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San Jose’s Caspian Networks, which had raised $317 million in venture capital to create a next-generation router, has given up and looking for a buyer, according to several reports.

The company’s saga mirrors the Internet boom and crash. It emerged in the late 1990s, with founder Lawrence Roberts creating a lot of excitement around the company’s vision. Roberts, who is credited for co-founding the Internet (as developer of ArpaNet), talked early about the need for a “traffic cop” networking product to prioritize Internet traffic. The company was still building its product when the Internet bubble popped, and in 2002 suddenly found there was no market for its initial product.

And, as the story went with many other huge networking companies at the time, venture capitalists decided to pump more money in, to tide it over. The company raised $55 million more last year.

News of the company’s problems surfaced last week, in a LightReading article, which said Caspian was stopping operations. VentureWire (sub required) confirmed the story this morning.

Major investors included U.S Venture Partners and Oak Investment Partners, and there was a long list of others.


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