Securing $35.5 million in a Series B financing that included strategic investors alongside traditional venture firms, technology enabler AppStream Inc. will use the equity infusion to propel the launch of its current product suite and dive into the emerging wireless software space.
JK & B Capital led the round, giving the company a valuation of $100 million. Computer Associates Inc., Deutsche Bank Alex.Brown, Draper Fisher Jurvetson, Evergreen Ventures, Goldman, Sachs & Co., Intel Capital, Mitsubishi Corp., Qualcomm Inc. co-founder Andrew Viterbi and Sun Microsystems Inc. also participated in the financing. JK & B’s Mark Sokol took a seat on the company’s board as part of the deal.
The company, founded in January 1999, scored $9 million in its first round of venture financing from Draper Fisher in November of that year. At the time, the company was valued at $25 million.
“Market conditions are very tough, but this round was very short – in the market very few weeks,” said Uri Raz, chief executive with AppStream. “Most of the discussions were to reduce the round by about 20%. We originally planned to raise $25 million, but raised $35.5 million to accommodate those strategic partners with plans to develop the business. We said no to other strategic partners because we don’t want the dilution.”
Both Intel and Sun will pursue joint development and marketing agreements alongside AppStream.
Intel will base its hosting data centers together with AppStream’s, while Sun will expand its existing partnership agreements with AppStream, which already include Java and software-based applications, to encompass wireless devices.
“There’s two different technology philosophies that come together in this round,” Raz said. “There’s Intel on the powered-client side computing and Sun on network-side computing. They’re two philosophies that represent new paradigms of delivery over the Net.”
Where’s The Wires?
AppStream, which provides enabling technologies for network-based computing by balancing Java-based software applications between a central server and a local client, is moving quickly into the wireless space.
It will work alongside Mitsubishi to develop wireless capabilities, and when the company next dips back into the venture pool in the third quarter of next year, it expects to sign wireless players to the numbers of strategic investors. Meanwhile, AppStream will officially launch the first version of network applications today with a list of financial institutions as clients.
The latest round of funding will support both a growing sales and marketing force and a global expansion. Currently, AppStream has offices in Palo Alto, Calif., Israel and Japan. By year-end, it will also move into the United Kingdom, Atlanta, Minneapolis and New York. – C.B.