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The Mobile-Talkie: Can You Hear Me Now?

A startup company hopes to capitalize on the push-to-talk phenomenon, offering a cross-platform alternative to Nextel’s service.

Company: fastmobile

HQ: Rolling Meadows, Illinois

Founded: 2002

Management: Kang Lee is the founder, president, and CEO. He previously served as vice president of engineering at now-defunct Auvo Technologies, a startup where he developed wireless services and applications. Lee also did stints at Motorola and AT&T Bell Labs. Co-founder and executive vice president Harry Eschel followed a similar path, working at both Auvo Technologies and Motorola.

Investors: On May 16, fastmobile announced it raised $12 million in Series B financing, co-led by Doll Capital Management and Walden International, with participation by existing investors Leo Capital Holdings and BlueStar Ventures. This round brings the company’s total funding to more than $21 million.

Business Model: The company’s core offering is called fastchat, a software application that turns a mobile phone into a walkie-talkie, allowing users to send and receive voice messages to other fastchat users, using voice-over-IP technology to deliver voice data over a cell phone’s data channels. Fastmobile offers its software to cellular services operators that are seeking to offer premium “bells and whistles” on top of regular voice service in order to compete with Nextel’s closed system. The software also supports instant messaging, picture and video messaging, and e-mail.

Competitors: Kodiak Networks, Sonim Technologies

Dirt: The company’s overall vision – to create a multimedia platform for mobile devices – is pretty compelling. Nextel popularized the walkie-talkie style interface – called “push-to-talk” (PTT) – on cell phones in the United States, paving the way for the acceptance of fastmobile’s technology. The advantage for fastmobile is that its technology is neutral and works with multiple vendors, allowing a Verizon phone, for example, to communicate with a T-mobile phone. With its growing list of customers, including Hutch in India and TIM in Europe, fastmobile is plugging away at expanding the adoption of PTT. However, when PTT technologies first came on the scene in 2003, to compete with Nextel, whose customer base grew from 13.3 million in 2003 to 16.2 million at the end of 2004, a faster rate of adoption was certainly anticipated. (The Yankee Group estimates that there were roughly 1 million combined PTT subscribers from Sprint, Verizon Wireless, and Alltel by the end of 2004 – a small percentage of their overall subscriber bases.) Figuring out the right consumer pricing, which has ranged from $5 to $20, has been one hurdle. Another has been the wait for handset manufacturers to create phones that can support PTT. Right now, Nextel still has a pretty firm grip on the market.

Sources:

From game makers to vote getters, private companies are gaining traction by making existing technologies better – and other alarm:clock news from the land of private venture funding.

The prospect of rapid innovation in technology markets can create an unrealistic expectation for breakthroughs and inventions. Entrepreneurs and technologists are transfixed by the notion of the newest “new thing.”

But more often than not, startups are best served by approaching old problems in new ways. Last week, we encountered a number of startups chipping away at elusive markets that have been tantalizing entrepreneurs for years. This week is no different.

Consider online video games, a market that has been long on promise, but has managed to befuddle industry giant Electronics Arts and many startups along the way. Countless millions have been devoted to the idea that gamers will flock to online arenas to participate in multiplayer contests.

Turbine Entertainment of Westwood, MA, has been around since 1994 and seems to be finally turning the corner with its massively multiplayer online games. CEO Jeff Anderson lays out Turbine’s mission on the company site:

“We make massively multiplayer online games – or MMOGs. These games are online three-dimensional worlds where hundreds of thousands of people from all around the world can go on exciting adventures together or just hangout and chat.”

The company claims $10.7 million in sales in 2004 and just raised $30 million in a  Series B financing from Tudor Ventures and Columbia Capital, with previous investors Highland Capital Partners and Polaris Venture Partners also participating. Total capital raised is approximately $48 million.

Turbine’s first game, Asheron’s Call, was well received, and the company is currently developing the first Lord of the Rings online role-playing game, The Lord of the Rings: Middle-Earth Online, with Vivendi Universal Games.

While online gaming successes have been rare, voting technology has been a vague, but intriguing concept. When the Florida balloting scandal occurred during the 2000 election, a cry arose for better voting technology. But progress has been slow.

VoteHere, a Bellevue, WA-based startup, is trying to advance the market with its election audit technology. The company has participated in pioneering digital elections in a number of U.S. states and abroad, yet the seven-year-old company is still facing a market hampered by voting systems that are slow to modernize.

VoteHere recently raised $4.2 million in a round led by Northwest Venture Associates and announced it will change its name to Dategrity (VoteHere will remain a division within Dategrity), and broaden its scope to audit data integrity and privacy markets, such as identity theft, homeland security, finance, and health care.

Another example of a technology that, in one form or another, has been making the rounds for years comes from Predixis, a Monrovia, CA-based developer of preference matching software. There are many flavors of preference matching technology, but the basic notion is that it matches Internet users with relevant products – books, songs, travel packages – by tracking patterns of usage and preference. Think of it as another version of Amazon suggesting books you might also like based on your previous purchases.

In the case of Predixis, the core product is MusicMagic, a “personal DJ” software application that provides continuously varied playlists. The software analyzes the music collection on your computer in iTunes and other common music programs, then creates playlists from that collection which, in theory, help you get into the groove.

MusicMagic also has a food counterpart, FoodMagic, a “proactive meal proposer” that takes into account tastes, diet, and lifestyle preferences when suggesting meals. Predixis says its matching engine can be applied to other vertical markets as well, such as art, video, and books.

Given that the company just raised $3 million, Predixis must be making a reasonable case that it can bring in some real revenues. Nonetheless, we wonder if this is a full-blown business or just a cool software app.

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