Digium Receives $13.2MM in VC Investment

August 9, 2006 by Garrett Smith

By BRUCE MEYERSON AP Business Writer

NEW YORK Aug 9, 2006 (AP)— Matrix Partners is investing $13.2 million in Digium Inc., the creator and coordinator of Asterisk, a popular open-source PBX software platform for business phone systems that’s based on Linux and Internet Protocol.

The funding announced Wednesday marks the first round of venture capital for Digium, which oversees development of the free Asterisk platform, but is also one of a growing number of companies selling a customized phone system derived from the software.

The investment comes amid modest, but growing interest in a new generation of technologies that seek to replace the traditional office switchboard and phone system often referred to as a PBX, or private branch exchange. Earlier this year, for example, Azure Capital Partners invested $5 million in Fonality, which makes an Asterisk-based phone system.

At last count, there were 130 vendors of Asterisk-based business voip systems, and more than a thousand software developers are downloading the source code each day, according to Digium. However, none of that activity generates any revenue. Digium won’t disclose any specific data on its financial performance, but says it has been profitable since 2002, generating 100 percent growth in revenues each year since.

Where the conventional products sold by major vendors can cost tens or hundreds of thousands of dollars for a business to buy, the new systems based on Asterisk and other Internet technologies can be purchased by a small company for as little as $1,000.

The IP-based systems also inject new programming flexibility and features for users to customize to the needs of their companies. Some of these products are delivered remotely over the Internet from a vendor’s servers rather than being installed on a computer at a company’s facility.

Matrix manages $2.5 billion in assets from offices in Boston, Silicon Valley and India.

“We have maintained steady growth and have been consistently profitable. We felt seeking outside funding was unnecessary, but Matrix Partners’ success and vision in the open source industry was too compelling to ignore,” said Mark Spencer, president of Digium and creator of Asterisk.

More from: Asterisk Garrett Smith

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