VCs Connect with Cable Company

Arroyo Video Solutions Inc.’s technology, says company vice president David Yates, is like having your cable company deliver a TiVO, a Sony PlayStation and a computer to your set-top in a single package.

The cable companies, so far, seem convinced.

On Monday, the company was expected to announce the close of its first round of venture capital with investments from two of the nation’s largest cable companies.

Time Warner Investments and Comcast Interactive Capital were in on the $13 million Series A round. Two Silicon Valley firms, DCM-Doll Capital Management and Foundation Capital, led the round. DCM’s Carl Amdahl and Adam Grosser of Foundation Capital have joined the company’s board.

The Pleasanton, Calif.-based company is promising it can provide all the on-demand programming cable companies need to boost revenue and hold on to their subscribers. It can deliver things like interactive games and video on-demand to cable subscribers, without sending a truck out to a single home.

“What cables companies really want is the ability to make more money and the way they make more money is get new services out to market,” says Yates, the company’s vice president of marketing and business development.

Founded 18 months ago, the company’s 30 employees have spent their time fine-tuning the technology. It’s a software package that runs on Intel Corp.’s Linux servers that cable companies can install alongside their own equipment. It can be used to deliver personalized programming to thousands of households, plus, it will record each subscriber’s preferences and then deliver that information back to advertisers.

The technology is about ready to be tested inside the labs of cable operators. Those trials will start in a few weeks, and if all goes well, the technology will soon be deployed out in the field, says DCM’s Amdahl. He expects the technology to hit the market as soon as next year. “Expectations are high,” he says.