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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BobbyMax 12/4/2012 | 9:40:19 PM
re: Startups Prepare for Pitchfest Dear "Dr." Cplayer:

The things have made our country so great are not coincidental. Except for a few bad apples we had a very strong work ethic, dignity, and honesty. We helped each other and truly connected a very cohesive society.

The corruptions practiced by Wall Street, Stock Analysts, Investment Bankers, VCs, Enterpreauners copying products from each other. Because very stark form of corruption that has hit our country is not likely to disappear in the next two cades or so. Because of wide spread corruption, millions and millions of people lost every thing that they had. I need not report the things that are focus of Wall Street Journal, New York Times, and Washington Post.

TheLeetleTacoBellDog 12/4/2012 | 9:40:19 PM
re: Startups Prepare for Pitchfest Yeah for BobbyMax the conscience of the unwashed masses.

What is your plan to save the industry? We are ready to march!

sanjoshi 12/4/2012 | 9:40:18 PM
re: Startups Prepare for Pitchfest I am not a H1 B worker but would still like to correct you on some of the things that are obviously misunderstood/miscommunicated.
1. 12 of the top 20 SEI CMM Level 5 companies of this world are Indian. That means quality so you are obviously wrong in assuming that Indians are Low Grade software workers (Cost effective absolutely yes ....)
2.FYI any one coming on H1B can only stay in US for Max of 6 yrs. 3 kids in 6 yrs just to stay back in US ??? May be a few want to stay back but 70% doing that sounds unreasonable to me.
3. As for Health care system ...I believe that is covered by Insurance and Premium is obviously not paid by US Govt. On the contrary you will be surprised to know that every H1B worker contributes 10% every Paycheck as SS tax without getting even a cent back as benefits bcos by the time 6 yrs are up he/she hardly qualify for any benefits. FYI rest of US residents benefit from it.
If you forget for just for one moment that you are one IT professional and look at it as an average American you will realize that China has taken away more jobs from Average Americans that those 500k Indians u mentioned. The Indians atleast pay taxes and spend money in US on Rent/Car/Groceries and have bank accounts which makes American economy benefit.
Juniper/Exodus/Hotmail/i2/Informatica...Some of the companies which employ hundreds of Americans and were founded by Indians....
Think of it rationally and you will find that inspite of such large no you will hardly ever see an Indian in a Terrorist attack or a crime....Its time you realize who your friends are and who your enemies are....
droptorgy 12/4/2012 | 9:40:16 PM
re: Startups Prepare for Pitchfest People will learn to desire to interactively communicate by video.
The critical mass of penetration, 1 million connections world-wide, reached in 2006, +/-1 year.
It will be implemented using PC/TV+web cam, video/IP/Ethernet, FTTH LAN, SM fiber P2P star.
This will be financed by banks, funds, VC and/or government.
And provided by a mix of incumbents and competitives, regarding component vendors, system vendors, connection providers and service providers.
Customers will be both enterprise, municipal, landlords and end subscribers.
This will first be employed in the economically rich parts of the world.
raid 12/4/2012 | 9:40:16 PM
re: Startups Prepare for Pitchfest sanjoshi,

(1) There are lots of high quality Indian engineers in the US. Most of these came to the
US universities on F1 student visa. The H1-B has worked much less affectively, mostly due to the difficulty in ensuring quality and sometimes blatant dishonesty by the companies contracting these workers.

(2) More than 70% of H1-B workers probably stay back in the US thru the green-card program (which is usually obtained in 3-5 years of stay in the USA).

(3) The H1 caps were increased during the bubble period causing a large influx of software engineers from India. This influx has virtually stopped today since no jobs are available. However congress needs to lower back the Cap to the pre-bubble times.

The US government does need to fend for its workers. For example, it can reduce the supply of green-cards for the next five years, so that the influx is reversed and the US economy can support a low unemployment rate.

BTW, I am not a US citizen and this is exactly what I would of expect my government.
brahmos 12/4/2012 | 9:40:15 PM
re: Startups Prepare for Pitchfest heh-heh, since rickshaw pullers, gas station
workers, fishermen, barbers in India can do the
work of all these rich american workers...
...why should cos keep jobs in mainland US ?

even if things recover, they can make more profit.

the "model" wherein rich , highly developed countries would continue to LOOT the rest thru
"hi-end" work while the rest get to work in
sweatshops isnt going to work. india, china they
will grab work at all levels.

whining about why "american" cos dont keep jobs
in usa wont help. more & more of these cos are
going to be majority staffed by non-amercians and
their concerns will get more importance.

companies dont need h1 visas in future. they
have developed confidence in offshore dev centers
and increasingly even GC holders are willing to
move back given a internal transfer. people
have seen dark side of the Boom and the fight
got knocked out of 'em.

..its better for a layed off GC holder with
COBRA running out to work his trade than fight
to work in a grocery store or retail job :(
droptorgy 12/4/2012 | 9:40:14 PM
re: Startups Prepare for Pitchfest Iipoed, thanks for your question.
My points:
* Video telephony over fiber is the major candidate to improve the telecom industry.
* A few years from now that will happen and prosper.
I found these points relevant in this thread, when considering some of the previous messages.
OK, Iipoed?
Iipoed 12/4/2012 | 9:40:14 PM
re: Startups Prepare for Pitchfest droptorgy: And your point is?
gea 12/4/2012 | 9:40:12 PM
re: Startups Prepare for Pitchfest Waitaminute folks...

This was our infamous Bobby Max (aka Harvey Mudd) often referred to as "Booby" who started this thread. This character is well known to completely fabricate "facts" that fit his worldview.

The only thing I can say about him is that he actually seems to believe most of the nonsense he spouts: this stems from the tenuous grip this character has on reality.

If you want to discuss this issue intelligently, don't quote Booby or any of his facts: he believes the whole world was snookered by Indian VCs that work for aliens from outerspace or something.

Booby: Where did you get the figure 500,000 from? And when you say the government forced the hiring of gas station attendants, are you referring to those wih advanced degrees, or do you seriously expect us to believe that high tech firms are hiring people with no college education to write their EMS code?

Either way, you are completely out of your mind, and your obvious racist hatemail stinks.
brighttank 12/4/2012 | 9:40:12 PM
re: Startups Prepare for Pitchfest It seems that person who posted such comments is totally ignorant of capabilities of Indians.

Who runs NASA?
Who runs Health care here ?
Where do the finest doctors come from ?
Where do the finest researchers come from ?

Do you think Americans! No my friend most of them came from India.

It is only their politeness and not so aggressive self adverstisement which lend themselves to comments by people like yourself.

India has one of the finest basic education centres. Why do you think companies hire Indians ? Are these exceutives fools! No because they know what they are getting.

With these highly mathematical oriented brains software skills come naturally. Average Indian (Even a rikshaw puller! ) can calculate change faster than any average American (I think some of them cant even calculate).

If you cant keep up with them. It is your problem.

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