BeVocal Sings $45M Tune

BeVocal Inc. management is quite literally looking to the proceeds from a recent $45 million private equity placement to put the one-year-old provider of voice-enabled Internet services on the map. In fact, the company may use its service in order to settle its nomadic headquarters.

After settling into new offices in March, the third move in the past year, BeVocal’s founders are looking well beyond the company’s modest beginnings in a spare bedroom of Chief Technology Officer Mikael Berner’s house.

“We literally got kicked out of the spare bedroom because Mikael’s wife was having twins and needed a nursery,” quipped co-founder and BeVocal V.P. of Product Development Amol Joshi.

Laying claim to the low-cost office space of Joshi’s and chief financial officer Steve Tran’s apartment before vacating the air-conditioned, roomier confines of Panasonic’s Matsushita U.S. R&D laboratories, the four founders are now haunting the offices of Internet content and wireless communications providers.

“We think it’s very important to partner with companies in order to lower costs and accelerate the time to market,” Joshi said. The initial foundation of BeVocal’s platform is its patent-pending speech-based address recognition software, which gives consumers free directions to locations over any phone.

“You don’t have to have a special cell phone that has a global positioning chip or any particular service provider,” Joshi said. “You just have to know where you’re at.”

To that end, Joshi was recently spotted in the Silicon Valley offices of Mapquest.com and Vicinity Inc. after exploring partnership possibilities.

Other uses of the company’s services include flight information, regardless of carrier, directions to the nearest brick-and-mortar retailer (hotel, restaurant, book store, etc.) and co-branded information from content providers (sports scores, stocks quotes, etc.).

Offline Applications

“BeVocal is an outstanding opportunity,” said Michael Linnert, a partner at Technology Crossover Ventures. “It makes a ton of sense that the Internet would evolve to add the functionality of interacting with wireless and other technologies.”

Moreover, Joshi is quick to point out that such services could be valuable weapons for brick-and-mortar retailers to combat Web-based competitors.

“There’s a lot of value in our service to brick-and-mortar companies,” Joshi said. “If consumers get directions to the nearest Barnes & Noble, that drives physical traffic to their stores.”

Indeed, after initially relying on the financial backing and guidance of its angel investors, the seamless mix of Internet, wireless and brick-and-mortar was seen as a key component in cinching the company’s first venture round.

“Given the environment of the market today, it’s not as difficult to raise money,” he said. “What is important, is that we assembled a really experienced group of angel investors that helped build a solid foundation for the company and then put us in a position to go after a major VC round.”

Those new investors include Mayfield Fund, U.S. Venture Partners, Technology Crossover Ventures and Trans Cosmos USA. Along with capital, the VCs have in tow a wealth of industry contacts and potential business partners.

“BeVocal has assembled a group of incredibly insightful, strategic investors,” said TCV’s Linnert. “This enables the company to evolve at light speed rather at an incremental pace, having to worry about financing.”

Going Global

Trans Cosmos USA, whose parent company is Japanese, was included in the round to lend some international expertise. “Japan has the same number of wireless users [as the U.S.] with half the population as the U.S.,” Joshi said.

High-powered board or not, it remains to be seen whether the public markets will eventually listen to BeVocal’s message of a wireless-enabled Internet. While a public round is indeed the company’s ultimate goal, some bridge financing may be necessary. In the interim, company officials are focused on developing strategic relationships.

“The next step is to partner with the leading content providers to voice-enable their information,” Joshi said. And while its services are indeed free of charge to consumers, the company is looking to profit from services to corporate partners.

The major component of that model is a fee charged to businesses for transactions secured through the BeVocal network. Other planned revenue streams include fees to host unique content, sponsorship opportunities for co-branded services and advertising fees.

“In our perspective, advertising is the least important revenue stream. We’re really much more transaction and hosting focused,” Joshi said. “We want to have the best image and quality for the service, and not clutter it down with advertising.” .