+ Sunday Business Post - 07.08.2005

HEADLINE: SELATRA PUTS E2M IN GAMES PLAN

But Cronin could see a future where colour-screen phones were the norm and phone users were demanding increasingly sophisticated games.

He set up Selatra as an 'aggregator' - a go-between that would buy games from developers and sell them on to mobile operators. Three years on, Cronin has raised E2 million from investors who share his vision of the future. The funds came from venture capital firm 4th Level Ventures, and Mianach, a business expansion scheme (BES) fund that backs technology firms. The investment, which has been in the pipeline for 10 months, will fund Cronin's expansion plan for the Cork firm.

Until late last year, Selatra was generating revenue from sales and there wasn't a need for funding, said Cronin, the chief executive of Selatra. But we wanted to grow aggressively and so we raised funding. He said the investment would allow Selatra to boost its sales and marketing effort and increase its market share in several countries. The company plans to hire six more employees, bringing to 18 the total number of staff at its headquarters at the National Software Centre in Cork. It will also increase the portfolio of games it sells to operators. Cronin said Selatra's current portfolio of games was available to 220millionmobile subscribers in 42 countries. We now need to strengthen brands and marketing channels and increase the percentage of the business with our current clients, he said. The new financing allows us to accelerate growth and enhance our presence in the global mobile arena. Cronin said Selatra had revenues of more than E1.3 million in its financial year to the end of June and had turned a profit.

His plan sees revenues doubling to E2.6million in the current f inancial year and reaching E5 million by 2006/2007. That growth should be driven by the increased takeup of games worldwide as mobile phones become more sophisticated. There has been a huge improvement in the standard of mobile phone games, Cronin said. 3D games technology, improved java handsets and faster download speeds means games have better plans and richer graphics. He said that the volume of games being played on mobiles was doubling year-onyear as phones and games becamemore affordable. In Ireland, mobile games sell for between E4 and E6, with a third going to the developer, a third to the mobile operator, and a third to the aggregator, such as Selatra. The company has contractual partnerships with more than 140 companies, including Belgacom, Legion Interactive in Australia, People Interactive in India, andWind in Italy. It has recently signed clients in South Africa, Scandinavia, Russia and Central Europe.

Ten months ago we secured clients in South Africa, and this has become one of our most successful markets, Cronin said. We are also seeing strong revenues from Central Europe, Belgium and Austria. The firm entered the Indian market last year.There, games are cheaper than in Europe, but more games are downloaded. Games there cost less than E1 each, but Selatra is sel l i ng 100,000 games a month, according to Cronin. The firm's strategy now is to increase its market share in Central Europe and Asia as quickly as possible. While Selatra developed its own game, called Arch Rally, last year, it has pulled back on development to concentrate on providing games. We kept it at one game because of the economics of producing games, Cronin said. The high cost of developing a game means it's far easier for us to outsource development. Selatra's competition includes two other Irish firms, Upstart Games and Nephin Games, but Cronin said Selatra had a unique offering. We are a service technology platform for storing, distr ibuting and val idating catalogues of games, he said.

Other companies don't have the technology to offer the same. However, he said Selatra was interested in forming alliances and was always open to anything thatwould help grow the company more quickly. In the last three years there has been investment in the industry, which has triggered a mania of mergers and acquisitions in developing companies, he said. Mobi le gaming companies like ours can be a complementary partner to an American firm because we target different markets. Before founding Selatra, Cronin managed Logica Mobile Network's product development centre in Cork. About 90 people were employed at the centre before it closed in mid-2002 as partof a reorganisation of Logica. Cronin, Martin Creaner and Michael Rogers are the three executive directors and major shareholders in Selatra. The latest investment in the firmbrings its total backing to about E3 million. The company had previously raised more than E600,000 fromits founders, including several ex-Logica executives and Enterpr ise Ireland. Further investment of E335,000 came from revenue reinvestment.

Two new directors - Ray Naughton of 4th Level Ventures and Mike Fitzgerald of Mianach - have joined the board of Selatra after the funding.

Enterprise Ireland, which was an early investor in Selatra, has a stake of about 10% in the firm, said Cronin.

Selatra is the latest addition to the portfolio of 4th Level Ventures, which was founded in 2002 with a E20 million fund.

It is managed by Dolmen Securities in Dublin. Investors include Enterprise Ireland and technology entrepreneurs Dennis Jennings and Ray Naughton. The fund has been active in investing in early-stage and university-based companies. It recently invested in a E2.5 million funding round at Cork firm Digisoft.tv. In January of this year, it contributed to a E1.6 million round at Pixalert, a Dublin firm whose software detects pornography on computers.

4th Level's other portfolio companies include optical testing firm PXIT, life sciences firm Deerac Fluidics, and Celtic Catalyst, a spin-off from University College Dublin. It is also an investor in Axeon, a Scottish firm that recently floated on the Alternative Investment Market in London.

Copyright 2005 Sunday Business Post