Start-up bridges Internet and home entertainment
Zurich-based BridgeCo, a designer of integrated circuits, is hoping that consumers will want to listen and watch Internet content on devices other than the home computer.
Its chips enable streaming media and MP3 files, normally limited to the PC and its tinny-sounding speakers, to play on newer, high-quality audio and video systems.
The two-year-old start-up company demonstrated a handful of products that are based on its chips at the Consumer Electronics Show – a major industry event – in California last month.
Its progress to date impressed Silicon Valley and European venture capitalists enough to invest SFr18.5 million to take it to the next stage.
The investment was quite an accomplishment considering how little venture money was placed in early stage and Internet/Information Technology-related firms in the past year.
Plus the investors are some of the best known names in venture capital, including Benchmark Capital, Intel Capital, Infineon Ventures, as well as Earlybird Ventures, the company that funded BridgeCo’s first round.
At the nexus
The firm’s success relies on consumers wanting to watch streaming videos on high-definition TVs in the living room or kitchen.
The newest consumer electronics devices, such as Sony’s video walkman, Mitsubishi televisions, and Yamaha stereo equipment, come equipped with special connectors based on an international standard known as Firewire.
These can be connected to BridgeCo’s equipment and from there to the home network, based on Ethernet.
In this way the Swiss company’s silicon sits at a nexus between networked digital consumer electronics devices and PCs connected to the Internet.
Market studies indicate that consumers will pay up to $200 for a stand-alone network adapter, a price point that BridgeCo supports.
“It is a powerful, flexible solution that cost-effectively combines the best from multiple networks in the home,” says Christof Heidelberger, CEO of BridgeCo.
BridgeCo was able to attract top tier capital because of the huge potential of its application in the market.
Home networking, along with automotive and mobile communications, are currently the three fastest growing markets available for semiconductor manufacturers, according to market researchers.
Plus, the young company managed to get prototypes of the chips into the hands of potential customers very early on.
The firm has a technical edge through the ability to complete fundamental research into media streaming via the CTI Startup program funded by the Swiss government.
It worked with the Microelectronics Design Center at the Swiss Federal Institute of Technology in Zurich.
Its ambitious, experienced, management is another reason the venture capital flowed its way.
BridgeCo was founded by a team of executives and technology experts who had worked together at family-owned Schmidt Telecom in Zurich, as well as other high-tech firms in the region.
Persistence and determination also played a part, as the deal took eighteen months to close.
Risks and potential
“It is targeting a good segment with a good technology, but these are tough times. It is more difficult than ever for a startup to convince large players in the industry to incorporate new chips into their products,” says Jürg Stahl, an entrepreneur and founder of Micronas, a growing semiconductor firm traded on the Swiss stock exchange.
Stahl, whose company began as a two-man engineering firm based in a spare bedroom in his home in Winterthur, says that BridgeCo’s challenge will be similar to the one he faced a decade ago.
The main challenge for Stahl was to convince big volume electronics manufacturers that it can deliver products on time and with better quality than its billion dollar chip-making rivals.
BridgeCo’s competitors, Texas Instruments and Agere, are major players in the chip market. Both have announced Firewire chips for consumer electronics manufacturers.
Another challenge for BridgeCo will be to manage its investors.
It has a mix of corporate venture capital investors and Silicon Valley types, some of whom may have different strategic goals.
Keeping such a board happy is not going to be an easy task, not to mention the ego jockeying that is likely to take place among investors.
Multimedia home networking is still a vision and not a targetable market for vendors or service providers, say market researchers.
But a shift is starting to take place, with the home computer evolving to embrace more entertainment activity.
“BridgeCo’s success demonstrates that Switzerland is rapidly evolving from its high-precision engineering roots to a centre for innovative, high-technology electronics,” said Christian Wanger, an attorney who is Chairman of the Board.
Other emerging electronics firms in Switzerland to watch are Avalon Photonics in Zurich, which should be raising a second round of capital soon.
Its investors also include foreign venture firms, such as Intel Capital. Start-ups on the horizon include Innovative Silicon ISi SA (Ecublens), Alpes Laser (Neuchâtel), Art of Technology (Zurich), Xios (Neuchâtel), and e-Vision (Dubendorf).
In compliance with the JTI standards