Sensetech Rides Success Of Motorola's Razr With Funding
NEW YORK -(Dow Jones)- Slim is in - and paying off - at Korean start-up Sensetech. After signing on to supply super-thin keypads for Motorola's popular Razr cellphones and new Pebl line, Sensetech scored $5.5 million from venture capitalists.
BlueRun Ventures, a Menlo Park, Calif., venture capital firm, led the Series A round with $3.5 million, while STIC Investments, a Korean venture capital firm, provided the rest of the funding, said BlueRun partner Kwan Yoon.
Although Motorola's Razr line is more than a year old, consumers are still briskly snapping up the trendy gadgets, which measure as thin as half an inch. Along with Yoo Eul, a large Korean keypad maker, Sensetech, based in Incheon City, South Korea, is one of a few companies that supply Motorola with keypads for the slim phones, said Yoon.
Enthusiasm for the high-design phones has translated into a growth spurt for the start-up, which hit profitability in December. Revenue for the company exceeded $20 million in 2005 and is expected to triple this year, said Yoon. Sensetech also aims to reach $140 million in revenue in 2007 and go public with a stock value of $250 million, according to its Web site.
Sensetech started manufacturing keypads in mid-2005 for three Motorola cellphone models, including an upcoming version of the Razr. Because Sensetech lacked enough capacity to ship directly to Motorola - it currently delivers up to 3 million units per month to customers - the start-up has been shipping its keypads through an existing Motorola supplier.
The $5.5 million in new capital comes just as Sensetech is building a high-capacity factory in China that will manufacture 6 million units a month - sufficient capacity for direct shipment to Motorola.
Besides Motorola, Sensetech counts Samsung, LG Electronics Mobile Communications Co., VK Corp. and Pantech & Curitel among its customers - all Korean companies. But now Sensetech aims to push for more international customers. Sensetech has no firm agreements with new customers at the moment, but Yoon is confident that will change within the next three months.
"Korean companies have limited access to overseas customers," said Yoon. "We [at BlueRun Ventures] are bridging them to new customers like Nokia and Sony, and we guide them in talking to them and negotiating with them."
Yoon, who joins Sensetech's board along with STIC's Sung Kyu Lee, said BlueRun limited its investment in the company to avoid being the largest shareholder. Korean regulations subject the largest shareholder in a venture-backed company to a six-month lock-up after an IPO on the Korea Exchange. While such a lock-up is the norm in the U.S., BlueRun prefers to retain the option of holding or liquidating its shares.
Since closing the capital, Sensetech has directed its attention entirely to slim keypads. Previously the 4-year-old company had developed traditional, non-slim plastic keypads with $4 million in seed capital from individual investors.
Designing and manufacturing a slim keypad is no easy feat. The process requires careful calibration for the keypad's four main components: the metal layer, the keypad layer, the metal dome that provide the "click" when keys are punched, and the lighting under the keys. In addition to basics like gluing the layers together and making sure the keypad endures a range of temperatures, some of the trickiest aspects lie in the surface details, such as how the keys feel to the finger's touch and how the numbers are etched.
Sensetech continues to research new materials for "thinner, lighter, and cooler design keypads," said Yoon. New products should reach the market later this year.
(This story originally appeared in VentureWire, a daily email newsletter that provides in-depth analysis on venture capital and high-tech start-ups. Dow Jones Newswires, publisher of VentureWire, runs select stories from the newsletter.)
-By Michelle Tsai, Dow Jones Newsletters/VentureWire; 201-938-4314; michelle.tsai@dowjones.com
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Posted to the site on 20th January 2006
