Motricity raises $32 million

Funds mainly for acquisitions

Investors continue to bet big on Motricity, supplying cash the technology company needs to fuel its explosive growth.

The Durham company will announce today that it has raised an additional $32 million in venture capital. The money brings Motricity's financing since 2001 to $152 million, one of the largest amounts of capital ever raised by a private company in North Carolina.

And Motricity officials say there's more to come.

Motricity provides technology that helps people buy and receive games, graphics, ring tones and music on their mobile phones. Its customers include cell-phone carriers such as Cingular and media companies such as BET.

"The reason we're able to attract the capital that we have is because we're executing every day," CEO Ryan Wuerch said. "Motricity is continuing to accelerate in its execution in the marketplace and we're wanting to intensify that even more than we have in the past."

Motricity has announced two major deals in just the past month.

In July it bought GoldPocket Wireless, a company providing interactive services for TV shows such as "The Apprentice" and "Big Brother." On Monday, Motricity announced it would partner with Universal Music Group to deliver music from artists such as Eminem and U2 to fans' mobile phones.

Wuerch said he would announce more customers in coming weeks.

The company's work force has grown to 300 in Durham, up from 170 last summer, and hiring continues. It has about 380 employees worldwide.

This year's $72 million in funding, and additional venture capital that Motricity expects to announce in coming weeks, are earmarked mainly for acquisitions, a key part of the company's growth strategy.

Motricity has built itself into a market leader, and that attracts money, said director Will Griffith, a general partner with Technology Crossover Ventures.

"Finding companies that have truly disruptive growth opportunities is a hard thing," he said. "Motricity is an extremely unique story. Investors certainly want to be a part of that."

Motricity's financing this year puts the company's performance ahead of all other media companies' fund-raising last year, according to the National Venture Capital Association.

Until Motricity, the richest local start-up may have been BuildNet, a Durham company that raised $140 million from private investors.

BuildNet's story shows that venture capital success doesn't always mean a bright future. The dot-com ultimately filed for bankruptcy.

Adam Smith, who has tracked venture capital in the area since 2000 for the Council for Entrepreneurial Development, isn't aware of any other local companies that have raised more than $150 million in private funding.

"I can't say it's the largest ever, but I can't say I can name too many that have come close," he said.

With major customer wins, a steady stream of acquisitions, national media attention and big-name investors, Motricity has the highest profile of any technology start-up in the region, Smith said.

But he's not willing to compare the company to the high-fliers of the technology bubble days. It was easier then for companies to generate buzz and raise cash, he said. The fact that Motricity has raised $152 million in "more rational" times makes it more of an achievement, he said.

Then again, six years ago during the IPO boom, many companies would have gone public before raising that sum, Smith added.

Motricity has plans for a public stock offering, but not immediately, Griffith said. The company is content to grow without the scrutiny of public investors and the burdens of government regulations, he said.

"We're capitalizing on our current status as a private business," Griffith said. If Motricity continues to flourish, "we will take the company public within the relative near-term, but ... it's not going to happen next month."

The company's addition of two new independent directors also takes it a step closer to meeting the requirements of a public stock listing. David Holland, vice president and treasurer of Cisco Systems, and Steve Clark, former chief executive officer of SpectraSite Communications and a partner with Intersouth Partners, joined Motricity's board on Thursday.

Motricity's market is still young, and the company won't stop at ring tones and games, Griffith said. Before long, video will be an option, and ultimately Motricity will supply advanced services, such as shopping via cell phones.

The company also is looking for growth abroad. While most of Motricity's business has been centered in North America, the company is ready to move aggressively into international markets, Wuerch said.

"There are a lot of strategic options in front of us," Griffith said. "We continue to invest because we think the end goal will be much larger than we realize right now."