The fabless semiconductor startup has secured a $1-million round of seed financing. The even better news, says company co-founder Jonathan Adair, is this smaller amount will be followed by a $16-million round of venture capital in the coming weeks,.

"We expect to close in the next couple of weeks, and that will be for about $16 million. It's a good deal, we're quite happy about it,” says Adair, who recently stepped aside as company president in favour of Kit Fung.

The Ottawa startup plans to spend the money on research and development efforts, as well as on marketing.

While details of the $16-million round are being kept quiet until the legal terms are finalized, an unnamed angel investor partnered with Venture Coaches in the seed deal.

"This fits in well with our profile of investments,” says Venture Coaches' Larry Perron. "We invest in teams and this was a good core group of ASIC designers from Nortel.”

The company was founded 10 months ago by a group of 13 Nortel Networks employees who left the telecom giant to start Camelot. Adair, David Lapp and John Pillar spearheaded the effort, which has seen the company grow from 13 to 32 people. With the new funding, Camelot hopes to have 45 employees on board by the end of 2002.

Expect Camelot to deliver its first product in the third quarter of 2002, which should be perfect timing, says Adair.

"If you look at the (publicly traded) fabless semiconductor companies, most of them are up about 100 per cent from their low. The semiconductor market is definitely on the rise,” he says. "I really don't think I could have planned (Camelot's timing) better.”

Adair stepped aside as president about a month ago in favour of Fung. Fung was in charge of Nortel's Passport product line, which delivers the protocols and features required to make data communication happen. The decision was influenced by Fung's perceived ability to attract new talent to Camelot, says Adair.

"There is a tremendous opportunity to hire good people in Ottawa right now. In order to attract good people you have to have very seasoned management, and that's what Kit Fung brings to the table.”

For Fung, a 25-year veteran of Nortel, the transition to Camelot has been easy. "All the guys in Camelot used to work for me at Nortel,” he says. "It's just like the old days.”