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News & Updates - Wednesday, September 28, 2005

ViVOtech - Proflile

HQ: Santa Clara, CA

Founded: 2001

Management: CEO is Michael Mullagh - an Irishman. He was previously President and CEO of Telephia, which sells performance information to wireless companies. He was also CEO of Whisper Communications, a provider of last mile wireless telemetry networks. Mohammad Khan is Founder, President and COO. He was with Verifone and did a China eCommerce startup called SparkIce.

Investors: In September 2005, ViVOtech raised $18.25M in Series B funding. The round was led by Draper Fisher Jurveston with Nokia Growth Partners, DFJ Gotham and previous investor Alloy Ventures.

Business Model: The company sells and licenses a system to enable contactless payments - aka smartcards - whereby an RFID card is passed before a reader deducting e-money. This involves radio frequency credit cards, debit cards, access cards and mobile devices with near field communication (NFC) technology. ViVOtech devices are deployed in fast food restaurants, corporate cafeterias, parking garages, movie theaters and grocery stores. ViVOtech's primary selling point is that the technology can be easily connected to credit/debit card readers and is backwards compatible. Its technology has in fact been approved by Mastercard and American Express. For merchants, the industy has plenty of data to show that they can get buyers in-and-out of their stores faster and that buyers will spend more money when they are not using cash. The company currently has about 100K readers in place. Consumers can use anything from card and key fobs to cel phones to make payment.

Competitors: OnTrackInnovations (which licenses to Ingenico and Hypercom). ViVOtech licenses its product to Verifone, thereby knocking out a big potential competitor and making money from Verifone.

Dirt: Smart cards have been a dismal failure in the US, but the industry seems to be rallying around ViVOtech, thanks primarily to its pragmatism in developing a solution that works with exisiting systems, and for building out the full answer to cashless purchases.