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An Open-Source Resource

Funambol, a startup with Italian roots, manages services for open-source mobile applications.
August 10, 2005


Company:
Funambol

HQ: Redwood City, CA, with its development office in Milan, Italy

Founded: 2002

Management: The CEO is Fabrizio Capobianco, who previously worked at Reuters and Tibco, and was the founder of an Italian Web company, Internet Graffiti, as well as Stigma Online. He holds a PhD in computer science. The CTO and founder is Stefano Fornari, who was project manager of Sync4j, the open-source mobile application server that is Funambol’s flagship product.

Investors: This month, the company raised $5 million in Series A from Walden International and H.I.G. Ventures.

Business Model: Funambol’s Sync4j is an open-source mobile application server that does data synchronization, application provisioning, and device management. For instance, a Blackberry user might use it to wirelessly access data from his or her company’s customer relations management system. Or an IT department could do a wireless data transfer without having to pay high licensing fees to a non-open-source vendor. The product is aimed at developers who need to extend an existing product to the mobile space, or who are looking to create a new mobile application. Funambol (“foo-nahm-ball”) charges a fee for using its software to create proprietary applications. Sync4j clients are available for Microsoft Outlook and mobile devices, including Blackberry, iPod, Java Phones, Palm, Symbian, and Windows Mobile. The company currently has a big partnership with Nokia, as well as with some big open-source players, including Jboss and SugerCRM.

Competitors: RIM, Good Technology, Microsoft ActiveSync, Visto

Dirt: The company claims that it was profitable prior to funding. What’s more, its CEO predicts that all of its non-open-source competitors, such as Visto and Good Technology, will be out of business within a few years because open-source software outfits charge much less than non-open-source companies. Open-source startups are very cocky – but there’s also no denying that trends are in their favor. If Funambol can continue to expand sales, it could be the next Jboss or MySQL. Right now, it’s keen on maintaining a balance between open-source developers and businesses: its name means “tightrope walker” in Italian.


Baidu Rakes It In

Tech M&As are far outpacing IPOs this year – and other alarm:clock news from the land of private venture funding.

The blockbuster public debut of the Chinese search engine Baidu last week provided a nostalgic glimpse of the good-old days for tech market IPOs. Baidu’s shares jumped 354 percent last Friday in their first day of trading on the Nasdaq. Millionaires were minted overnight.

As it turns out, however, the IPO market – particularly for venture-backed companies – is currently fairly tepid. According to the most recent statistics from Thomson Venture Economics and the National Venture Capital Association (NVCA), second-quarter 2005 saw only ten venture-backed companies go public, raising a total of $714.1 million. This represented the lowest total number of IPO dollars since the second quarter of 2003.

To counterbalance the weak IPO climate, though, the M&A market has come to the aid of the overall tech sector, providing a path to liquidity for investors and entrepreneurs – while allowing large publicly traded companies to add breadth to their offerings. The 451 Group, a research firm that tracks tech financings, reported that U.S. and international companies spent a whopping $86 billion to acquire technology ventures in the second quarter of 2005.

When the numbers for the third quarter of 2005 come in, we’d be surprised if they don’t continue to look strong. In the past week alone, some of tech’s biggest names made a number of notable acquisitions.

Last week, AOL acquired privately held Xdrive, a provider of online storage and backup services, for an undisclosed amount. Xdrive, founded in 1999, offers a Web-based storage platform that allows subscribers to keep all their digital assets, such as music and pictures, in one place. These assets are accessible from any computer and free up local hard drive space.

News Corp.’s Fox Interactive Media Division announced last week that it had acquired Scout Media, publisher of a network of 200 local sports team-focused sites and 47 publications covering various teams. The move came fast on the heels of two other News Corp. deals: last Monday the company said it was offering $93 million for an Australian online property-listings site, realestate.com.au, and in July News Corp. purchased Intermix, owner of the wildly popular social networking site, myspace.com, for $580 million.

Earlier in the week, Oracle announced its intention to purchase Indian banking software company i-flex Solutions in a deal that could be worth $909 million, pending regulatory approval. Another software behemoth, IBM, announced it was purchasing DWL, a private Atlanta-based maker of customer data integration software that was funded by MMC Capital and Insight Venture Partners.

Finally, MCI, which is awaiting the approval of a pending merger with Verizon, announced on Tuesday it was acquiring Totality, a provider of managed communications services to corporations such as American Airlines and Best Buy. Founded in 1999, Totality’s investors include Lightspeed Venture Partners and Baker Capital. The terms of the deal were not disclosed.

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