June 19 -- Zolo Technologies, a developer and manufacturer of optical networking subsystems, announced that it has raised $32.5 million in its second round of financing. Despite the downturn in the market, financing was led by Canaan Partners and included other new Zolo investors, 3i and Infineon Ventures. Also participating were existing Zolo investors: Crescendo Ventures, Morgenthaler Ventures, Anschutz Investment Company and Telecom Partners. Stephen Palfrey, principal of Canaan Partners, joins the Zolo Board of Directors immediately. Zolo will use these funds to significantly expand its production capacity, product development and marketing programs for the company's Zmux line of dense wavelength division multiplexing (DWDM) products. In February, Zolo Technologies announced that it had begun delivery of its Zmux family of DWDM products, which uniquely combine high-performance, scalability, reliability and cost-efficiency with a design that facilitates high-yield production. Since that time, Zolo has delivered evaluation products to many of the world's leading optical systems manufacturers and, in March, the company introduced the industry's first dual-input DWDM device.