The News

Esmertec Nets €23m in Over-Subscribed Funding Round

13/11/2003

Esmertec AG, a Java solutions provider for mobile phones and embedded devices, has closed a 23m euro (.7m) Series C funding round. CEO Alain Blancquart believes it is the largest private equity investment secured by a software company in Europe over the past 15 months. Earlybird Venture Capital (Germany), Partners Group (Switzerland), and Sofinnova Partners (France) led the round. They were joined by BVgroup Private Equity, Quilvest Group, Rothschild Gestion, Invision AG, and Credit Lyonnais Equity. Speaking to ComputerWire, Jean Schmitt of Sofinnova Partners declared that Esmertec could have easily raised as much as 34m euros (.5m), such was the interest and demand during this funding round. The funding will be used to expand Esmertec's global reach and fund new product development initiatives. Previous funding rounds included 15m euros (.4m) in Series B, and 5m euros (.8m) in 1999 when the company was founded. Esmertec is headquartered in Dubendorf, Switzerland. It has two R&D centers, one in Switzerland, and the other in the United Kingdom. Most of the R&D is carried out in Switzerland, while testing is done in the UK. It also has sales and support operations in France, USA, Singapore, China, Taiwan, and South Korea. It has partner representation in Japan. The company has kept a relatively low profile over the past couple of years, but in April this year it acquired all the Java virtual machine (JVM) assets of Insignia plc. The company now has a total of 97 staff (44 in Switzerland, 35 in the UK, 12 in Asia, and six in the US), with over 50 different nationalities employed. More than 60 of these people are engineers. The company is profitable as of the last quarter, and is expected to make revenue of 23m euros (.7m) during the current financial year ending March 31, 2004. This compares to revenue of just 5m euros (.8m) in 2002, and in 2004 revenue is expected to be in the 60m euros (.8m) region. At the moment, 80% of revenue comes from license sales, 20% from services. Essentially, the company provides Java solutions for mobile and embedded devices. Its Java Platform targets handset manufacturers, mobile operators, and application and content providers. Customers include TTPCom, Infineon Technology, Intel, Wavecom, Siemens Mobile, and Vitelcom. Esmertec has over 25 customer projects around the world, from which 28 million units of its mobile Java runtime platforms are expected to be shipped by March 2004. Current customer orders represent a backlog of over 120 million units. Schmitt of Sofinnova Partners also revealed that Esmertec has been holding talks to acquire four other companies, although understandably he refused to reveal names or put a deadline on the deals. He did admit they were looking to acquire these companies either for their technology, or for expansion into local markets. Regarding a future IPO, Hans-Ulrich Muller of Partners Group insisted the VC backers were more than happy to proceed as a privately held company for the time being, and will instead just grow the company. He said it could go public right now, and they have been fending off "buy-out" offers from interested parties.