Spokane’s World Wide Packets gets $15.7 million boost from Madrona Venture Group and Northwest Ventures among others

Tech firm hopes venture capital will help it turn corner

Spokane Valley’s World Wide Packets http://www.wwp.com/ is $15.7 million richer this week. The tech company, founded in 1999 by tech honcho Bernard Daines, announced Thursday it has landed that much in venture funding.

Tom Sowa
Staff writer

http://www.spokesmanreview.com/news-story.asp?date=010904&ID=s1468688&cat=section.business

Among the companies providing the new round of money is Spokane-based Northwest Ventures Associates http://www.nwva.com/ .

Also putting in a significant portion of money was Madrona Venture Group http://www.madrona.com/ of Seattle, a venture firm that focuses mostly on strong high-tech firms.

The new money will help get World Wide Packets to the point of being profitable, said company CEO David Curry.

Curry had replaced Daines more than a year ago as CEO. Daines continues as a consultant and a shareholder.

Even though the company has not turned a profit, a key factor in raising the money was continuing to build revenue for three straight years, Curry said.

"We grew by 100 percent in 2002" and not nearly as much in 2003, Curry said.

"Unlike so many other telecommunications companies, we had real customers and a steady stream of revenue," he said.

The new money will help World Wide Packets reach the break-even point in "late 2004 or early 2005," Curry said.

The money will largely be used to expand the company’s sales division and its business development group.

World Wide Packets has about 45 Spokane-area workers and another 20 elsewhere.

At one time, the company had more than 170 area workers, many recruited from across the United States to work on innovative tech products. Those products are hardware and software systems that help companies manage huge volumes of data over internal or transport networks.

Its customers include government utility providers, such as Grant County Public Utility District, and major telecom firms like Telewest, Great Britain’s largest cable-TV company.

But since 2001, the telecom slump led the company to lay off more than 100 workers and focus on sales.

The new capital won’t directly lead to extra Spokane-area jobs. Curry said the key areas of company focus will be outside this community, developing and supporting customer sales.

The separate amounts invested by Northwest Ventures and Madrona were not disclosed. Also taking part in this round of financing were a number of previous investors, including Azure Capital Partners of San Francisco.

Tom Simpson, managing partner of Northwest Venture Partners, said this is his firm’s first Spokane-area investment since 1997. Back then, Simpson pumped about $1 million into Packet Engines, a company also founded by Daines.

After Packet was sold to French networking firm Alcatel in 1998, Daines founded World Wide Packets.

"We’re always looking at possible Spokane-area investments," said Simpson. Northwest Venture Partners has about $190 million under management and has been one of the most active venture investors in the Northwest the past two years, he said.

He said he’s bullish on World Wide Packets, in large part because all indicators suggest many companies will be investing in networking equipment — and World Wide Packets has a compelling lineup of products for that need.

"Based on what they’ve done, they are not a startup anymore. They’ve shown they’re well beyond the startup stage," Simpson said.

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