FANTASMA SHUTS DOORS AFTER FAILING TO GAIN CONTINUED FINANCING
Second largest ultra-wideband (UWB) technology developer Fantasma Networks closed its doors Fri. after unnamed investor backed out of 2nd round of financing at last min. “The capital markets are extremely difficult right now,” company spokesman said. “That’s the issue, it was not a technology issue.” First round investors in Fantasma had included Paul Allen-backed Vulcan Ventures and Intel and company itself was spun off from Allen’s former technology incubator Interval Research last year. Former FCC Office of Engineering & Technology Chief Dale Hatfield joined company in Jan. as technical adviser. Shuttering of Mountain View, Cal., company leaves smaller pool of UWB developers to make case at FCC about pending regulations that would allow devices to operate in Part 15 limits, move that has stirred wireless carriers and GPS industry concerns.
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Target in 2nd round had been $20 million to complete product development, said Roberto Aiello, founder and chief technology officer, who had led team at Interval that began studying UWB technology in 1996. “With the current market conditions making it difficult to raise funding from investors… the first round investors couldn’t come up with enough cash to support the company,” Aiello told us late Fri. Besides Intel and Vulcan, other initial investors included Asia Pacific Ventures Technology Partners and Denver-based Centennial Ventures, he said. Fantasma was 2nd largest UWB developer after Time Domain.
Referring to difficult market, spokesman said: “We just happen to be one of the casualties.” Company had 30 employees, whose executives were drawn from Interval Research, Qualcomm, Apple Computer, Advanced Micro Devices. Aiello and team from Interval formed Fantasma as independent organization in Jan. 2000. As recently as late Fri., privately held company had 7 job openings, mostly for engineers, posted on its Web site. Initial investors will be examining options for disposing of company’s assets, including intellectual property, spokesman said. Referring to challenges in private equity market, Fantasma executives began spreading word about failed financing round Fri., with operations scheduled to close officially by end of that day.
While company itself had cited inability to close its 2nd round of financing as main reason for shutdown, its closure also came amid large volume of ex parte filings at FCC by supporters of UWB, including Intel, against air transport, GPS and wireless interests who earlier expressed concern about potential interference issues. Along with companies such as Time Domain, Fantasma had been among most vocal UWB developers in backing its technology at FCC. Earlier this month, company in ex parte filing urged FCC to split rulemaking between GPS and non-GPS bands. Fantasma’s proposal was response to letter from broad group of wireless, GPS, satellite radio and air transport groups and companies asking that Commission not take final action on operations of UWB devices until it conducted further rulemaking that would provide another opportunity for comment on details. Fantasma’s technology operated in non-GPS bands.
But regulatory situation wasn’t only risk that investors examined when financing Fantasma, Aiello said. “It is fair to say that if there were no regulatory uncertainty it would have been a lower risk investment to some investors,” he said. “This was not the only risk that investors would consider in this company.” Because Fantasma targeted market for high-performance wireless networks for homes, other factors studied by investors included competition elsewhere in residential market and product timing, Aiello said. “It is more complex than just regulatory.”