Israeli company receives $5-million Series A to develop products around its local positioning technology.

April 11, 2005

Epos Development, an Israeli company making positioning systems, turned down multiple term sheets from U.S. venture capital firms to accept its first institutional investment from Jerusalem Venture Partners, the company reported Monday.

Founded in 2002, the company has already received more than $1 million in seed money from Tel Ad electronics and private investors.

Epos, based in Kfar Sava, Israel, will use the new funds to expand sales and product development to meet demand from mobile phone, PC, and gaming companies for its chip-and-software-based positioning systems.

“We currently have more [potential] projects than we can handle,” said CEO and co-founder Oded Eliashiv. “The money from JVP will help us ramp up the team.”

The company added three new employees in the last week, bringing the total to 14.

Epos’ positioning system is based on software that lets its tiny chips “know” where it is in three-dimensional space. At close range, it’s both cheaper and more accurate than prior GPS technology.

“We believe that Epos has solved elegantly some of the crucial problems in human-machine interaction, and therefore has superb business potential," said Glen Schwaber, General Partner, JVP, and Epos Board Member. “EPOS has shown an extraordinary ability to reach commercial products with extensive market traction and limited funds.”

That market traction has not yet translated into revenues, but by the end of the year, the company and an unnamed top-tier PC partner will release a digital pen that doubles as a wireless mouse, so users can scrawl notes on a piece of paper and have them show up on a PC screen.

Because the technology applies to several markets, Epos is also working with mobile phone companies for a variety of applications, including cellphone touchscreens. Gaming console companies are using the technology to develop products such as light guns for plasma screen TVs and, eventually, a consumer-priced virtual reality suit.

After receiving several funding term sheets, Mr. Eliashiv and his management team sat down and thought about what they wanted in a VC.

Just a few years ago, most Israeli entrepreneurs would have chosen a U.S. VC to gain access to the North American market. But for Epos, the most “global” VC was right in their own backyard. Jerusalem Venture Partners has foreign offices in New York City, London, Shanghai, and Tokyo.

“We’re building a global company, so it’s important for us to reach out to global markets,” said Mr. Eliashiv. “We’ll open a sales office in North America, but we’re also going to be strong in China. We already have deals in process in Japan and Europe.”