get what we did," Mr. Fung said. "VCs out there are very careful and are protecting their initial investments. But this is exactly [the money] we needed."

Marc Beauchamp, president of Novacap, said Seaway's frugal business structure is a sign the company will weather the current telecommunications slowdown.

"We saw a survivor's burn rate in these guys," Mr. Beauchamp said. "The founders were down to earth and had a good sense of what makes a startup successful."