MOUNTAIN VIEW, Calif. – As a guiding principle, following market trends might not sound very radical. But serial entrepreneur David Coelho is betting that the technological advances of his most recent wireless communications company will make it a success.
Founded in March 1999, MobileSys’ Etherpage software links computer applications and data to a wide variety of wireless devices, such as pagers, personal digital assistants and digital cell phones. The software, for example, can link e-mail or a company’s Web site to a pager or a cell phone.
“An employee on the road can go to that internal Web page, look up a colleague, click on the link and send an e-mail, which is a more efficient way to communicate than using phonebooks to try and find a number,” says Coelho, the company’s chief executive officer.
MobileSys differs from its competitors like Princeton, N.J.-based Nettech Systems Inc. and Somerset, N.J.-based Dynamic Mobile Data because it supports a larger number of wireless devices and users. Most wireless companies only link specific sites within an organization rather than the entire enterprise, which means with Etherpage “you can send a message to any of your people anywhere in the world at anytime,” he says.
Etherpage software is used by 1.5 million individual users from more than 650 companies worldwide, including Cisco Systems Inc., Qualcomm Inc., Hewlett-Packard Co. and even staffers at the White House.
The company charges its clients on a per-server basis, and the costs associated with Etherpage can range from about $600 for a small company to as much as the low seven figure range for a large corporation, Coelho says. The $600 fee charged to a small company would, for example, cover a one-time license fee and three wireless devices. Coelho declined to reveal the company’s revenue.
Etherpage was first marketed in 1996 by Personal Productivity Tools Inc., another wireless company founded by Coelho in 1993, but the company was disbanded and MobileSys acquired the software and its distribution.
After graduating from college in 1979, the entrepreneur launched his first start-up, Silicon Valley Research, an electronic design automation company that went public in 1984. In 1986, he founded a similar start-up, Vantage Analysis Systems, which later merged with Viewlogic Systems Inc. in 1992.
Wireless communications is one of the fastest growing technology sectors in the world, and its users are expected to quadruple to 1.3 billion over the next two and a half years, Coelho says. Although Etherpage is now used in almost every industrial nation in the world, the company wants to increase its channels of distribution worldwide.
To reach this goal, MobileSys in February received about $18.5 million in a series B second round of venture financing led by Duff Ackerman & Goodrich LLC, AsiaTech Management LLC and Alcatel Ventures, with each investing $4 million. Allegro Venture Partners LLC put in $3 million, Novus Ventures invested $1 million and The Entrepreneurs’ Funds kicked in $750,000, while private investors provided the remainder. The company plans to use the capital to speed up new product development and increase the scope of its sales and distribution, Coelho adds.
MobileSys in March received $2.2 million in a first round of venture financing provided by Novus Ventures, The Entrepreneurs’ Funds and angel investors, says Coelho, declining to comment on how much each investor provided. Prior to that, Coelho had supplied his own seed financing to the company.
The most recent round should be enough to carry MobileSys to an initial public offering or a buyout in the next 12 to 18 months, he says.
Several large venture firms, which Coelho declined to name, expressed interest in this latest round of financing, but he decided to create a group of backers based on the strategic relationships they could provide his company. AsiaTech, for instance, has strong connections in China, Taiwan, Hong Kong and Southeast Asia, one of the fastest growing regions in terms of wireless communications, says Coelho. AsiaTech, a backer of early- to late-stage IT companies, was attracted to MobileSys because of its “top-notch” customers and the fact that it had produced revenue, says Katherine Jen, a managing partner at the Silicon Valley-based firm. Meanwhile, Alcatel Ventures, whose major investor is the Paris-based global telecommunications company, Alcatel, can provide MobileSys with access to executives within the telecom company’s infrastructure, said Victor Lee, Alcatel’s general partner and co-founder. Alcatel Ventures focuses on early-stage information technology companies in the software, hardware and services sectors.
Tom Goodrich managing director at Duff Ackerman & Goodrich, said his firm invested in MobileSys because of its market potential and strong management team. MobileSys is an example of the venture firm’s shift toward earlier-stage companies with the potential for higher returns.
Walter Lee, a partner at Allegro, says his firm hopes to help MobileSys gain access to European and Asian markets. “I’d like to take David across both puddles,” he adds.