The market for wireless applications must be particularly frustrating for venture investors who invested in strong core technology a few years back, then sat back and watched as an
evolving marketplace rendered technical leadership irrelevant compared with the rapidly shifting evolution of content fads and slow carrier adoption.
So it's no surprise that Melodeo Inc., founded by successful wireless applications developers who had earlier sold text-recognition software maker Tegic Inc. to AOL for $50 million, turned to seed backers Ignition Partners and Voyager Capital for an
insiders' round of $7.9 million, even as it could likely have excited some interest among new investors in a brand new product aimed at taking on the iPhone. First, there's loyalty and longtime ties -- Voyager and Ignition were investors in Tegic -- but existing investors also probably had a keener sense of Melodeo's ability to roll with the punches.
"The basic product they first brought to market was enabled by strong technology on the phone, but an initial plan to work with music labels was challenging," says Voyager managing director Bill McAleer. "They took that same product into podcasting and marketed it to carriers and to consumers at the Web level, and in general they are doing a pretty good job of adapting as the market shifts."
Melodeo is still sitting on robust technology for selling downloads to wireless users, and it is prepared to take advantage of further shifts in the market for content distribution. For now, the company was able to capitalize on growing consumer interest in social networking, along with carrier anxiety about
competing with the iPhone, to recharge its cash reserves. Its ace in the hole: NuTsie (an anagram of iTunes), a Web and wireless distribution service that will allow users to share, but not download, content and playlists with each other.
-- Clifford Carlsen See Oct. 18 press release from Melodeo Inc.
See June 15 story from TheDeal.com
See Oct. 18 post from John Cook's Venture Blog
See Oct. 18 post from VentureBeat
See Sept. 26 post from GoMo News
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