Interop draws the smart money
SmartLink Radio Networks landed a $12 million round of venture funding last month, a significant win that will let the company more than double the size of its staff by the end of the year and expand its product offering. However, other vendors that share the interoperability space with SmartLink might experience the greater impact, as the funding round is seen as a harbinger of more capital flowing into the sector.
SmartLink, which currently has about 30 employees, will add 40-45 staffers during the next three quarters, said Mark Hatten, chairman and CEO. The company also plans to expand its interoperability platform — a softswitch-based product that ties in to repeaters in the field, receives their calls, tears down the calls to the “least common denominator” and then rebuilds the calls to match the frequencies and protocols of a predefined talk group, all within 250 milliseconds.
As a result of the funding, the platform will be expanded so it can operate on a statewide basis, which Hatten believes will make it more attractive to larger public-safety organizations.
“It’s not that we couldn’t have done this without the funding, but it wasn’t a focus,” Hatten said. “Now, we’ll be able to do it more efficiently.”
In addition to the interoperability capability — a major selling point at a time when many public-safety agencies aren’t able to talk to each other — another selling point is the platform’s compatibility with legacy equipment, according to Hatten.
“If it’s usable, the municipality doesn’t have to throw it away to use our platform,” he said.
But it is the interoperability aspect that attracted General Catalyst Partners and Highland Capital Partners, which led the round, Hatten said.
“There is a big problem in this country: public-safety entities lack the ability to communicate with each other,” he said. “Federal and state governments have made fixing this a priority, and they’re looking for solutions. We have a viable solution, and that’s why we’re a good investment.”
David Fialkow, managing director for General Catalyst Partners, agreed. “We believe public-safety is an enormous growth area. The federal government has a significant amount of dollars available for interoperability hardware and software,” he said. Fialkow estimates the federal government will spend at least $4 billion on such systems the next two years.
However, Michael Grossi, wireless communications analyst with Adventis, cautioned that Congress has yet to approve this year’s federal budget, and there’s a chance that some dollars that theoretically would flow to interoperability vendors could be cut. He added that circumstances also could change based on the outcome of the November Congressional and presidential elections.
Nevertheless, Grossi said the next 24 months would be “the time” for any vendor that works in the homeland-security space.
“There’s usually a two-year lag after a change of power, so there should still be something there,” Grossi said. “There is still a large amount of RFPs and budgets tied to homeland security. For once, the government is ahead of the curve. I’m bullish on the technology and the space.”
Grossi was somewhat less enthused about the interoperability sector, calling it a risky “niche play” where technology superiority will prevail. “When the government is involved, it’s a competitive bid process, and that always carries risk. Those with robust solutions that can be brought to market quickly will be better off,” Grossi said, adding that the risk could scare off some investors.
However, there is ample opportunity right now, because relatively few players populate the space and those that do are in the nascent stages of their product development.
“No one has developed a solid end-to-end solution, and there hasn’t been a lot of players so far,” Grossi said. “It’s still early.”
SmartLink RADIO NETWORKS INC.
Employees: About 35
Chairman and CEO: Mark Hatten
President: Tom Lambalot
What they do: Two-way radio network design, engineering and implementation
Their partners: Kenwood, EFJohnson, Secom Systems
Their big news: $12 million Series A funding round led by General Catalyst Partners and Highland Capital Partners
Source: SmartLink Radio Networks