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Apax kicks off spending spree with Red-M investment

European venture capitalist Apax partners has made the first investment from it $4bn fund in Madge Networks' Bluetooth spin-off Red-M.
Written by silicon.com staff, Contributor

European venture capitalist Apax partners has made the first investment from it $4bn fund in Madge Networks' Bluetooth spin-off Red-M.

Apax led the $43.6m financing round for Red-M, a company that makes the access server with which wireless devices such as phones, PDAs and laptops communicate. Michael Risman, director at Apax Partners, said: "This was a large investment for an early stage deal." Red-M only introduced its first product in November and sales have largely been to companies doing Bluetooth pilots. Apax's Risman expects to announce the next investment from its $4bn fund in two weeks. He puts the two-month delay between the announcement of the new fund and the first investment to the time it takes to seal such deals in times of financial insecurity. Risman reduced the size of the investment in Red-M by bringing in fellow VC, Amadeus Capital Partners and could bring in further investors. Despite the size of the investment Apax is not backing Bluetooth over other wireless technologies. Apax has and will continue to back companies that develop products for Wireless LAN, a wireless technology pitching to replace the corporate fixed line network. Risman sees Bluetooth and Wireless LAN both surviving and believed Red-M's investment in Bluetooth had not precluded it from Wireless LAN. $8.65m went to networking parent Madge Networks. The remaining $35m will go towards expanding sales and marketing at Red-M and bringing new products to market. The existing product is a Bluetooth access server for small business or work groups. The next product in the pipeline is a similar access device for the home. Beyond that Red-M is looking to enterprise class servers that will support many users at once, the sort that it hopes will be deployed in airports. Red-M vice president and co-founder Simon Gawne was cagey about how many employees the company expected to take on this year or if/when the company intended to IPO. The $35 million will last until Red-M is "cash positive" said Gawne, which will "not be in one year but less than five." By Andy Favell
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