SAN JOSE, Calif. — Neterion, a developer of 10 Gps Ethernet connectivity products, said it closed its second round of funding with $18 million.

New investor Menlo Ventures led the round, with participation from previous investors VenGrowth Capital Partners and the Business Development Bank of Canada. Hal Calhoun of Menlo Ventures joined the board as the fourth member. The board still has two open seats reserved for outside directors.

The company will use the funds for product and sales development. President and CEO Dave Zabrowski said the company expects this round to take the company to profitability, slated for the second half of 2004. Mr. Zabrowski does not anticipate raising any further funding.

Neterion is developing I/O products that offload processing-intensive functions from servers and data storage devices. The company expects to release its first products in the first quarter of this year.

Mr. Zabrowski said the company's sales model focuses on OEMs, which expands the company's national presence to end users of the OEMs. Mr. Zabrowski said the company plans to announce a major partnership by the end of the month that will expand its global presence.

The company has raised $27 million to date. Law firm Kirkpatrick & Lockhart served as legal counsel for the financing.

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