Frustrated developer turns to offshore investment

After a fruitless 18-month search for venture capital in Australia, innovative Sydney company Mobile Data Communications (MDC) has accepted an investment from Finnish conglomerate Savcor. The deal means that control of MDC's remote communications gateway product -- known as Shadow -- has passed to Savcor, but it also ensures that the product's development can continue. MDC will retain its name and David McGill, the company's founder, will stay with MDC as general manager.

The futile search for capital was extremely frustrating for McGill, particularly given his belief in the potential of Shadow, which is middleware for remote communications and allows any handheld device to communicate with a corporate wireless application gateway (WAG) and from there to access corporate applications or generic functions, such as e-mail. "We have a product that will sell in the US, European and Asian markets and could have made a major thrust if we had managed to obtain sufficient finance on the local market," McGill explained.

The potential of WAGs is yet to be achieved, although it has been identified by the Gartner Group as a red hot technology. In a recently published report Gartner claimed that by 2003 at least 60 per cent of Fortune 1000 companies will use a WAG. "By 2004, companies will have to support a minimum of 50 different mobile device profiles and 10 different wireless network interfaces at once, and a WAG is the only way to glue it all together into a successful mobile strategy," a Gartner analyst said.

McGill agreed that demand for the technology is set to explode. "The industry, telcos and businesses are starting to see a revolution that will be bigger than the Internet and through which organisations will eventually be able to access generic and -- more importantly for MDC -- enterprise mission-critical applications," McGill claimed. "However, with the level of development available to us now, MDC is likely to remain a small player."

McGill said he is comfortable with the investment by Savcor, which is a diversified group that has its roots in the Finnish forestry industry, although he would have preferred to have remained an Australian-owned operation. "I have looked at all alternatives. For us to expand and compete in this emerging technology we had to have growth capital. Savcor's investment gave us opportunities for the future rather than endless bureaucracy and delays.

"At one stage I was talking to five potential investors and I even went to a Federal Government body that was set up to help companies like MDC.

"In the US they would have been putting at least $US20 million into a product like this, but in Australia we couldn't get any capital. The people who are most open, willing and supportive are overseas."

McGill said he expects the Savcor deal to be consummated by the end of March, and after that he will move quickly to increase sales, support and development staff to expand MDC's ability to deliver its products to a rapidly growing market.

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