Bypassing Venture Capitalists, Area Tech Firms Boost Funding

Technology
by Christopher Keough

While the Department of Justice holds up the major studios' plans to offer video-on-demand, Intertainer Inc. has extended its reach to 300,000 customers and rounded up another $15 million to help foot the bill.

Money for the first phase of the fifth round of funding came from partners Thomson Consumer Electronics and Microsoft Corp.

Jonathan Taplin, the Culver City firm's chief executive, said Intertainer hopes to close on another $10 million in the next 90 days. The complete $25 million round would bring the company's total raised to date to $125 million.

The new money will be used for working capital and marketing purposes, which Taplin said means a major marketing program on MSN.com and AOL Time Warner Inc.'s Roadrunner broadband service. Intertainer, which is available to customers with DSL or better connection speeds in 35 U.S. broadband markets, markets itself through other broadband entertainment providers.

Taplin said Intertainer has almost 30,000 registered subscribers who pay $7.99 per month plus per program viewing fees. Intertainer licenses its content from Artisan Pictures Inc., DreamWorks SKG, Universal Studios and Warner Bros. and keeps about 200 movie titles available for viewing at any one time. It maintains a digital vault of more than 70,000 hours of programming.

Intertainer reaches another 300,000 homes through deals with cable carriers Adelphia Communications and Comcast Corp. The main competition on the cable side is from iN DEMAND, the leading video-on-demand service provided by cable companies.

The investment from Thomson, with which Intertainer recently signed a deal to integrate the service into RCA set-top boxes, is important to the future of video on-demand. "For us, moving IP (Internet protocol) service to the TV is critical," Taplin said.

In addition to current movies and archived film, Intertainer offers television shows, concerts, music videos, children's programming, documentaries, enhanced television programs and shopping programs.

Who Needs VCs?

In another funding deal that bypassed the VCs, Inglewood optical software developer Eyematic Interfaces Inc. recently closed a $16 million round of funding from a variety of business partners.

The third round of funding was led by previous investor T-Venture, which is venture capital unit of Germany's Deutsche Telekom, and brought new interest from Sun Microsystems Inc., Texas Instruments Inc. and Japanese systems integration software development company INTEC Inc.

Company officials did not return calls regarding the latest round.

Eyematic's Synthetic Video multimedia and communications software essentially transfers images more rapidly than possible through conventional means. It works on existing wireless networks in addition to wired Internet connections from 56 kilobits per second. Part of the appeal is in its format, which requires less than 1/100th the bandwidth of pure video, eliminating the expensive bandwidth costs associated with other technologies.

Sun and Texas Instruments were drawn to the product because it is supported on their Java 2 program and OMAP family of application processors, respectively. INTEC's plans call for applying it to rich media in Japan's ubiquitous wireless Internet market.

By investing in the company, Eyematic's business partners allowed the company to avoid traditional venture capital sources and attract larger investments from players already familiar with the developing technology.

Eyematic, founded in 1997, intends to use the new capital to continue development and distribution of its technologies, provide working capital and other corporate purposes.



Staff reporter Christopher Keough can be reached at (323) 549-5225, ext. 235, or at ckeough@labusinessjournal.com.

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