Milestone lands $25m investment

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Thursday, July 17, 2008

COPENHAGEN--Open platform IP video management software specialist Milestone Systems, based here, has secured roughly $25 million in growth stage funding from European venture capital firm Index Ventures, which the company will use to support new business initiatives and technology development.
The funding marks the first external investment in Milestone's nearly 10 years of existence. Current market developments and the ensuing growth opportunities make this the right time for a cash injection, according to Milestone's CEO, Lars Thinggaard. "The market is really picking up," he said. "We've been organically growing since the start of the business 10 years ago, but for the first time since inception we can see that more available cash would give us the benefit of even faster growth."
One new area the funding will open up for Milestone is the possibility of acquisitions, according to Thinggaard: "We will use [the funding] for minor acquisitions for a start. We'll have the opportunity to do that now, which we didn't have before." Thinggaard also said the company would use the money for more product development on the technology side as well as for the build-out of sales channels. Milestone sees "great opportunities" in China, Australia, South Africa and South America, he added.
The funding comes from Index Ventures' new $635 million Index Growth I fund, which was launched earlier this year to address the market opportunity created by maturation of Europe's start-up industry and the movement of traditional late-stage investors into larger deal sizes in both the technology and life science sectors.
The investment is a further endorsement of the transition from analog to IP technology. Index, which is based out of Geneva and London and has invested in such cutting edge companies as Skype and MySQL, has become increasingly interested in the security sector, especially the IP side of the industry, in recent years, according to Index's Tony Zappala. "There are lots of good reasons why the move that we've seen in a lot of other industries like telephony, for example, from analog to digital technology should make sense," Zappala said. The transition to IP makes sense from both a total cost of ownership point of view as well as in terms of functionality, he explained, and "now we've reached a tipping point and people are recognizing that."
Positioned as an industry leader in this space, Milestone proved an attractive target, according to Zappala. "We very much like their open platform approach. This is essentially a real stimulator for the industry, being able to work with all the different camera manufacturers, storage guys and so on." He noted that while Milestone already has a very good footprint internationally, "we think there's a lot more to be done there, given the size of the security market and the changes happening."