Elemental Technologies CEO Sam Blackman wasn’t looking for cash. After all, more than half of the money from the company’s last round is still parked in the bank. But when you’ve got a business that’s nearly tripling revenues and operating in the super hot arena of mobile video processing, venture capitalists have the tendency to hover.
And hover they did around Elemental, a six-year-old Portland upstart that today is announcing a $13 million venture capital round from Norwest Venture Partners, General Catalyst, Voyager and others. That brings total funding in the 70-person company to just over $29 million.
More impressive, the company is on track to more than double — possibly triple revenue this year — to more than $20 million.
“It is a really fast growing space,” Blackman tells GeekWire.
You’ve probably never encountered Elemental directly. But if you’ve watched any shows on mobile devices from HBO, ESPN, Comcast’s Xfinity, Big Ten Network and others, you’ve come across its technology. Simply put, Elemental helps those big media entities seamlessly process content across a full slate of mobile devices, from tablets to mobile phones to e-readers.
As Blackman likes to say, Elemental provides the “picks and shovels” to make mobile video work across multiple devices. For example, it is powering the video behind the HBO GO service, which allows subscribers to watch programming on the mobile device of their choosing.
“You take an HBO asset that was created for the cable networks or satellite networks…. and we take that video so they can play it across all different types of IP-connected devices,” he said.
Some in the venture capital community are already drawing comparisons between Elemental and Isilon, the Seattle-based storage company that sold to EMC for $2.25 billion in 2010.
Elemental has a long way to go to achieve that lofty valuation. But there are similarities between the two. Both combine a hardware-software solution, and both sell into the media and entertainment space. (In fact, at the National Association of Broadcasters conference last month in Las Vegas, EMC Isilon hosted a chat with Elemental vice president of marketing Keith Wymbs to talk about video processing for a multiscreen world).
Isilon and Elemental also have faced off against big rivals, proof that there’s money to be made in this core infrastructure.
In the case of Elemental, the main competition comes from Cisco Systems — which purchased rival Inlet Technologies for $95 million last year — and Harmonic — a San Jose, California company whose first quarter revenues fell to $127 million because of slow order rates and weakness in Europe.
Other tangential players in the space include Brightcove and Envivio, both of which completed IPOs this year. In other words, most of Elemental’s rivals are well funded. Because of that, Blackman said it made sense to raise cash, even though they didn’t technically “need” it.
“We certainly have very well capitalized competitors, but we fundamentally believe that we have better, uniquely-patented technology that gives us very significant advantages in video quality, in stream density and processing efficiency. We are Linux-based, which is a huge advantage for most data centers these days,” said Blackman.
Because Elemental is selling to some of the top media companies in the world — including a number of broadcasters of this summer’s Olympics — Blackman said he wanted to have more cash on the books. Obviously, it doesn’t have Cisco’s billions.
But he said the balance sheet is “solid and deep,” and should give customers “that we are going to be around for the long-term.”
To help bolster that point, Elemental also just elevated Integra Telecom CEO Kevin O’Hara to chairman.
In addition, Elemental is rapidly rolling out its service internationally. Last year, the company opened a new office in London, and already 20 percent of the company’s revenue flows through that office. It also has offices in Hong Kong, and with the new cash plans to open new offices in four other locations this year.
“That takes capital to do, and it is great to have a deep, deep balance sheet in order to do those” new offices, he said.
Given the recent IPOs in the online video arena, Blackman isn’t ruling out a public offering at some point.
“As long as we continue to execute, going public is a very real possibility. Of course, the markets have to cooperate, as much as the company has to perform. But we are absolutely focused on building a world-class company that could go public in a year or two,” he said.
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