PARK RIDGE, Ill. Wind River Systems Inc. will announce next week that it will fund startups Tvia Inc. and Zaffire Inc. under a venture-capital initiative it began two months ago.
Tvia (Santa Clara, Calif.), a manufacturer of chip sets for Internet appliances, and Zaffire (San Jose, Calif.), a maker of optical networking equipment, will receive funding from Wind River Ventures, a strategic organization and investment fund. The two companies are the first to receive funding from the organization, which Wind River Systems formed in June as a means to accelerate what the company called "the development of next-generation connected, smart devices."
A Wind River executive said the company chose the two startups from among 40 to 50 candidates that submitted business plans. "The idea is for us to help them get their businesses kick-started," said Curt Schacker, vice president of corporate marketing and development for Wind River Systems (San Jose). "And this also allows us to get closer to the customer than we might normally get."
Tvia, formerly known as IGS Technologies Inc., designs and develops semiconductors for Internet appliances, particularly set-top boxes and digital televisions. The company plans to create a "reference platform" that incorporates Wind River's VxWorks operating system and the Tornado Integrated Development Environment. It will also distribute an evaluation copy of Tornado along with its own software development kits to customers in the digital television and set-top box arena.
Wind River said it had a special interest in Tvia because the set-top box market is expected to grow at a rate of more than 30 percent per year until 2003. Tvia will also sell common stock to Wind River, as well as issue a warrant to purchase additional shares.
Zaffire, which makes carrier-class optical networking equipment, will use Tornado and VxWorks to develop its Zaffire Z3000 Series of networking products. Wind River is interested in the company because studies predict 60 percent to 70 percent annual growth for the optical switching market. "A lot of people feel that the entire Internet will be reconstructed around optical technology in the next ten years," Schacker said. "We wanted to align ourselves with people who know that space well."
Wind River did not say how much it will invest in either company, nor in a third startup with which it has also closed a deal. A Wind River spokesman said, however, that the company plans to invest in approximately 15 to 20 more startups in the first phase of the Wind River Ventures initiative, which will account for $25 million in funding. It will also earmark another $25 million in the second phase of funding, which will probably start sometime around the beginning of 2002.