Case Studies
Elanti Systems, Inc.
Turning a captive cost center into a commercial supplier.
In 2006, New Venture Partners began working with Telstra, Australia’s leading telecommunications service provider, to evaluate a new method for managing traffic flows in IP/packet based networks. The new method would allow service providers to dynamically manage and optimize traffic flows in real-time based on conditions occurring in the network. The investment thesis was based on a service and performance management solution for next generation networks including a service assurance offering for virtual private networks.
Since Telstra’s strategy was focused on expanding its telecommunications services business, the company selected a spin-out path to secure a commercial product from Elanti Systems. At the time of spin-off, Telstra became Elanti’s first customer deploying its service assurance and visualization product in its operational support systems.
New Venture Partners led the spin-out process, including developing the business plan, engaging with lead customers, refining the product strategy and recruiting the management team. In January 2007, New Venture Partners led Elanti’s Series A financing round of $2.5 million with Innovation Capital. To further expand Elanti’s sales and channel partner efforts, New Venture Partners recruited two recognized industry executives as independent board members.
Today, Elanti Systems is a global telecommunications software company based in New Jersey with operations in UK, Europe and Australia. The company is currently engaged with several tier one and two service providers as it executes its go-to-market strategy.
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Airversent, Inc.
Building a supplier to meet a corporate need.
As part of New Venture Partners’ vision of building a leading mobile resource management company, we completed two investment transactions to form a new company named Airversent. First, in an effort to work with our corporate partner, British Telecom (BT), on its field force management initiative, we were introduced to Telepartners, Ltd., a UK-based strategic supplier to BT. With BT committed as a customer and channel to market, we invested in the venture.
In parallel to closing the UK investment, we sourced a corporate spin-out from Telecommunication Systems, Inc (TSYS) in the mobile asset management market. The TSYS spin-out company was a leading provider of field force automation solutions for logistics, courier and delivery related industries. We completed the spin-out transaction from TSYS in May 2007, merged it with Telepartners, resulting in the formation of Airversent as the leading mobile resource management company offering solutions across a wide range of industry segments.
New Venture Partners led the Series A financing with an investment of $7.3 million to fund the combined company and purchase the assets from the TSYS transaction. We recruited the executive management team, developed the business plan and crafted the initial go-to-market strategy.
Today, Airversent is a global mobile resource management company based in Maryland with sales and marketing activities in the US, UK and Europe targeting large enterprises directly and working with leading wireless carriers to market to small to medium businesses.
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Gainspan
Establishing a beachhead in an emerging product market.
GainSpan brings WiFi sensor networks to life. The company’s semiconductor and software solutions break new ground in WiFi applications by enabling years of battery life for WiFi sensors and other devices. Target applications include: industrial process automation, commercial and home automation, and industrial and health equipment monitoring.
In September of 2006, a core team of engineering and thought leaders spun off from Intel Corporation, led by New Venture Partners, to form GainSpan. Intel’s New Business Initiatives group had brought the project together, but they had come to realize that there was greater commercialization opportunity for the business to grow as a focused startup company outside Intel. They chose New Venture Partners as their partner to lead the spin-out.
New Venture Partners conducted extensive due diligence on the market, team, technology, and value proposition. We negotiated the venture spin-out including the transfer of intellectual property, assets, and people into an independent venture and built a strong syndicate of venture capital co-investors. New Venture Partners continues to contribute to GainSpan as active Board members facilitating critical customer and eco-system partner introductions that will help the company grow and succeed.
GainSpan has met all development goals and started shipping its first product in Q1 2008. The company is working closely with numerous alpha customers and has a strong sales pipeline. Gainspan secured a $20 million Series B financing in late 2007 that will allow it to expand its sales and marketing activities to further its lead in the market for WiFi sensor networks.
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Liquavista
Commercializing an innovation outside core markets.
It began when New Venture Partners met two Philips researchers in Holland with a rough lab experiment that demonstrated a very powerful idea. Using water and electric voltage, they pushed globs of colored oil around a plate and described how “electrowetting” technology could be used to make the pixels of a perfect display for the skyrocketing number of mobile phones and other devices.
