Jul. 30–In many ways, XAware Inc. is a throwback to the heady days of technology.
The Colorado Springs-based software firm recently landed venture capital, boosted its work force and expanded.
That was the typical tech startup story in the late 1990s, when it seemed any techie with a business plan could land financing and build a large company overnight.
Venture capitalists today, however, are much more hesitant to fund companies. Most of the startup firms fortunate enough to receive investment money use it to survive, not grow.
What XAware hopes to avoid is the fate of the once high-flying tech firms that went out of business when the technology bubble burst.
The signs are encouraging.
XAware has been able to land money in the toughest venture capital environment in years: Venture investments nationwide dropped for 12 consecutive quarters before stabilizing in the second quarter of this year.
XAware received $2 million this month from its investors — ITU Ventures and Gefinor Ventures — for meeting certain business milestones. That’s on top of $2 million the company landed last fall from those investors.
If XAware can expand and land financing during tough economic times, it should be able to expand even faster when the economy recovers, said Bill Miller, XAware’s chief executive officer.
“The companies that didn’t deserve to survive are gone,” Miller said.
“New companies like XAware really were funded in middle of the (downturn) with the idea that there will be an upside.”
XAware used the venture money to hire about 10 workers and boost sales and marketing since last fall.
It was the first, and so far only, company to “graduate” from the Colorado Springs Technology Incubator, an organization formed in 2001 to provide startup companies with office space, guidance and other support.
A company graduates when it leaves the incubator and can stand on its own.
XAware moved last year into 5,000-square-feet of space on Briargate Parkway.
Gary Markle, president of the incubator, said XAware’s ability to land venture capital during the downturn demonstrates that the firm is proving itself in difficult times.
“It shows that the financial backers still believe very much in the business model that they invested in,” Markle said.
XAware employs 26 workers and, if business holds, expects to have 32 workers this year.
The firm develops software that allows businesses and organizations to exchange and store data quickly and more efficiently. Its software uses extensible markup language, or XML, a format for sending and receiving data on the Web.
Organizations such as the U.S. Environmental Protection Agency, Unisys and Oppenheimer Funds use the software.
XAware recently tailored its software for uses in homeland security, allowing law enforcement agencies, the military and other organizations to share data.
“All these different organizations have information stored in different systems,” Miller said. “They don’t have an easy way today to share that information in real time.”
Like most other technology companies, XAware’s sales have been somewhat slow during the economic downturn.
Many companies have delayed buying software as they grapple with financial problems.
But business appears to be improving, albeit slowly.
“Especially in the first quarter of this year, we saw that a lot of projects people were looking at doing were not moving ahead. A lot of things went on hold,” Miller said. “That’s loosened up a little.”
XAware might look for more venture capital this year, but Miller said the company will be able to stand on its own if it can’t find money.
“We always imagined managing the company so that we could get to profitability if we wanted to. What it would mean would be holding back on spending and not growing as much,” Miller said.
“We have our hands on the throttle to push forward or pull back if we need to.”
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(c) 2003, The Gazette, Colorado Springs, Colo. Distributed by Knight Ridder/Tribune Business News.
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