Esprit provides extra backing for Xanadu(3)

The European venture firm has increased its investment in Xanadu Wireless, a Dutch semiconductor business that is looking to revolutionise the wireless sensor market.

UK-based venture capital firm Esprit Capital Partners has invested a further €0.9 million ($1.2 million) in Dutch semiconductor business Xanadu Wireless, taking its total commitment to €2.7 million.

Esprit is making the investment from Prelude Trust, the listed vehicle it manages. It comes as part of a €2 million funding round, which also includes further contributions from Belgian group GIMV and Motorola Ventures, the VC arm of the US phone-maker.

Esprit first invested in Xanadu in May 2006, ploughing €1.8 million into the business for a 19.4 percent stake. The company makes fabless semiconductors that are used in sensor networks, and has been developing a new family of chips that allow these sensors to operate wirelessly and on less power – so manufacturers can cut power costs or use smaller, lighter batteries.

The sensors, which can be used in day-to-day electronic systems like thermostats, burglar alarms and smoke detectors, have been designed to meet the Zigbee standard – agreed by a number of industry participants to ensure that different products from a range of manufacturers can work together.

Alan Duncan, an Esprit partner who sits on the Xanadu board, said his firm was “very pleased” with Xanadu’s progress. Its first chips were almost ready for production and the business is expected to start generating revenues this year, he said. “The market is taking off and the company is very well-placed.”

The latest funding round has been timed to coincide with Xanadu’s acquisition of Ubiwave, a Belgian company that makes wireless systems. The two companies had already been collaborating on software development, and the combined entity is intended to offer customers a complete hardware and software solution.

Duncan said further acquisitions were not expected. “The company is not on the acquisition trail. It’s got what it needs now to build revenues, and this deal will enable it to get there quicker.” However, Xanadu is expected to have another financing round towards the end of the year, he added.