Current concerns about the global economy mean that mature venture backed companies may find it increasingly hard to exit this year, particularly onto the public markets. However, investors funding very early stage companies this year will be looking much further into the future than 2008 for potential exit opportunities.

Investments at the seed stage carry more risk for the investor than at later stages in a company’s lifecycle. In many cases, very early stage companies tend to be extremely technology heavy and lack sufficient commercial skills to take their product to the market successfully. Additionally, in the majority of cases the product will not be fully developed and in some cases may only be at the concept stage.

Injection of capital into companies at this early stage allows them to develop their technology further, develop commercialisation strategies and then market their products to a wider audience. This enables companies to attract larger, predominately private investors with the ability to take the company to the next level.

A number of public sector backed funds support entrepreneurial efforts at this early stage in a company’s lifecycle. Many of the public sector backed funds operate co-investment funds that only invest alongside private investors. The private investors serve as a company quality filter whilst the public sector money multiplies the effect of the early stage private investors’ money. Highlighted below are three European start-ups receiving recent seed funding rounds.

Vizimo is a UK-based company developing a system that integrates the web, mobile web and TV, allowing users to discover new shows, plan viewing, share recommendations with friends and set personal video recorders remotely. Vizimo’s product is currently in beta but the company’s recent €890k funding round from NorthStar Equity Investors and a syndicate of private investors will be used to accelerate its development. NorthStar Equity Investors is one of a number of public sector backed investment companies stimulating high-tech economic development in the North of England. The company runs two funds, a £10m Proof of Concept Fund supporting entrepreneurs with up to £90k, and a £23m co-investment fund that can invest up to £1.5m alongside other syndicate partners.

Data Essence, an Israeli company developing a semantic search engine, raised €675k from Battery Ventures, ProSeed Venture Capital Fund and Vertex Venture. The company is currently in stealth mode but will be releasing a beta version of its service in 2008. New search technologies have been receiving considerable attention from venture capitalists recently, with many VCs clearly believing that Google’s dominance of online search is not infallible. Previous EVI editorials have also highlighted Quintura and True Knowledge as potential ‘Google Killers’.

Optisynx received a €135k round of funding from Cambridge Enterprise Seed Funds to expand the development and worldwide marketing of its next generation, solid-state, stratum 1 clock. OptiCloc, currently at the prototype stage, uses quantum mechanical particle properties to provide a stable and extremely accurate time source without the use of 3rd party time or synchronisation providers.

Investing at this stage is a high risk activity. However, for those investors who complete the difficult task of picking the winners at this early stage, massive returns await.

Germany-based Odersun, the solar cell developer, has raised a total of €61m - €21m in grants from the local government in Bradenburg and €40m of series B investment from AGF Private Equity, Advanced Technology Materials, Doughty Hanson, PCG Clean Energy & Technology Fund and Virgin Green Fund  who led the round.  The capital will be used to build the company’s second factory, SunTwo, for the mass production of solar modules.

Kobalt Music, the UK-based music publisher, has raised $16m (€11m) in series B funding, led by Balderton Capital, who was joined by existing investor Spark Ventures.  Kobalt offers support services to songwriters and publishers, including the administration of copyrights, pipeline advances and creative services.

OraMetrix, the US- and Germany-based developer of an orthodontic care system, has raised $20m (€13.8m) from existing investors Brentwood Venture Capital, Centerpoint Ventures, Rho Capital Partners, STAR Ventures and Versant Ventures, with a post-money valuation of $104m (€71.8m).  OraMetrix has developed a system to make orthodontic braces work faster and more effectively using digital tools.

More companies' intelligence at www.libraryhouse.net

More companies' intelligence at www.libraryhouse.net

Anyware Technologies, the France-based machine-to-machine software developer, has been acquired by Wavecom for €9.1m with an additional €1.5m placed in escrow for warranty provisions.   Anyware will continue to operate as a subsidiary of Wavecom, a provider of embedded wireless products for use in industrial applications.

US- and Ireland-based Cape Clear Software, the developer of software designed to enable existing systems to work together, has been acquired by US-based Workday for an undisclosed sum.   Cape Clear’s chief executive Annraí O’Toole will join Workday as vice president, integration.

ActiCM, the France-based manufacturer of three-dimensional measurement systems, has been acquired by Creaform for an undisclosed sum.  US-based Creaform will use the acquisition to consolidate its position as market leader in the field of three-dimensional control.

More companies' intelligence at www.libraryhouse.net

More companies' intelligence at www.libraryhouse.net

Sweden-based IBX, the supplier of purchasing systems, has appointed Leif Bohlin as chief executive.  Mr Bohlin has been part of the IBX management team since it was founded in 2000, most recently as head of consulting. 

PacketExchange, the UK-based provider of networking services, has appointed Rick Mace as chief executive, following the close of the company’s Q1 2008 funding round.  Mr Mace has served as chief operating officer at Tekelec, chief executive at Steleus Group and, before that,  PakNetX.

More companies' intelligence at www.libraryhouse.net

More companies' intelligence at www.libraryhouse.net

UK-based Huddle, the business networking provider, has informed Library House that it has increased the amount being sought in its planned funding round, due to open in Q1 2009, from £3m (€4m) to £10m (€13.4).  Mr Alastair Mitchell, chief executive and co-founder, revealed that the funding would be used for sales and marketing in addition to product development.  Huddle has developed an online collaboration tool to allow businesses to work together effectively through the internet.

Silentium, the Israel-based developer of noise-reduction products, told Library House that the company is seeking $5m (€3.5m) which it hopes to secure by Q2 2008.  Mr Yossi Barath, chief executive and founder, revealed that the investment would be used to set up subsidiaries and field offices in the US, south-east Asia and Europe.  He said that company planned to float in 2010, either on AIM or the Canadian Venture Exchange.  Mr Barath also revealed that the company launched two products in Q4 2007 and has generated $1m (€690k) in three months.  He aims to achieve $10m (€6.9m) in 2008.

More companies' intelligence at www.libraryhouse.net

More companies' intelligence at www.libraryhouse.net