(From left) Solace's Rob Steen, executive vice-president, CFO and general council; director Jose Medeiros; and Wayne Burwell, vice-president of engineering. (Darren Brown, OBJ).

The venture capital just keeps coming, with Solace Systems the latest startup to announce itself with a financing round, a new product and ambitious plans to double its workforce in a year.

The Kanata-based company, which specializes in carrier-scale multi-service message routing, is launching what it considers to be a one-of-a-kind product with the help of venture capitalist EdgeStone Capital Partners.

EdgeStone's Venture Fund makes equity investments of between $2 million to $20 million, primarily in Canadian companies that sell developed technology solutions to the enterprise. It also focuses on investing in companies where it can create significant value by providing operational, strategic and financial advice.

While Edgestone's investment in Solace is obviously a vote of confidence, neither party was willing to divulge the dollar amount of the investment, a rarity when it comes to VC funding. However, EdgeStone partner Derek Smyth did say the figure was in "the multi-million dollar range."

"We made the decision not to announce how much the round was worth because we feel there's a competitive advantage not to do so," said Solace vice-president marketing of Peter Ashton. He added that with a product launch this week, much of the money would be directed to sales and continued development.

"Money will be applied to all areas of the organization. So far, most of the money has gone to R&D, but with the launch of the product (this week), there will be funds going to sales as well as engineering."

The funding will also be used to develop its next-generation of message routing solutions.

"Our investment in Solace Systems is a testament to the vision, execution, and determination of the Solace team to achieve market leadership and success," Mr. Smyth said. "As IP networks evolve to better address fast-growing application traffic, we believe a tremendous opportunity exists for introducing content intelligence in the network. With successful customer deployments and strong endorsement from industry experts, Solace Systems is poised to capture a significant portion of that opportunity."

The product everyone is so excited about is the 3200 Series Multiservice Message Router, which has been three years in development. The 3200 Series is a scalable application-services platform that allows IP-based service providers to introduce new services and improve information sharing for enterprises and consumers.

"About the launch, we're certainly optimistic the product will be received well," Mr. Ashton continued. "Solace is the first to come to market with this product and we expect to hear good things."

Those good things should lead to a healthy round of hiring, said Solace VP of engineering Wayne Burwell. He expects to see the current workforce of about 50 double within a year with most of those new hires in Ottawa.

"In terms of people we'll be hiring, there's a large bank of talent in Ottawa selling boxes to carriers. Solace has been fortunate in that we've been growing steadily and we've been able to hire some of the top talent around."

Asked if he feared the pitfall some companies encounter of growing to quickly, Mr. Burwell said it had crossed his mind.

"There is the danger of trying to grow to quickly. There were fears that the organization couldn't accommodate that growth and take in (employees) who are not as talented as some others. But we've been able to grow at a good, steady pace and maintain the calibre of people who are very talented."

Others, too, like what they see.

"We've been involved with Solace Systems since the beginning," said Jose Medeiros, president of Wesley Clover International, the private venture fund of Terry Matthews. "The company has a strong focus on its target market, a sound management strategy, and considerable traction with top tier customers around the world."

"We are delighted to have this international group of investors join the Solace team," said Solace president and CEO Craig Betts. "Their involvement, insights, and contributions will be invaluable in helping Solace deliver on its current commitments and achieve its future objectives"

As far as funding is concerned, this round is the last – at least for a while. Now, with a toehold in North America and Europe, the company is thinking about delving into Asia, all the while keeping an eye on the competition. "We won't be receiving any more capital for the next year," Mr. Ashton said. "We're good for some time now. A year from now we'll be well down the road with the second generation of the product. We're in North America and Europe currently and we're just dipping our toe in Asia.

"As of this instant, no one else has the product we do, but I'd say Cisco is our top competition. The difference is Cisco has been involved in enterprise solution while we focus on the service provider."

By Scott Taylor

scott.taylor@transcontinental.ca