Looking to grab a piece of what it sees as a next-generation sector in voice and video IP networks,Silicon Valley venture capital firm Mayfield Fund recently led a $20 million Series C private equity round for Convedia Corp.
The Vancouver, British Columbia-based firm makes softswitch-compliant media servers that provide enhanced services over Internet Protocol (IP) networks.
“Convedia’s ahead of the market,” said Janice Roberts, a general partner at Mayfield, which contributed $10 million to the deal. She and Sam Znaimer of Ventures West each took Convedia board seats as part of the financing.
Additionally, newcomer Ventures West was the second largest player in the transaction, investing $5 million.
Along with new backer Entrepia Inc. returning investors Ontario Teachers Pension Plan, Altamira Financial Services Ltd. and Ottawa-based investment company Wesley Clover Corp. also participated in the round.
A Coup For Customer Service
In its barest iteration, Convedia’s technology enables the transmission of voice and video over the Internet. It has applications in numerous every day business transactions, said Peter Briscoe, Convedia’s founder, president and chief executive.
“Our piece of equipment is the ears and voice of the network,” he added. “When a bank customer [uses an automated dial-up or speech-activated menu during a customer service phone call] for example, our technology decodes the digit or recognizes the voice response, and sends back the message [using the Internet].”
Although Convedia shares its chosen space with such competitors as IP Unity Inc. and Snowshore Networks Inc., it is the company’s compact packaging that attracts customers, Briscoe said. Indeed, Convedia’s technology can help network providers save money and overall network space.
To date, more than half of its customers are U.S.-based, mainly because its targeted clientele in Canada has been hesitant to adopt Convedia’s technology. Historically, the rate of adoption for new technologies in Canada has been slower than in the U.S., Briscoe said, accounting for the company’s lagging market traction there.
However, Convedia’s products have been catching on with network providers in the Far East. The company currently does half its business in East Asia.
“Japan has moved along in terms of next-generation software,” Mayfield’s Roberts said. “And China is known for [its] leapfrog technology – going from nothing to the latest development.”
Convedia will use some of the capital raised to expand its sales and support services into the U.S. It plans include opening one office on the East Coast, and another in the Midwest. Founded in 1996, Convedia has raised a total of $50 million in venture capital.
The company may also consider doing an initial public offering at some point, but intends to put those plans on hold until it reaches cash flow positive next year.
Larissa Masny can be contacted at:Larissa.Masny@tfn.com