Company Logo Wednesday, June 20, 2001

Tech start-up rises out of PixStream

WATERLOO -- A high-tech start-up is rising out of the ashes of PixStream. Four former employees of the Waterloo video networking company have launched VideoLocus Inc. to develop the next generation of video compression and processing technology.

PixStream effectively was shut down in April, when owner Cisco Systems laid off 170 of the company's employees.

Another 40 employees were retained for four months to wind down the operations.

Cisco's decision to close PixStream came only four months after it paid $554 million for the business.

VideoLocus, housed in offices on Randall Drive, is headed by president Mate Prgin, a University of Waterloo graduate who joined PixStream in 1998.

The firm's other employees -- all formerly members of PixStream's engineering staff -- are Lowell Winger, chief technology officer, and Guy Cote and Michael Gallant, co-vice-presidents of research and development.

Prgin said the technology VideoLocus is working on is different from PixStream's and so is the application.

While PixStream largely focused on the transmission of video signals over broadband networks, VideoLocus is developing the next generation of video processing technology, he said.

"We are going far beyond where PixStream was," he said.

"There is a lot more opportunity for video than what PixStream was doing. What PixStream was doing was just a small, small part of the market."

Prgin said it is too early to disclose the applications VideoLocus is working on or the timeline for bringing a product to market.

The start-up, which was incorporated in May, is getting a helping hand from Tech Capital Partners, a Waterloo-based venture capital firm that invests in early-stage technology companies.

It is providing $600,000 in seed financing.

The firm, managed by Andrew Abouchar and Tim Jackson, said additional funds have been reserved for future development.

It said it will help VideoLocus put together a business plan and development schedule.

Jackson, PixStream's chief financial officer until shortly after Cisco bought the business, said the fact he knows the four founders of VideoLocus well was a big factor in the decision to invest in the venture.

"The type of company we are investing in is typically very early stage," he said.

"We are looking for engineers and scientists with an idea. Obviously, when you are investing in those types of people, knowing the individuals and the strengths of the technical talent is key."

The investment in VideoLocus is the firm's first financing deal.

Tech Capital Partners, launched in February, manages two funds -- the $30-million Waterloo Tech Capital fund and the $5-million Waterloo Ventures fund.

Jackson said the firm is working on other deals, but no announcements are imminent.

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