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After building a foothold in the market for mobile software management for cell phones, Red Bend Software announced Monday it has raised $10 million in strategic venture investment to take it to profitability and expand its presence in the growing remote device and machine-to-machine software management markets. Herzliya, Israel- and Waltham, Mass.-based Red Bend brought in its first new investor from outside Israel, landing a lead contribution from Minneapolis-based Coral Capital Management in a deal that could bring strategic value in several global markets. In addition to boosting Red Bend's U.S. presence, Coral is an affiliate of Russia's Sistema JSFC and its Sitronics telecommunications products and services subsidiary, which controls several mobile operators. All of Red Bend's previous investors--Poalim Ventures and Infinity Venture Capital Fund, both of Tel Aviv; and Carmel Ventures, Greylock Partners and Pitango Venture Capital, all of Herzeliya--returned for the round. Red Bend CEO Yoram Salinger said the new investment brings total capitalization in the nine-year-old company to $33 million, noting that the funding is expected to be the company's final private round before turning a profit later this year. Salinger did not disclose a valuation for the investment, but said it came at a sizeable increase to the pricing of the company's $10 million Series D round led by Greylock in February 2005. "We had several investors interested, both strategic partners and venture capital funds, and in the end we went with a combination," Salinger said. "This came at a very nice valuation and showed our investors the very significant progress we have made." He said the company expects to work closely with Coral senior managing director Yuval Almog, who will join the company's board of directors, and with Coral's affiliates. Almog is a 35-year technology and telecommunications veteran of companies including Advanced Fibre Communications Inc., which Tellabs Inc. now owns, and San Francisco-based Macromedia Inc. Salinger said Red Bend's software is used in more than 305 million mobile phones, up from about 105 million a year ago. Since early 2007, the company has broadened its focus to enabling software delivery to other connected wireless devices, such as mobile broadband PC cards, USB modems, embedded chipsets and M2M modules. He expects the machine-to-machine market to initially augment the company's core sales to include cell phone makers and network operators that supply manufacturers with Red Bend products. The sector could eventually rival its cell-phone business, Salinger said. Red Bend's technology allows wireless carriers to deliver software updates to enable new products and services. The company's new initiatives in the machine-to-machine market allow for delivery of software maintenance to devices, which often are remotely located and expensive to service manually. Salinger said the company will put the new capital into additional research and development for new products in both the handset and device markets, and to expand sales and marketing. Red Bend used no outside financial adviser for the new round, and had legal work from Iris Pappo of the Eitan-Mehulal Law Group in Herzliya. Oppenheimer Wolff & Donnelly LLP in Minneapolis represented the investors. -- Clifford Carlsen
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