Venture capitalist Mark Ein and a group of prominent localinvestors agreed to take over Cibernet, a clearinghouse used by thewireless industry to settle roaming fees and other financialtransactions between wireless companies.
Until now, Cibernet has operated as a for-profit division of theCellular Telecommunications & Internet Association (CTIA), aWashington-based trade group representing the mobile phone industry.
But with this deal, which also includes Yurie Holdings, theBethesda-based investment arm of Jeong Kim, and Liberty AssociatedPartners, the settlement firm becomes an independent company. Thegroup did not disclose the financial terms of the deal.
Kim, who will serve as chairman of the company, and Ein intend totransform Cibernet from a financial settlement company into atechnology firm. They plan to leverage its customer base into alaunching pad for new technologies.
"We look at this as a platform to do other deals," Ein said.
Cibernet was launched by CTIA in 1988 to facilitate paymentsbetween wireless companies. The firm handles more than $7 billion intransactions each year.
At the heart of Cibernet's business is facilitating roamingcharges between mobile phone companies.
For instance, Verizon Wireless customers who travel to Atlanta mayend up using the wireless network owned by Atlanta-based Cingular.Cibernet ensures that Cingular is paid for the temporary use of itsnetwork by Verizon Wireless.
The privately held company has been growing 25 percent annually inrecent years and expects to have revenue of $16 million this year,according to chief executive George S. Shaginaw.
Ein and Kim say they will begin scouring the wireless industry forfledgling companies that have a worthy technology but lack thecapital or contacts to get off the ground. In some cases they maypartner with a company; in other cases they may be an acquirer, Einsaid.
Although some applications are still in the early stages in theUnited States, wireless customers in other parts of the worldregularly use their mobile phones to send text messages, downloadvideo, play games or activate vending machines.
Ein also said the company will be taking a close look at WiFitechnologies, which give users the ability to access the Internetover a wireless connection. Yesterday, Verizon Wireless announced itsown plan to launch a nationwide wireless data network serving morethan 400 hotels and 10 airports.
In addition to Ein and Kim, other Washington area investorsinvolved in the deal are Raul Fernandez, who founded Proxicom Inc.before selling it in 2001, and CapitalSource Finance LLC, a ChevyChase-based commercial finance company.
Both Ein and Kim have deep roots in the Washington technologyscene. Kim was the founder of Yurie Systems, which he sold for $1.1billion to Lucent Technologies in 1998.
Ein, Kim and Liberty Associated own equal shares of the company; Fernandez and CapitalSource own smaller stakes.
Cibernet will be moving to new offices in Bethesda, Shaginaw said.
Although Cibernet was founded in the United States, more than halfof its revenue comes from foreign companies, Shaginaw said.
The company says it has more than 300 customers in 82 nations.
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