Mobile products have very limited battery power and yet, because they are portable, they must be viewable under a wide range of lighting conditions, including broad daylight. Historically, these requirements presented an insurmountable challenge: traditional LCDs drain batteries in order to outshine the sun (and still often are barely viewable), while available low-power display technologies are not capable of color or video. These two researchers had invented a display that could meet the key needs of mobile devices: ultra low power, daylight viewability, full color, and video speed.
We recognized the potential of the opportunity, but also that more research was needed to show that practical performance requirements could be met. We provided guidance to the small team on where they might focus their attention and kept in close touch with them.
While they achieved rapid advances, Philips made a strategic decision to exit all of its display businesses leaving the nascent technology without a path to market. We incubated the effort for a year inside Philips -- funding and directing an expanded technical team, building a business team and plan, and recruiting an experienced CEO. In 2006, we spun the venture out as Liquavista and built a strong syndicate of co-investors.
Today, Liquavista has operations in Europe and Asia, paying customers in several market segments, and a bright future.
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iBiquity Digital
Establishing a beachhead in an emerging product market.
In 1997, we invested in the internal Lucent incubation of a technology called Perceptual Audio Coding (“PAC”) under the name Lucent Digital Radio (LDR). PAC was a digital compression algorithm developed by Bell Labs technologists that would ultimately be used to convert AM/FM radio broadcast from analog to digital for improved sound quality and new data services.
Our research indicated that PAC was an effective solution for the radio market and due diligence showed competitive technologies to be distinctly inferior. Since Lucent’s strategic interests did not include radio broadcast, it was willing to grant an exclusive license for the PAC technology in the radio field. Our team supervised the transfer of the core engineering team and physical assets to a start-up.
We funded the business, and lead it through the pre-revenue, pre-merger technology development cycle. In August 1999, LDR completed a Series A financing of $10 million led by Pequot Capital, and merged in August 2000 with its principal competitor, USA Digital Radio. The combined company, now known as iBiquity Digital, has become the industry standard in North America. In October 2003, the FCC officially sanctioned iBiquity’s HD Radio™ technology as the US industry standard for digital radio. As of January 2005, all ten of the nation’s largest radio station groups --- including Clear Channel Communications and Infinity Broadcasting -- had converted or committed to converting approximately 2,500 radio stations to iBiquity’s HD Radio™ technology. By December, 2007, over 60 different radio models had hit the market, for automobiles and the home.
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Flarion
Creating an alternative path on an established technology roadmap.
In May 1999, we began working with Rajiv Laroia, a leading researcher in Lucent’s Bell Labs. Laroia developed a concept for a new wireless data architecture that offered greater performance than existing 3G technologies at five to ten times less cost.
New Venture Partners funded a short development project and worked with Laroia to develop a business plan, presenting the Flarion concept to other venture capitalists. In Februrary 2000, we led Flarion’s Series A fundraising of $12.5 million with Bessemer Venture Partners, Charles River Ventures and Pequot Capital. The investor group recruited former NextWave Telcom Inc. COO Ray Dolan as CEO, and added three industry luminaries as independent board members. Once the venture was launched, New Ventures Partners brought it to the attention of Cisco, and in March 2001, a series B financing was led by Cisco Systems.
By 2005, Flarion’s Flash-OFDM mobile communications network technology demonstrated seamless mobile Internet access, enabling mobile operators to profitably offer low-cost, IP-based wireless broadband services. Flarion ran successful trials with several carriers throughout North America and Asia, and with Vodafone Group in Japan, T-Mobile in Europe, and Telstra in Australia, among others.
In February 2006, Qualcomm purchased the company for $805 million, making it the second-largest venture-backed company exit of that year.
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InPhase Technologies
Commercializing an innovation outside core markets.
InPhase Technologies was spun out of Bell Labs research in December 2000 with the objective of becoming the first company to bring holographic data storage technology to market. Through revolutionary techniques developed by a team of Bell Labs scientists, InPhase solved several fundamental problems associated with holographic storage, including the creation of a viable, commercial storage medium.
