January 18, 2006
Latest investor round includes Motorola
Spotwave Wireless has raised $10 million U.S. in new funding to drive demand for technology that improves cellphone reception in office and apartment towers and garages.
The addition of wireless giant Motorola as an investor shows there are few dead spots in Spotwave's money-raising performance. The five-year-old company has now raised a total of $34 million U.S. and it expects to add at least $2.5 million more in the next few months.
With sales hitting an annual run rate of $12 million U.S., Spotwave is aiming for $20 million by the end of this year with an aggressive marketing push.
"We expect to go cash positive later this year and meet future needs from internal cash," chief executive Bill Carlin said. "Except for some debt financing for working capital, this should be our last equity injection from the private side."
Spotwave now has 72 employees, about 45 in Ottawa and the balance in the U.S. It will add about nine employees this year, with some new development jobs in Ottawa but most in marketing outside Canada.
The company had 60 employees when it last raised money in August 2004.
In addition to Motorola, the new round was led by previous venture-capital backers Newbury Ventures, VenGrowth Private Equity Partners, Primaxis Technology Ventures, Skypoint Capital, VentureLink Fund, The GrowthWorks Canadian Fund, and RBQ Ltd.
Motorola, the second-biggest global cellphone maker and a contender in wireless networking gear, said Spotwave technology complements Motorola's seamless mobility strategy.
"We are confident that (Spotwave's) upcoming products will advance indoor wireless coverage for consumers," said Warren Holtsberg, Motorola vice-president of equity investments.
Founded by engineers from the former Canadian Marconi – now CMC Electronics – Spotwave has turned "smart antenna" technology into a growing line of SpotCell signal-repeating hardware sold to major wireless companies in Canada, the U.S. and China. It also makes SpotCell products sold to police and fire departments, building managers, colleges, banks, arenas and retailers. Wal-Mart uses Spotwave in some U.S. stores to ensure that Sprint phones on sale work for customers.
Now Spotwave is taking aim at the growing number of people who run businesses and work from their homes.
Canadians generally enjoy good wireless reception, except in high-rise stairwells and garages, Mr. Carlin said, but U.S. wireless networks were built by many companies to varying standards that create more market opportunities for Spotwave.
He said that as many as 25 per cent of U.S. wireless subscribers have reception problems at home and at work.
He estimates that as many as 500,000 small to mid-sized office buildings in Spotwave's U.S. target market have reception problems.
It is also shifting marketing from a direct sales approach to working through major distributors. Mr. Carlin said Spotwave has competitive edge working with distributors because its products can be installed with minimal adjustments and without interfering with other telecommunications traffic.
Spotwave is also focusing on particular markets where demand is strongest now, including hospitals and healthcare, transportation and manufacturing and financial services.
"Companies are investing heavily in wireless technology to track shipments and ensure security. But it isn't much good in a truck parked in an underground garage."
