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RaySat has developed a two-inch antenna that can capture Internet and TV programming in a car or other moving vehicle.
July 13, 2005

Company: RaySat (formerly SkyGate)

HQ: Vienna, VA

Founded: 1997

Management: RaySat has impressive leadership. Its chairman is Yoel Gat, who was cofounder and CEO of Gilat Satellite Networks (Nasdaq: GILTF). RaySat’s CEO and president is Samer Salameh, previously CEO of the satellite services firm rStar and of Prodigy Online, one of the pioneering Internet Service Providers.

Investors: In July 2005, the company raised $27 million with Apax Partners and existing investors. RaySat was restructured in early 2004, when the company changed its name and raised $10 million from Benchmark Capital and Israel Seed Ventures.

Business Model: RaySat has developed a two-inch receiver: a flat antenna that receives satellite television broadcasts and provides Internet access from a vehicle – a car, RV, train, or airplane. For the hardware, consumers can expect to pay $2,000 for TV reception and an additional $1,500 for Internet connectivity. Users who already have satellite TV service in the home will pay only a modest amount to add mobile service. Audiovox, a publicly traded mobile media manufacturer and owner of the Jensen brand, has signed on to resell RaySat’s line of on-the-go antennas.

Competitors: Motosat, KVH Industries, Delphi and Tracstar Systems

Dirt: RaySat’s offerings are so compact and streamlined they make competing products look like they were developed back in the 1960s. With the proliferation of flat panels in cars, the success of XM and Sirius Satellite radio, and the growing demand for Internet access in trains and airplanes, we believe RaySat will explode out of the gates. The market for vehicles equipped with “backseat” entertainment is expected to reach 18 million units by 2008, according to a report by Frost & Sullivan, and we think RaySat could capture a significant slice of that pie. Indeed, the company is predicting an IPO in 2006.

Content Comeback
The rebirth of a moribund Web content provider…and other alarm:clock news from the land of private venture funding.

It wasn’t long ago that online publishing was out of favor – unable to sustain the hype surrounding early entrants, such as Slate and Salon. Now content is experiencing a resurgence with the rising popularity of blogs and new low-cost online publishing models. What’s more, the surge in online advertising and some big acquisitions have helped.

We took notice of this revival when Beliefnet announced in June that it had raised $7 million from Softbank Capital. Founded in 1999, Beliefnet offers discussion forums, newsletters, and general information on religion and spirituality. It also has an online dating service, aptly named Soulmatch. A bona fide dot-com survivor, this New York City-based startup endured some hard times, including a Chapter 11 bankruptcy proceeding, from which it emerged in 2002.

CEO Steven Waldman, a former journalist, summed up the company’s short history in a November 2002 Slate article: “…we boomed, we busted, and then, unlike almost every other dot-com in our situation, we got back on our feet and have actually begun to thrive.”

One of the hurdles that tripped up many online publishers was that production and distribution costs, while much cheaper than for print magazines or newspapers, were not insignificant. Building an audience proved to be quite costly, while advertising revenues were non-existent. Beliefnet blew through $25 million in venture financing before its bankruptcy – it learned the hard way that a large online audience does not necessarily translate into revenues.

Online content providers such as Beliefnet also learned to wait for the Internet advertising industry to begin maturing. Now it seems like the pain might have been worth it. The purchase of financial news site Marketwatch by Dow Jones for $519 million in November 2004 signaled a revived interest in Web-only media properties. And the New York Times’s purchase of for around $410 million in March 2005 turned heads. Both Marketwatch and has experienced lean times.

As for other online publishers, we’ve watched privately-held companies like TechTarget, a technology news and information site, with astonishment. The company has raised $127 million from venture capitalists, including $85 million in 2004 alone.

The formula for success is different, of course, for every company. For Beliefnet, though, it might seem like a miracle. Eric Hippeau of Softbank Capital has joined its board since the recent investment. He sits on the board of another content-rich website, Yahoo.

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