From a hard-boiled negotiator into a true ally — MobileMonday Global: Industry News

^{A company view into venture capital:} From a hard-boiled negotiator into a true ally

15 Jan 2005 at 18:49 GMT Timo Poropudas

Making investment decisions is the core process for venture capital companies. They do day and day out. The process look quite a bit different from ”investee” point of view.

Timo T. Laaksonen, CEO of mobile middleware company First Hop Ltd, shared the process that his company went trough last year when, after a long process in September, signed a funding deal for EUR 7.2 million.

Laaksonen is happy with the results of the nine month process of preparing and finalizing the company second round. Partech International was the lead investor and current investors DFJ ePlanet and Stratos Ventures also contributed in the final round.

”There was an amazing change in the attitude. Partech International transformed from hard-boiled negotiator into a true ally. They have shown us drive that energizes everyone,” Laaksonen says.

The privately held First Hop, founded in 1997, has a staff of 80 people. It has operation in Finland, Singapore, Spain and Dubai. The company has developed and markets wireless service delivery platform products for mobile operators. With these platforms operators get an ability to connect, manage and charge any content and application service including SMS, MMS, WAP/WAP2 and http.

The two best known users of First Hop platform are Vodafone for its Vodafone Live! services, and Telefonica for all of its mobile data services.

According to Laaksonen’s presentation in January MobileMonday in Helsinki, in the second round of financing First Hop was looking for funds at reasonable terms from a investor that would provide proper valuation, correct size round and fair treatment of current investors, option holders and management.

He was also looking for a VC with a respected name in the VC scene and proven track record of building successful companies and exits. The investor would have to share the company’s vision and strategy and to be well connected and understand the mobile market.

According to Laaksonen there were several VC’s who would have wanted to invest more than company was looking for. This would have given them outright majority position and existing investors did not like it.

Laaksonen also defined what the company was not looking for. First was not interested in the best company valuation or a network of contacts to win new mobile operator customers or an access to new business partners.

Laaksonen wanted even an investor that would come on board wit a new business vision and strategy.

”The company must know its own business, best potential customers and partners. No VC has a better grip of the basic business than the company itself.”

”We did not want someone to give us their money and then leave us in peace”, Laaksonen said.

The funds were needed to take the company trough the next step of growth; to support the product range expansion and increase the company’s business reach.

“We operate in a line of business on a business model where being international is the only financially viable route. This mans that significant upfront investments into R&D and sales, high quality standards and heavy competition lead to demand for VC financing, from early stages,” Laaksonen said.

“A venture backed mobile company, such as First Hop, needs to build solid momentum when expanding its business.”

“VC funding is indeed crucial, “Laaksonen said. “It is better to face the music well prepared.”