Talking It Up

Company: Kodiak Networks HQ: San Ramon, CA Founded: 2001

Management: F. Craig Farrill is co-founder, president, and CEO. Previously, he was managing director at inOvate Communications Group, a venture capital firm focusing on wireless startups. He also held the prestigious position of chief technology officer for Vodafone AirTouch.

Investors: In August 2005, the company raised $14.63 million in Series B funding from Kleiner Perkins Caufield & Byers and Redpoint Ventures

Business Model: Kodiak sells a suite of voice technology enhancements, the RTX system, to wireless carriers. It allows carriers to add new features that leverage their existing voice networks. Their offerings currently include four key ones: Push To Talk is a walkie-talkie function that allows cell phone users to push a single button to make a call or convene a conference. Nextel offers its own version of Push to Talk – and it helps keep Nextel users loyal. Another feature, which should attract businesses, is Voice Bridge, a simple way to initiate a conference call with up to 30 different phones. Instant Availability offers icons similar to those in instant messaging applications, which indicate voice availability. Finally, Instant Voice Messaging allows users to leave voice messages with an individual or group – without dialing or listening through greeting messages.

Competitors: Nextel, Sprint, and Verizon have competing features.

Dirt: Management and investors have been patient with Kodiak – it’s been in business for four years without major customer wins. However, in the past five months it has signed significant agreements with carriers and handset makers, gaining commitments from Alltel, Sony Ericsson, Samsung, Lucent, and Amp’d Mobile. Kodiak-enabled services are currently available to Alltel users and Amp’d plans to launch services in the fall of 2005.

If users take to Kodiak’s features, as we expect they will, other wireless carriers will be lining up. Carriers can’t allow their competition to offer valuable new services without providing those same services. And working with Kodiak is a fast and easy way to get those new features. Additionally, of course, carriers can charge fees for this new functionality. To date, for instance, conferencing revenues have been the domain of land-line carriers; now wireless carriers have a chance to take a bite out of that apple.

Shanghai – Once Again – Is a Thriving Center of Business
China is still hot – and other alarm:clock news from the land of private venture funding.

The successful IPO of the Chinese search engine Baidu, mentioned here two weeks ago, has drawn renewed attention to the growing number of tech-related investment opportunities in China. With companies like Yahoo joining the rush earlier this month, by investing $1 billion in Hangzhou-based search engine Alibaba, the drum beat grows louder.

With increasing frequency, we are encountering companies like 99bill.com, a Shanghai-based e-commerce infrastructure company that offers an e-mail and mobile phone online payment platform. On August 11, 99bill.com received an undisclosed Series A round of venture funding led by Doll Capital Management and Peninsula Capital. The company claims that Internet-based transactions reached $2.8 billion in China in 2004. It hopes to facilitate the growth of this market going forward by making transactions easy to complete on the Internet.

Although Internet- and consumer-related investments will continue to attract the most attention from the media because of the potential spending power of China’s 1.3 billion citizens, we’re also keeping an eye on less glamorous, yet potentially exciting investment opportunities.

In the past, we have mentioned Huawei Technologies – calling it the biggest private company you’ve never heard of. Huawei had 25,000 employees and reported sales of $5.58 billion in 2004. The company sells a broad range of telecom networking equipment, from wireless and wireline products to data networking equipment.

And, last week, we came across VeriSilicon, a Shanghai-based semiconductor design company founded in 2001. It’s an ASIC design foundry – basically a low-cost builder of customized chips. The company provides outsourced services that run the gamut in chip design and boasted 140 engineers prior to its latest round of funding. VeriSilicon says it has over 400 customers worldwide.

On August 15, the company closed a Series B round of financing of $13.5 million from existing investors WI Harper Group, IDG Technology Venture Investment, iGlobe Partners, and Harbinger Ventures, and new investors Intel Capital, HSBC Private Equity (Asia), CID Group, Legend Capital, KTB/UCI, and International Finance Corporation (IFC). This brings its total funding to $20 million.

Its CEO is Wayne Dai, who was previously CTO of Celestry Technologies, which was acquired by Cadence Design Systems in 2002. He has a PhD degree in Electrical Engineering from U.C. Berkeley and was a professor at U.C. Santa Cruz.

Meanwhile, one of VeriSilicon’s more prominent investors, Intel, also announced two other China-based investments from its $200 million Intel Capital China Technology Fund. The Santa Clara-based chip giant invested an undisclosed amount in Hong Kong-based Chipsbrand Microelectronics, a fabless semiconductor design company, and Shanghai-based Onewave Technologies, a broadband entertainment technology company.