Content networking company, Venation has secured its first GBP7 million round of funding from Softbank UK Ventures, the 50:50 joint venture between Softbank and News Corporation, and from BT’s corporate incubator Brightstar. Both Softbank UK Ventures and Brightstar are taking board positions at Venation. With two dynamic founders running the show and a strong international focus, Venation is looking at a rosy future.
Currently based in Ipswich, UK, Venation was founded by Ralph Cochrane, chief executive officer, and Paul Evans, chief technical officer, in February last year. The idea for the company was born out of a chance conversation over coffee, while they both worked for BT Laboratories. Cochrane could see the problem of large scale distribution and Evans found the solution, when he came up with two slides and a mathematical formula. And so Venation was created.
Ralph Cochrane defines the essence of the service: “Our business is to relieve the current congestion and then give you a platform for the future.” He adds that the appliance-based technology can automatically disseminate information to potentially millions of users as and when information changes or it becomes available that is, on an event-driven basis. In addition, there is no complex management overhead in deciding where to send information. It is built in inherently.
Defined as a content networking company providing unique technology to aid the real-time acceleration of multiple types of content including video, audio, web, gaming and finance information, Venation’s core technology is actually the product of three years’ work by the Internet infrastructure lab at BT under Evans’ leadership.
This technology develops dynamic content distribution solutions for timely data such as share prices, news information and billing which will scale to millions of users over the wide area. In short, Venation pushes out content at the infrastructure level as and when it changes, only to the edges of the Internet that it needs to reach. As well as simplifying the task of writing distributed applications for developers; Venation’s technology should also compliment existing networks.
Potential customers include telecommunications service providers, ISPs and major enterprise companies, all of which want to distribute multiple types of content over one platform to large numbers of clients or users. Applications that best lend themselves to this technology, are rich content, dynamic data, event driven appointments, financials, wireless (3G), entertainment, education, e-commerce, on-line gaming and news dissemination.
The technology is packaged in two main hardware offerings. The domain controller, monitors, configures and manages Venation server deployments. The Venation server acts as a sophisticated relay mechanism for transmitting information efficiently over any IP based network. This is done in a scalable, efficient, reliable, secure and flexible way. Venation servers are deployed in a hierarchic fashion and can potentially support millions of users and groups of interests. They are also capable of utilising a wide range of technologies such as TCP, UDP and Multicast. In the future, Venation will also support advanced technologies such as DiffServ (QoS, MPLS (VPN), IPSec, Satellite and DSL, as well as non-IP based networks such as GSM and ATM.
Launched in April last year, Brightstar is BT’s corporate incubator and part of BTexaCT which provides research, development and consulting services for the BT group. With 15 companies in its portfolio, the incubator this year is on target to spin out a company a month.
Harry Berry, creative leader of Brightstar, said: “Venation is a very exciting proposition. The technology which Venation will be unleashing into the market is the first of its kind and will prove the ability to deliver real time information instantaneously, in a personalised fashion, to hundreds of millions of users.”
With regards to finding a suitable venture capital backer, Cochrane remarked: “Venation had the worry of being approached by VCs who had accidentally prospered from the dot.com boom and actually wouldn’t have offered the company any real benefits.”
With Softbank UK Ventures he said that although they are new to the UK market, having launched here last year with a $450 million investment vehicle, that is nearing its final closing (see Venture Capital news this issue), the parent company has a good track record and corporate history with a strong portfolio.
Venation was particularly impressed by the strength of Softbank’s international contacts, in particular its links with Asia. Venation is focusing on becoming an international player and there are plans to open an office in the US in several months time. Cochrane says that they don’t want to be pigeon-holed as one of the many UK-focused technology companies and would ideally like to make the most of their contacts in the US to form headquarters on that side of the Atlantic. The team is toying between Seattle and San Francisco as a base. Cochrane prefers San Francisco, but it looks like the company is geared more towards Seattle as the vice president sales and additional new recruits are already based there.
Cochrane mentions that there are plenty of plans in the pipeline for the summer, when Venation appliances will be available. These appliances will work around a concept of real time delivery and will be aimed at anywhere you can relieve congestion. One such project is a high profile multi-user gaming. Cochrane says that he is unable to name the project at the moment, but the subject centres around a popular TV game show where contestants are invited to ask the audience, but in this case will be directed to ask the Internet. Another project will involve distributing advertising and software technology to mediums such as cash machines and petrol pumps.
Venation is growing quickly and is already forming a team in Seattle, thanks to contacts established there by Cochrane. In line with this growth, there are plans to seek a second round of funding in around 13 to 16 months time. Karim Abouzahr, principal of Softbank UK Ventures, said that fund will certainly go into a second round. He sees this as a sign of commitment to the company. “When you invest in a company like Venation, it is with a view to putting in a lot more money. We want to help develop the company on an international level as quickly as we can.”
The key that Softbank held for Venation, said Abouzar, was that it had already successfully taken businesses global, such as Yahoo and e-trade. This is exactly what the UK fund is set up to do. It is not looking at investing in the UK equivalent of a US business, which is what many newcomers to the UK have been doing, but is looking for opportunities that are ahead of the curve here and everywhere.
He adds that the UK is full of great technology stories, but that the money made has not benefited the founders of the companies over here. “Young, talented guys like Ralph
and Paul need a big break,” he said. “But without access to capital from a global organisation, such as Softbank’s, it is impossible to break out and achieve that success. Softbank is helping Venation to achieve its global vision.”
Venation is Softbank UK Venture’s third investment to date, following commitments in wireless company, Ripcord and Riot Entertainment. In Ripcord, Softbank invested
$14 million of a $16.5 million investment round and in Riot, the fund invested a total of $4 million across two rounds, the first led by Nokia and the second by Carlyle Internet Partners. Softbank expects to close fundraising on its $450 million fund by the end of this quarter. The fund’s first closing, with about 85 per cent of the monies raised, was held towards the end of last year. Softbank has committed $250 million to the venture and News Corporation, via ePartners II fund has committed $150 million.
Commenting on the decision to back Venation, Abouzahr said that Softbank had identified that there was something lacking in content distribution technology and set about solving the problem. Venation fulfilled its requirements. He said: “We were very excited when we discovered Venation. Today’s Internet will struggle to cope with the huge demands created by mass broadband access. Venation’s intelligent content distribution infrastructure addresses this problem and highlights the world class potential of network technology in the UK.”
Looking at the future of Venation, Abouzahr says that the internationalisation of the company is key. He states that all the major ISPs and telecoms companies that Venation is targeting are international businesses and Venation needs to operate globally to service them. He adds:
“If this remains a UK-only proposition, we will have failed but I am certain it won’t.”