Silicon Valley eyes BC – Zeugma introduced to major telcos seeking strategic partnerships

For companies with established technologies, strategic partnerships with major telcos can be of greater value than an injection of capital in today’s marketplace. The search is on

Curt Cherewayko

Representatives from international telco giants Vodafone, British Telecom and Swisscom were among those gathered in a small downtown Vancouver conference room to lend an ear as B.C. wireless companies put their best pitch forward.

Cash investment, however, wasn’t top of mind for many of the companies presenting at the Service Provider Investment Forum last month. Rather, strategic partnerships with the telecom carriers were the order of the day – underscoring the need in B.C.’s wireless cluster to forge relationships with wireless carriers that have the network infrastructure and distribution channels to fast-track new technologies to market.

According to the 2007 BC Wireless Industry Survey, the province’s 250 wireless companies will increasingly turn to institutional venture capital and strategic investments from channel partners in the next 24 months.

With more than 80% of wireless companies in B.C. expecting to be cash-flow positive within the next year, many will be their own primary source of funding as they become less dependent on traditional sources of start-up capital.

Released every two years by the Wireless Innovation Network Society of BC (WINBC), the survey also indicated that the telecom market prevails as the number one market for wireless technologies developed in B.C.

Vancouver’s Contigo Networks was one of nine wireless companies to pitch to the 20-plus representatives from the Silicon Valley-based venture capital and R&D divisions of international wireless and wireline carriers. Contigo’s web platform uses GPS signals that are transmitted over wireless networks to track vehicles, people and other mobile assets.

“We deploy using wireless carrier infrastructure, so we need wireless data transmission, we need access to location networks that some of the carriers have rolled out,” said Rob Goehring, Contigo’s vice-president of product management and marketing.

In its presentation, Burnaby’s Sutus Inc. sought strategic partnerships to grow sales for its lead product, the Business Central 200, which manages voice, data and networking applications for businesses in a single tabletop unit. Sutus’ vice-president, Shawn Chute, said it could accelerate roll-out of the product if it found a large service provider to partner with.

“A strategic partner would be someone who would take the Business Central in volume – probably private label it or private brand it – and come out and bundle it with their current offering,” said Chute. Sutus is also looking for additional investors to help fund the company’s approximately $10 million round of series B financing that it expects to close in late spring.

Other B.C. wireless companies that presented included FeedM8 and Mobidia Inc., as well as AppLocation Systems, which is aiming to raise $600,000 in its first round of external financing.

Another presenting company, broadband developer Zeugma Systems, announced in December the completion of US$22.5 million Series B financing. Andrew Harries, president and CEO of Zeugma, said that cash was not the company’s primary focus in its pitch. “We were introducing ourselves to forward-thinking service providers,” he said.

Representatives from the investment arm of Telus were also in attendance. Telus Ventures invests up to $15 million annually in new companies and helps develop products to meet the specs of Telus’ infrastructure and products.

“That way these guys aren’t developing something that’s not going to naturally fit into our network or anybody else’s network,” said Tanasut Rasmidatta, director of investment analysis for Telus Ventures. “This is the kind of open communication and working together as an industry that ensures that.”

The forum, which wrapped up the Pacific Northwest Wireless Summit in Vancouver, is hosted monthly, but the Vancouver forum is the only one to be held outside Silicon Valley.

“It definitely improves the cachet of [B.C.’s wireless cluster] in Silicon Valley,” said Liz Kerton, managing director of The Kerton Group, the wireless consulting company that directs the forum. “When we advertise an event, it goes to the whole community, so people know there’s something going on in British Columbia.” •

cgc@biv.com