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Cortec’s $6m capital boost

There has been a flurry of private equity transactions in Western Australia in recent months. Mark Beyer looks at this growing market.

 

PERTH company Cortec Systems is planning to market its innovative telecommunications software in the US after winning the backing of three venture capital firms.

The $6 million capital raising, organised by West Perth company QPSX, marks Cortec’s transition from product development to commercialisation.

It has spent the past four years developing its technology, which addresses two of the major barriers to the adoption of Voice over Internet Protocol (VoIP) technology.

Cortec business development manager Steve Telburn said VoIP had been ranked in many surveys as one of the big technologies for 2004 and beyond.

The company is planning to hire a US-based chief executive and establish a US office to market its technology.

“We have been making good progress with a couple of vendors,” Mr Telburn said.

The new funding will be provided by Perth-based Foundation Capital, Sydney-based Technology Venture Partners and Melbourne-based Starfish Ventures.

They join three existing shareholders – the Australian Telecommunications Cooperative Research Centre, which sponsored the original research, Cortec management and QPSX.

VoIP has been marketed by a range of companies over recent years but has generally failed to deliver on its promises.

Mr Telburn said the two major problems had been unreliable call quality, particularly when data networks were used for phone services, and the expertise needed to install and maintain a VoIP system.

“Our new product guarantees the quality of service and automates the process of doing that,” he said.

“This is real technology developed by people who are respected internationally. Its not just the old thing wrapped up in hype.”

Mr Telburn said the key benefits of VoIP included the savings from having a single integrated communications network rather than separate voice and data networks.

It also opened up opportunities for a range of new features and services, such as unified messaging.

Mr Telburn said Cortec would focus on partnering with companies such as Cisco, Lucent spin-off Avaya and Nortel, which are already marketing VoIP services.

VoIP market penetration was very low but growing rapidly, he said.

 

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