VCs See 3D Content Provider Kaon Through $6.4M Series B Round

Proving that it’s always possible to build a better mousetrap, interactive 3D imaging content provider Kaon Interactive Inc. late last week announced that it recently raked in $6.4 million in its second round of venture capital funding.

The deal follows up a $3.2 million Series A financing the company did in September 2000, and is likely to be the Maynard, Mass.-based issuer’s last foray into the private equity market as Kaon expects to reach profitability by year-end.

New backer Prism Venture Partners led the Series B transaction with a $4 million contribution, investing alongside Longworth Venture Partners, which pumped $1 million into the round. Private investors, including new Kaon board members Sandy Bloomberg and Jim Savage, put in the remaining $1.4 million. Bloomberg is the chairman of Tweeter Home Entertainment Group, and Savage is a Longworth co-founder and founding general manager of ZDNet.

The company’s post-money valuation has not been disclosed, but Prism General Partner Jack Sweeney confirmed that this was a down round for Kaon.

As far as the financing goes, Sweeney is responsible for bringing Prism on as the lead investor. Before joining the firm in May 2001, he was the president and chief executive officer of EPiCON Inc., a Prism portfolio company. Sweeney also sat on Kaon’s board and pitched the investment opportunity to his colleagues at Prism.

“Kaon’s technology allows you to do 3D imaging much the same way you do 2D imaging on the Web today,” Sweeney explained. “It very cost-effectively brings a high-resolution photo-realistic imaging capability to the Internet at a cost point that equals or is below what it takes to bring 2D imaging to the Web today.”

Indeed, Kaon claims to take the pain out of dealing with 3D imaging on the Internet, including unreliable plug-and-play display technologies, extraordinarily lengthy download times and poor image quality.

And it’s already gaining hefty traction in the marketplace. The company has already signed on heavyweight clients such as Dell Computer Corp., Ogilvy Interactive, Samsung Electronics GmbH, Casio Inc. and FootJoy. In all, Kaon has about 17 customers.

At this point, Kaon’s competitors are few and far between, claims Richard Silton, the company’s chief executive. The company rubs elbows with only two direct competitors, publicly traded 3D image provider Viewpoint Corp. and Cycore of Switzerland.

“We seem to be having our way with them,” Silton said. “Frankly, most of our customers have come from Viewpoint.”

The company has no immediate liquidity plans, although Silton said if public market conditions become more favorable, he’d likely consider an initial public offering.

Kaon was founded in 1996.