More than money

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.


Deals announced during March/April 2002
Company What it does Country Amount in € (round) Lead investor
Alice Systems S/w for mobile operators Sweden 3.3m (2nd) ACR Capital
Am-Beo Telecom billing systems Ireland 3.0m Enterprise Ireland Mobile internet tech UK 2.8m Close Brothers
BlueChip Technologies Voice recog &mobile tech UK 4.9m Enterprise Equity
Corus Technologies IT services s/w Sweden 2.2m InnovationsKapital
Esmertec Jave virtual machines Switzerland 3.5m (2nd) Sofinnova Partners
Essient Photonics Optoelectronics UK 7.9m (1st) Pond Venture Partners
Hypnotizer Interactive video s/w France 1.0m (2nd) SPEF Venture
Infinite Data Storage Optical data storage tech UK 4.9m Cambridge Gateway Fund
InterNetwork Network load testing s/w Germany 5.0m (1st) Target Partners
Kaidara Customer support s/w France 8.1m (2nd) CDC Innovation Partners
Lumentis Optical networking tech Sweden 21.6m (2nd) Santec
Mediabricks Mobile tech Sweden n/a Siemens
MuTek Solutions App mgmnt s/w Israel 5.7m Plenus Venture Lending
Obtree Technologies Content mgmnt s/w Switzerland 12.4m n/a
Picsel Technologies Multi-media content engine UK 6.8 (2nd) Softbank Europe Ventures
Prediction Dynamics Trading &risk mgmnt s/w Ireland 1.3m (2nd) ACT Venture Capital
RadioScape Wireless comms s/w &h/w UK 3.2m Yasuda Enterprise
Thirdspace Living Broadband s/w UK 18.2m (2nd) Concurrent Computer
Vio Worldwide Graphic arts s/w UK 4.9m LMS Capital
Volantia Info extraction tech UK 2.4m (2nd) nCoTec Ventures
Vrisco Content integration s/w UK 571,550 Beer &Partners
Data from Infoconomist‘s daily Deal Watch. All currencies converted into euros at current exchange rates

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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