VeriWave changes its mind, nets $10 million investment
June 26, 2005
By Aliza Earnshaw

Little more than a year after saying it probably wouldn't seek new funding, VeriWave Inc. has closed a $10 million Series B round with a new lead investor.

Woodside Fund of Redwood Shores, Calif., last year declined to participate in Beaverton-based VeriWave's first professional round.
What attracted Woodside to VeriWave was "that WiFi was exploding," said Rick Shriner, a Woodside venture partner.

VeriWave, founded in August 2002, makes test equipment for wireless networks.

When VeriWave contacted Woodside again, "they'd put together a really top-notch management team, led by [CEO] Chris DeMonico," said Shriner. "We were able to get good feedback from customers about VeriWave, which we didn't have a year ago."

Also participating were previous investors US Venture Partners of Menlo Park, Calif., and TL Ventures of Philadelphia.

The latest infusion of cash has helped VeriWave develop a new generation of products. A company official had said last year that the Series A round was likely to be VeriWave's last.

The new products, "an extension of our WiFi testing equipment," will be on the market later this year. They are now being used by beta customers, said DeMonico.

WiFi refers to a standard for wireless data transmission otherwise known as 802.11.

The company has grown since raising something under $10 million in February 2004, but DeMonico won't say how many employees have joined the 20 who were then working at VeriWave. He also declined to reveal revenue.

VeriWave customers include Cisco Systems Inc., Aruba Wireless Networks Inc. and Colubris Networks Inc. Other companies that DeMonico says he cannot name also use VeriWave's equipment to test their wireless networking equipment.

Network World magazine recently conducted tests of Voice over Internet Protocol (VOIP) quality delivered over wireless networks, using VeriWave's equipment. The magazine mentioned VeriWave in its article published in January, and that has brought in some new customers, said DeMonico.

It was not by accident that VeriWave's equipment was chosen; the company has been canny about marketing to labs that conduct such tests.

"It would have been hard for Network World to pick a lab that didn't have our equipment," said DeMonico.

Investing in wireless testing makes more sense than investing in a wireless device or equipment company, said Shriner.

"When you looked at it, you had the feeling that if you were investing in a component or device, you were probably behind the wave of investments, because a lot are already on the way," he said.

Just as had been the case with Ethernet technology years ago, manufacturers need testing equipment to tell them how well their wireless networking products are working.

The situation is complicated by the fact that wireless networks now must be capable of transmitting not only data, but also voice. Increasingly, businesses are shifting to VOIP, and away from traditional telephone networks.

Ashish Gupta, a venture partner with Woodside, has joined VeriWave's board. Shriner is considered to be an "alternate" board member with Gupta, though he also attends board meetings.

Recently, VeriWave has hired a new vice president of sales, Rob Johnson, lately of Spirent Communications, and a new vice president of marketing, Eran Karoly, lately of network testing equipment company Ixia.

VeriWave co-founder Rick Denker, who was the company's vice president, is now consulting part time with VeriWave, said DeMonico. Co-founder Tom Alexander remains as VeriWave's chief technology officer.

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