Folsom Wi-Fi firm gets more aid: Startup JiWire lands $2.35 million for expansion of portal.
Jan 4, 2005

Sacramento Bee

A Folsom startup has landed $2.35 million in second-round funding to expand its vision of being a portal to the Wi-Fi world.

The new funding for JiWire Inc. illustrates the growing clout of Wi-Fi, the technology that lets electronic devices such as notebook computers connect wirelessly to the Internet. And it suggests that investors are warming to funding dot-com companies, which fell out of favor during the tech meltdown of 2000.

JiWire (rhymes with high wire) aims to serve as a guide to every public Wi-Fi hot spot in the world. It already has a compiled a roster of more than 53,000 hot spots in 93 countries, said Kevin McKenzie, the company's founder and chief executive.

At the company's Web site (www.jiwire.com) users can type in an address and get a list of public Wi-Fi hot spots within up to 100 miles.

The site also contains comparisons of Wi-Fi pricing plans, product reviews and links to other Wi-Fi resources.

Wi-Fi, which stands for Wireless Fidelity, has become one of the hottest business and consumer technologies, with companies like Intel Corp. pouring hundreds of millions of dollars into developing and promoting the standard.

The Telecommunications Industry Association estimates that U.S. spending on Wi-Fi goods and services will hit $190 billion a year by 2007.

"The thing that attracted me to building this company is that ... companies like Intel are making sure that every notebook computer and PDA has Wi-Fi," McKenzie said. "It's a pretty good standard to build on."

JiWire's revenue comes from selling ads on its site, and for licensing its content to other Web sites, McKenzie said. Among those that have licensed JiWire's listings are CNET, USA Today, Forbes, Yahoo!, Intel, Wired magazine and PC World magazine,

Scott Lenet, managing partner of DFJ Frontier, the only venture capital company in JiWire, said he was interested in the company for a number of reasons.

"This entrepreneur is dynamite. He has the mentality to get things done," said Lenet, who invested $350,000 in the latest round that closed last month. The remaining funding came from a variety of angel investors.

"They've developed relationships with substantial companies like Yahoo! and Intel. They've built the biggest Wi-Fi directory and stable of content. They've positioned the company to create something really unique in this space," he said.

Some may question why a pure dot-com, a company that offers only content rather than a tangible product and depends on advertising, can attract investors.

According to the research firm eMarketer, online advertising grew 28.8 percent in 2004 and will climb an additional 20.7 percent in 2005.

"Success has a lot to do with how a company is built," Lenet said. "You can't say all dot-coms are doomed to failure when plenty have been successful."

McKenzie has seen his share of tech hits and misses. As one of the early employees of the tech news and product review site CNET, he had a ringside seat for the dot-com boom and bust. And he learned some lessons.

"When I started raising money in 2003, I didn't put ridiculous valuations on the table," he said. "I was really conservative, and with my experience at CNET I didn't get much push-back from investors."

Jack Crawford, a managing partner and co-founder of Capital Valley Ventures, which is not an investor in JiWire, said enough dot-coms have survived the tech shake-out to wash away some of the bad taste left by the implosion.

"The ones left standing have figured out a way to validate their business model," he said. "And there are enough entrepreneurs who have slugged it out in the early stages, so now they are getting some attention."