Funding for startups

Startups Prepare for Pitchfest

DALLAS -- Startups seeking funding in the telecom equipment space? Who's kidding whom?

Believe it or not, venture funding activity still exists. And 30 young companies -- including some telecom and wireless startups -- are getting a chance to pitch their wares to an audience of more than 400 moneymen from Texas and elsewhere in the southwest who will gather here at the Southwest Equity Capital Summit (SECS), an annual venture investment confab.

"It's a good place to learn what's on the minds of the VCs," says Scott Grout, CEO of Chorum Technologies Inc., a company that closed a $54.7 million funding round about this time last year.

So what does a young startup do to raise money in this environment? Grout's advice for startups seeking capital is to be realistic about funding terms, demonstrate a deep understanding of the market you're trying to penetrate, and "state credibly what your exit strategy will be."

"At the end of the day, investors get into an investment so they can someday get out," he says.

One startup that's busily preparing for its moment in the spotlight is jNETx, a Dallas-based developer of middleware for telecom operators. "Obviously we're excited about the opportunity and we want to do the best possible job," says Steve Hollis, founder and VP of jNETx. "That excitement might lead to a little nervousness."

Hollis says jNETx is looking to attract $5 million in new financing for its middleware, which he says will help wireline and wireless carriers implement new phone services, ranging from short message services to automated personal secretaries. JNETx's software enables the new services, but the service creation itself is left to third-party developers, a division of labor that is paying off handsomely for NTT DoCoMo Inc.'s (NYSE: DCM) i-mode platform.

In a way, jNETx's software appears to be a next-generation service control point, the node in a telephone network that hooks into several databases and signals network switches to provide specific services. The startup says one European wireless network is already installing its software to run tests.

Hollis says jNETx competes with Infitel International N.V., Incomit, and AePona Ltd. So far it has raised about $2 million in funding from its founders and Mint Capital, a London-based venture firm.

The company has about 35 employees, most of them software developers based in Moscow [ed. note: Russia, that is, not Idaho].

Other attendees will include big corporations who are either looking to partner or invest in startups. Fujitsu Network Communications Inc. (FNC), based in Richardson, Texas, says it is always looking to team with photonic component startups and, in rare cases, systems vendors. "I'm going to be talking a lot less about investing and a lot more about partnering," says Brian Gawick, senior VP of product development at FNC.

Not all early-stage startups seeking funding will be met with fistfuls of cash, despite the prime audience, says John Adler, a venture partner at InterWest Partners. "I know we're going to see deals, but I don't expect that I'm going to see one that makes me stand up and say, 'I'm going to fund that thing.' "

However, startups like jNETx, that are looking for additional funding at SECS or a similar venue, may have more success. "I think it's really good for companies that have got funding already and they're getting ready to go out and get follow-on funding from groups like VCs," Adler says.

— Phil Harvey, Senior Editor, Light Reading
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Half-Inch Stud 12/4/2012 | 9:38:42 PM
re: Startups Prepare for Pitchfest perhaps the issue is REALLY A SIMPLE MATTER of
"really smart people" available to work.

Therefore, perhaps the "really smart citizens" are busy working the U.S.A., Canada, Japan, and China.

H.I. Stud
sigint 12/4/2012 | 9:38:44 PM
re: Startups Prepare for Pitchfest packetswitch:

When you say India has the smartest people, do you base this on which of the following:


India doesn't haven't an unusually large percentage of smart people, maybe just close to the global average. However, given the large population, you could say that the *absolute* number of smart people is large.

Unfortunately, many of these smart people (and some not so smart people) have migrated to the US and other Western nations. This, IMHO, has been detrimental to India.

We have to remember that most of these migrants have had the benefit of a free education in what is a poor country. Indian programmes in Space, Defense and Telecom have suffered greatly due to lack of skilled engineers.

Yeah, do send them back. India will be better off. And, if what you say is correct, so will the US.

rafaelg 12/4/2012 | 9:39:01 PM
re: Startups Prepare for Pitchfest READ the bottom of the site page...
rbfishing 12/4/2012 | 9:39:03 PM
re: Startups Prepare for Pitchfest The intent of the H1B program was to make additional technology workers available for positions that could not be filled with domestic talent. The problem is that there is certainly not now, nor was there probably ever a need for this program. Iindustry organizations like the Information Technology Association of America and other groups have in the past and continue to Lie to Congress about the need to import foreign labor to fill the thousands of jobs that will go unfilled unless Congress acts to continue or increase the number of H1B visas. Maybe they should put out a list of the "unfilled" positions because there's thousands of unemployed technology workers that would like to know where to find them.

There is something that can be done. The current H1B visa level is 195K for 2002 but is set to revert back to the original level of 65K next year unless Congress acts. WRITE YOU CONGRESSMEN/SENATOR. Unless we do something to expose these lies there is no hope of change.
veluthuru 12/4/2012 | 9:39:05 PM
re: Startups Prepare for Pitchfest
While BobbyMax (Harvey Mudd's) email suggesting Indians are "inferior" programmers and similar insinuations remain, rebuttals have been removed.

What is LR's policy regarding removing postings ?
rafaelg 12/4/2012 | 9:39:29 PM
re: Startups Prepare for Pitchfest OOOHHHHH.... I can't do that. I see his posts as one of the many happy moments during my day! He always manages to make my face muscles work! I hope never to find his identity. Whether a fake or not, I would be disappointed...

lastmile 12/4/2012 | 9:39:41 PM
re: Startups Prepare for Pitchfest LR should remove the 'ignore' feature. LR should also eliminate the P2P rating system. Everyone deserves at least a 5 for the hard work in expressing garbage. This includes me and BobbyMax is no exception.
ThinkLogically 12/4/2012 | 9:39:41 PM
re: Startups Prepare for Pitchfest Hey Jim
I totally agree.. but with a caveat ..
not watching such bigots may be harmful to your health :surgeon general
keep a healthy sense of humor and its all good .. some of these posts are intentionally inflamatory .. doesnt mean you have to get inflamed ... a little bit of ridicule always helps ;-)

also theres theres the "a little knowledge is a dangerous thing" brigade led my major no_light ..

thanks to the positive posts .. also i know im adding fuel to the fire by getting drawn into this discussion and steering it away form the topic at hand ..

so ill let it lie..

jim_smith 12/4/2012 | 9:39:42 PM
re: Startups Prepare for Pitchfest Dear LR readers,

The "Ignore author" feature is meant for the
likes of BobbyMax.

Use it.

rjmcmahon 12/4/2012 | 9:39:50 PM
re: Startups Prepare for Pitchfest how does ip/broadband/atm/mpls etc etc help improve the human condition? i believe that
first we got to solve the basic problems of
food/shelter/water/air/environment etc. Then
lets talk about more esoteric needs like

It's about so much more than broadband or technology choices.

It's about an advanced unicast communications infrastructure with inherent storage which provides the basis for all of mankind. Getting there requires reducing the costs so everybody, from the past, in the present, and to the future, can first understand and then assist with the individual needs.
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