New Venture Partners identified the spin-out opportunity in Bell Labs in 1997 and supported the venture development/market qualification phase while the nascent venture was still inside Bell Labs. Ultimately, we negotiated and transferred the intellectual property and equipment from Lucent to the new independent company, and orchestrated the initial venture capital syndication. The Series A financing of $14.million was led by Signal Lake Venture Fund, Madison Dearborn Partners, Newtown Technology Partners and a strategic investor, Imation.
In November 2002, after continued advancements, New Venture Partners helped InPhase close a $6.3 million Series B financing, recruiting strategic investor Hitachi Maxell Ltd. ("Maxell"), one of the leading global manufacturers of storage media. Less than two years later, in January 2004, we led an $8.7 million second tranche of Series B financing, attracting additional strategic and financial investors.
In January 2005, InPhase announced a breakthrough in data storage with the world’s first prototype of a holographic storage drive. The prototype is the foundation for InPhase’s family of Tapestryª holographic drives, with data capacities that range from 200 GB to 1.6 TB on a single disk.
New Ventures Partners remains InPhase’s lead venture capital investor on the board of the directors, and continues to work closely with management on strategy, partnerships and financial planning.
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Subex (Azure)
Turning a captive cost center into a commercial supplier.
Initially an internal unit held within the BT Exact division of BT, Azure was the first spin-out that New Venture Partners orchestrated under its BT relationship in March 2003. We selected Azure because of its large market opportunity, its strong value proposition and its ability to leverage its relationship with BT. The team already had a multi-year track record as a business supporting internal revenue assurance and fraud detection needs of BT .
New Venture Partners launched the independent company by negotiating intellectual property and asset transfer agreements, and played a lead role in recruiting and hiring the senior management team. In addition, we negotiated multi-million dollar supply agreements with BT operating groups, and transitioned over 100 employees and contractors to the new company. New Venture Partners participated in the due diligence for six potential acquisitions, three of which were closed. In 2005, we led Azure’s first external venture financing with new investors Doughty Hanson and Intel Capital.
By 2006, Azure had become one of the world’s leading revenue assurance companies. It had developed or acquired a suite solutions that enabled telecom operators to reduce costs and maximize revenues from existing operations and infrastructure, by improving the accuracy of cross-carrier billing, identifying and diagnosing the source of lost revenues and reducing fraud.
It had become a truly global company with over 200 employees, operations throughout Europe, Asia and North America, and 20 of the top 40 operators as its customers.
In February 2006, Azure was acquired by Subex Ltd. The combined company is now headquartered in Bangalore, India. It has 32 of the largest 50 global telecom operators as customers, with 60 installations in over 150 countries. As of 2008, new Venture Partners retained multiple board seats for this publicly traded company.
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Vidus Limited
Turning a captive cost center into a commercial supplier
Vidus Limited provided intelligent field force management software to major telecommunications, cable television, and public utility operators. Vidus’ solution enabled such service providers to reduce cost and enhance customer service by offering and meeting narrow service appointment windows through the dynamic optimization of field force worker deployment.
Vidus began as a project within British Telecom’s R&D unit, and was one of New Venture Partners’ initial spin-out ventures under the firm’s relationship with BT. The software, critical to the operations of BT, was attractive because of its large scale field proven track record, clearly superior and patented technology, and global market potential. BT deemed it in its strategic interest to be a customer for the technology, leaving the work of developing, maintaining and supporting the software to Vidus, who would grow additional expertise and a customer base.
New Venture Partners launched and funded Vidus as an independent company in 2003 after negotiating the transfer of all intellectual property, employees and assets and securing substantial supply and distribution agreements with BT. Post investment, we recruited a seasoned serial CEO entrepreneur. New Venture Partners also played a key role in building out the senior executive team including the CFO, COO, VP Marketing, and VP Sales. We collaborated with the management team to shape the business plan and led the company’s venture fundraising campaign. Meanwhile, Vidus successfully expanded its business with new customers, including Centrica (the United Kingdom gas utility), NTL (the largest United Kingdom cable operator) and Eon (the incumbent German power utility).
New Venture Partners helped negotiate @Road, Inc.’s acquisition of Vidus which was completed in February 2005. @Road, Inc. was a leading provider of mobile resource management (MRM) services, before itself being acquired.