Many technology start-ups are, once again, turning to established vendors rather than venture capitalists as their preferred source of funding. With new business hard to come by, co-operation and distribution agreements with companies that already have a ready-made customer-base are seen as just as valuable as cash.
The UK's Thirdspace Living, for example, has licensed its entire patent portfolio to Nasdaq-listed video-on-demand (VOD) specialist Concurrent Computer in return for $16 million (€18m) in second-round funding. Thirdspace, a joint venture between French telecommunications equipment maker Alcatel and US database giant Oracle, sells video server software and provides interactive television (iTV) services.
Amid a difficult climate for all iTV suppliers, Thirdspace's technology roll-out failed to live up to ambitions set out when the company was founded in October 2000 with an estimated €173 million in cash. Concurrent and Thirdspace say they will work together to develop technology to enable telecoms network operators to provide TV, iTV and VOD services over high-speed copper networks.
German conglomerate Siemens, meanwhile, took a stake in Swedish start-up Mediabricks, which has developed a platform that aims to enable wireless carriers to offer real-time interactive video applications. Under the deal, Siemens has promised to grant Mediabricks access to its sales network and wireless expertise.
Lumentis, a Swedish developer of equipment for dense wavelength division multiplexing (DWDM) telecoms networks, landed the largest injection of funds during the month. Japan's Santec and existing investor Deutsche Bank invested $19 million (€21.4m) in second-round funding. Santec, a supplier of optical components and testing equipment, promised Lumentis a distribution route into Asian markets and access to its research and development efforts. Santec hopes that collaborating with Lumentis will mean it can bring products to the market quicker.
Working toward a similar goal, 2002-founded Essient Photonics raised €7.9 million in first-round funding from early-stage venture capital firm Pond Ventures. The money is earmarked for creating a prototype and then ramping up production of its opto-electronic components.
Essient, spun out of Glasgow University in the UK, claims that its technology contains design breakthroughs that will enable customers to produce communications equipment that is smaller, uses less power and is cheaper than alternatives. Its chief technology officer is Simon Hicks, who was also involved in setting up opto-electronic component specialist Kymata and photonic integrated circuit developer Intense Photonics.