Vivato (Spokane) nets $44.5 million in new backing from Advanced Technology Ventures, Intel, Leapfrog Ventures, U.S. Venture Partners and Walden International

A Spokane tech company developing pioneering products for wireless networks has just raised $44.5 million in new investments.

Tom Sowa
Spokesman Review Staff writer

Vivato, http://www.vivato.net a tech start-up with about 70 workers in the city of Spokane Valley, has vaulted to near the top of U.S. companies raising investment money this year, according to people tracking venture deals.

The latest round of investment, announced today, came from a California venture firm, plus additional money has been received from three other companies that helped start Vivato two years ago.

Getting $44.5 million in a lukewarm economy is a major milestone, said Ken Andersen, editor of VentureWire, a publication surveying venture funding.

"What they’ve done is impressive," Andersen said last week.

Vivato develops what many consider breakthrough network products that create widespread data connections for large companies or outdoor locations.

During Hoopfest in Spokane this weekend, five or six Vivato "switches" will be placed on top of downtown buildings. They’ll allow people using laptops or handhelds to log on to the Internet throughout much of downtown.

The switches deliver broadband or high-speed data to users as far away as three miles. The company also makes internal switches for hospitals, airports and large facilities.

With the new investment, Vivato has received a total of $67 million in backing from outside investors. In return, those investors get an undisclosed stake in the company.

The new investor joining Vivato is Advanced Technology Ventures http://www.atvcapital.com/ based in Silicon Valley and Boston. That firm has just invested nearly $11 million.

The other $33 million came from four previous Vivato investors: Intel http://www.intel.com/capital/ , Leapfrog Ventures http://www.leapfrogventures.com , U.S. Venture Partners http://www.usvp.com/ and Walden International http://www.waldenintl.com/main/ .

Spokane’s previous largest investment came in 2000. Linesoft, an energy software company here, landed $26 million from a California investment fund.

Vivato CEO Ken Biba said the new money will help the company focus on sending out its first commercially sold units in the next few months.

Over the past year, it’s been developing prototypes of its switches and delivering them to several companies to test them for possible purchase.

The new investment won’t mean new jobs at the Spokane office right now, he added.

At most, it could lead to a few marketing and sales staff increases at Vivato’s San Francisco office, where the company has about 20 workers, Biba said.

A major beneficiary will be Servatron, a Spokane Valley manufacturing firm that has been assembling Vivato’s products.

As sales increase, Servatron will need to keep pace and will likely expand its Spokane operations, Biba said.

Advanced Technology Ventures put the new money into Vivato because no other company can match its technology, said Jos Henkens, a general partner with the venture firm.

"What they’re doing is very, very hard," he said, describing the challenge of providing secure, widespread "Wi-Fi" wireless networks.

"But based on our talks with Vivato’s initial customers, we see a company that’s mastered the challenge, and that’s getting very favorable responses," Henkens said.

The wireless-data — or Wi-Fi — industry is one of the fastest-growing tech sectors in an otherwise lukewarm economy, said VentureWire’s Andersen.

He’s found only one other U.S. company this year that can boast of having landed more money.

That was San Diego-based Magis Networks, which earlier this year obtained $48 million, Andersen said. The company also develops wireless networking equipment for connecting a wide array of home entertainment systems.

Henkens said the wireless market is booming. He expects Vivato to be earning revenues "in the hundreds of millions of dollars" in several years.

"If what their customers tell us is right," added Henkens, "they could be taking off very rapidly."

The likely customers of Vivato are colleges, large companies, airports and any location trying to provide network access to customers and workers.

Vivato’s indoor units cost about $10,000. The outdoor switches cost $14,000.

The announcement is a major moment for a company launched quietly in Liberty Lake two years ago, when three former Agilent Technologies engineers decided to follow a hunch.

The engineers, Skip Crilly, Bob Conley and Jim Brennan, quit their jobs to test the idea that technology first developed for naval radar could be adapted for wireless networks.

Their idea was to develop panels measuring four feet wide by two feet high and four inches deep that could deliver network connections to hundreds of users across a wide distance.

Currently, creating a large wireless network inside or outside requires hundreds of small "access points" to deliver the data back and forth.

Vivato’s switches offer the same results more quickly and are more affordable, according to people who’ve tested its products.

After Crilly, Brennan and Conley started Vivato, the key step was bringing Biba into the company. A veteran tech leader in California, Biba had extensive connections with venture firms and an impressive record helping young companies grow.

Biba’s management style was to start quietly, convince early customers that the product is solid, then start earning a profit.

Biba said the additional $44 million will be socked away, in part, for the company’s long-term health.

"We’re going to forget about (that $44 million). We’ll try to run the company on much less.

"When you have that much money, you’re tempted to spend it. And that’s a bad idea," he said.

•Business writer Tom Sowa can be reached at (509) 459-5492 or [email protected].

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