Envara: Wireless standard deviation

While cable companies in Israel are preparing to merge, the rest of the world is envisioning and implementing a cable-less globe.

Izhak Kirshenbaum, co-founder, president, and CEO of Envara and recipient of the Israel Defense Prize, has a great deal of experience in the Ministry of Defense and the Intelligence Corps, and joined up with serial entrepreneur Gideon Barak to work on Hyperlan – the European standard for 5GHz high-speed wireless transmission.

Barak heard of Kirshenbaum through Amit Heller, a co-founder of Butterfly (which was sold to Texas Instruments), who had served under Kirshenbaum in the army. Barak, himself a co-founder of Butterfly, who has also already managed to be a partner in DSPG and DSPC, met with Kirshenbaum for a brief, businesslike talk. “Barak spoke for ten minutes about the start-ups he had already set up and for five minutes we spoke about the start-up we set up jointly,” Kirshenbaum says.

”In early 2000, while we were beginning to get our ideas together, we thought of abandoning the 802.11a protocol that had become quite common, and focus on Hyperlan. The second version of Hyperlan was just beginning to be discussed.”

”Globes”: Why should the Europeans create their own standard?

Kirshenbaum: ”Why are there so many standards in cellular? Even more absurdly, the situation today is that the European and US frequencies operate using the same physical layer, frequency, and characteristics – the only completely different thing is the transmission exit.”

Dr. Alain Fogel, the former VP of ICCom (which was bought by Siemens subsidiary Infineon) joined in, and Envara was officially founded in March 2000 under the name h-LAN. Just as Nasdaq started to show signs of crashing in April, the founders took intensive actions. The trio was not deterred from planning a financing round. Kirshenbaum: “The Nasdaq (drop) had a delayed effect on Israel, and we started to have difficulties in receiving funds only towards the end of the year. Until that time, the amounts raised were crazy. The problem was entirely different – it was difficult to recruit employees.”

The Gemini Fund invested the entire $2 million that the company raised during the seed round. “This was mostly thanks to Barak, who had a solid reputation,” Kirshenbaum says modestly. “At the time, it wasn't clear that I would join in.” The first capital raising round was announced in July, after $14 million was raised in June, led by STI Ventures, with the participation of Gemini Israel Fund, Giza GE Venture Fund, Challenge Fund-Etgar, Koor Corporate Venture Capital, and Evergreen Canada-Israel. Envara’s company value was around $40 million, after money.

Kirshenbaum says that at the time the company negotiated to bring in a strategic partner, which he describes as “a US infrastructure giant active in the cellular market.” He declines to elaborate. “We wanted to negotiate with the company from a strong position, which we hadn't yet attained in the initial round, and we decided to build up the company first and return to them later. We planned to raise another $2-3 million but we succeeded in raising $14 million and then realized we no longer needed their investment."

“Beyond developing the products themselves, we knew we had to be visible in forming the standard, that is, to be partners in the relevant standards committees, even though it meant spreading our resources more. We quickly understood that the European standard was twelve months behind that of the US, and that it also lacked the backing of the industry, which isn’t the case in the US.”

Envara changed its focus and concentrated on the 802.11a wireless protocol, which operates on 5GHz, enabling optimal broadcasting of 54 Mbps, compared with the 11Mbps enabled by the 802.11b protocol.

The Japanese love it

The company changed its name to Envara when it changed its focus, and now develops integrated chipset solutions for wireless communications, including Baseband and RF frequencies. Kirshenbaum says the company’s complete solution, which meets the needs of even exceptionally small suppliers, is still a relatively new concept in the sector. Its business model is therefore based on cooperation with manufacturers and direct sales to customers. Applications of its solution include laptop computers connected to the office network and web tablets (laptops with Internet surfing capabilities).

Kirshenbaum says Apple, which offered customers wireless connections with advanced models of PCs at relatively attractive prices, made the public aware of wireless networks. However, Apple is not among Envara’s list of potential customers, whereas 3Com, Intel, Cisco, Dell Compaq, HP and IBM are.

As for competition, Kirshenbaum says, “Proxim still has a broad market share and Intersil, with 70% of the 802.11b market, plans to also operate in the 801.11g market. This market is clearly hot and some competitors are naturally more of a threat than others. Lucent’s Agere, Texas Instruments, and Intel are all involved in the market.”

Envara currently has a prototype, mainly for demonstration purposes. “About a month ago, we demonstrated our product to a potential Japanese customer who loved it,” Kirshenbaum says. At the end of this year, the prototype model will be distributed to customers and Envara hopes to complete a final product in less than a year. The company’s development center is located in Ra’anana, and Envara is currently setting up branches in the US and Japan.

”Even if we expand by another 6-10 employees, which we’re planning to do, we still have enough money for another year,” Kirshenbaum sums up optimistically, adding that he does not rule out bringing in additional investors.

Published by Israel's Business Arena on 15 May, 2001