by Clifford Carlsen
[Posted on January 22, 2008 - 5:15 PM]
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DiggLocation-based technology developer Airbiquity Inc. returned to the capital markets for a $25 million sixth round of funding led by Ignition Partners of Bellevue, Wash., after a bumpy five-year hiatus that saw massive business development but relatively slow deployment.
The new round includes previous investors Acorn Ventures of Seattle, Kirnaf LTD of Saudi Arabia and Shell Internet Ventures of The Netherlands and comes on top of about $4 million the backers have contributed since the company's last formal round of $9.2 million in June 2003.
The new round brings total investment in the company to about $75 million. The money will support the company's growth as a number of partnerships come to fruition, including the expansion of Detroit, Mich.-based General Motors Corp.'s OnStar wireless vehicle communications system and several other applications of its technology that enable airbag notification, remote diagnostics, vehicle tracking and navigation.
"The next few years will be a watershed period for the industry, and we believe telematics will be available in all new cars by 2010," said Airbiquity CEO Kamyar Moinzadeh. "I am proud to say that Airbiquity now has four of the world's leading automobile manufacturers in its customer portfolio, demonstrating the exemplary performance of this company."
Airbiquity's telematics software allows for wireless data connectivity for location based applications, using digital cellular wireless networks rather than analog systems. The company's technology is deployed in about 8 million automobiles, most of them through OnStar.
Moinzadeh said the company is profitable, but opted to return to investors to support anticipated growth in automotive markets, as well as to take advantage of emerging markets for personal navigation devices.
"We have been cash flow positive for the last 18 months, but we couldn't capture the market we wanted with the cash we were throwing off," Moinzadeh said. "[Ignition general partner] Steve Hooper has been on the board as an outside investor for more than five years and had expressed an interest in investing, but we went to multiple new potential investors and had multiple term sheets at a significantly higher valuation from the E round."
Thilo Koslowski, lead automotive analyst with technology market research firm Gartner Inc. in San Jose, Calif., said projections for the automotive telemetry market were overly optimistic in the early days, but that the market is returning with a great deal of strength as General Motors, BMW AG and Mercedes Benz develop applications to differentiate their vehicles.
"This market has evolved tremendously and a lot of the over-optimism of the size of the market predicted six years ago is gone," Koslowski said. "But now that the hype cycle has receded and the industry is a lot more realistic, they have stepped back to look at what consumers want, and how to use services to make cars, that really are commodities now, more differentiated."
Koslowski said that as greater diagnostics capabilities and navigation applications are developed, and as the drive for restrictions on cell phone use in vehicles grows, automotive connectivity will become more standardized. He said about 10% of the 16 million new cars sold in the U.S. currently have connectivity, and projected that will grow to more than 50% by 2012.
Moinzadeh said he believes the current funding will take the company back to profitability in 2009, and he does not expect the company to raise additional private money. Airbiquity did not use an outside financial adviser in raising the money, and had legal services on the deal from Patrick Frank of Graham & Dunn PC in Seattle.
Investors were represented by Steve Yentzer of DLA Piper in Seattle.
