Editor’s note: Many of the most promising high-tech, biotech and pharmaceutical firms will be presenting at the annual venture capital conference sponsored by the Council for Entrepreneurial Development. The event will be on April 27-28 in Chapel Hill. As it has in the past, Local Tech Wire will profile presenting companies that wished to participate in a Q&A.Looking to increase the speed, improve the security, reduce the complexity and cut the costs of a wide area network?

End II End Communications, a Charlotte startup founded in 2001, says it has a solution to all those challenges with its software.

“Domestically our product is being well received because of total cost of ownership savings by enabling secure broadband and device consolidation at the Remote Office,” the company tells Local Tech Wire. “Worldwide, our product has an even greater advantage because our performance gains over satellite enable companies to utilize their applications anywhere and everywhere.”

What’s the secret sauce for doing all that?

“End II End’s software solution provides all the essential network services on a single off the shelf Intel server to secure, manage and optimize a customer’s broadband Wide Area Network,” the company says.

End II End has been bootstrapped for funding to this point by management, friends and family. Should the company get investors, it plans to use the funds to expand sales, marketing and research development efforts.

End II End’s response to LTW’s Q&A:

Given the difficult investment climate, have you explored or used other means of getting funds than venture capital?

Early stage technology companies have few hard assets; so traditional asset-based lending is not a viable avenue. Factoring receivables for cash flow purposes is always an option, but that is predicated on booked sales. We’ve bootstrapped the company by selling our products and services along with small investments from employees, friends and family.

If so, please explain why you remain interested in venture capital. Are investors telling you that the climate for making deals is improving? Please explain.

A recent article in the Wall St. Journal stated that there was over $86 billion in committed capital in the venture sector, so there are ample investment funds available. New deal flow appears to have begun as VCs complete any necessary refunding or follow-on rounds for their existing portfolio companies. Obtaining funding from a marquee VC firm with a track record of success in one’s sector provides useful validation for market credibility as well as access to potential customers and partners that can accelerate a company’s growth.

If you had only one chance and one paragraph to convince an investor, how would you answer this question: “Why should an investor choose your company?”

End II End believes the new reality in network communications and security issimplicity. We have developed and commercialized a software product that integrates all of the essential network services to secure, optimize and manage a company’s broadband Wide Area Network. Our software products and the intellectual property we have developed enable customers to take a holistic approach at improving network communication, security and management while dramatically reducing costs. Domestically our product is being well received because of total cost of ownership savings by enabling secure broadband and device consolidation at the Remote Office. Worldwide, our product has an even greater advantage because our performance gains over satellite enable companies to utilize their applications anywhere and everywhere.

What is the “pain point” (or points) you address for your customers?

Our software products address these four pain points for a company’s Wide Area Network:

1. Speed — Company Networks are Too Slow due to dramatic growth in Internet traffic and the deployment of bandwidth intensive enterprise applications.
2. Complexity — Enterprise WANs are Too Complex to configure, manage and troubleshoot because of the proliferation of devices and vendors necessary to fulfill all business requirements at every site.
3. Security — Company Networks are NOT Secure enough to defeat today’s evolving security threats and meet ongoing regulatory compliance.
4. Cost — Enterprise WANs are Too Expensive to upgrade, manage and support.

What makes your company unique? Do you have a proprietary and/or a patented technology? Please explain why it is unique and what the status is of any patent filings.

End II End’s intellectual property includes three patent-pending technologies all of which are in the early stages of the patent filing process.

1. Broadband Network Optimization technology maximizes the data throughput across any broadband connection with performance improvements of 20-75 percent over DSL, Cable and satellite. Broadband Network Optimization enables the only IPSec VPN that performs over satellite at full service speed.
2. Network Security Database is a relational database that contains all the network and security information for every site on the WAN and allows each site to share information about the status and performance of the network.
3. Distributed Adaptive Technology are algorithms that use the information in the Network Security Database to allow each location on the Wide Area Network to defend itself from and optimize WAN performance across the Internet.

What makes your product(s) and/or services unique vs. your competition? (Who is your competition, and what do they offer?) If you have no competition, why not?

End II End’s software solution provides all the essential network services on a single off the shelf Intel server to secure, manage and optimize a customer’s broadband Wide Area Network including: Router, Firewall, Virtual Private Network, Quality of Service, Intrusion Detection, and Web Cache. The Security Information Management System enables a customer to manage all network services at all sites as a collective from a single location as well as perform security scans, audits and traffic analysis.

End II End’s competitive advantages include the only IPSec VPN that functions over satellite at full service speed. This unique functionality enables a customer to deploy secure broadband anywhere and everywhere, since DSL or business cable broadband is not available at every remote office location.

Also, the efficiency of our software allows us to provide all of the network services and host a customer’s applications on a single off-the-shelf Intel server. This service consolidation onto a single device simplifies the infrastructure at the Remote Office where there is no IT staff to support users and contributes to a significantly lower Total Cost of Ownership than our competition. Also, our software solution enables incremental remote software upgrades, which is a convenient and cost effective method of deploying new security technologies.

Our competition consists of the network appliance manufacturers for the Small to Medium Enterprise (SME) market such as Netscreen, Watchguard, Sonicwall and Servgate as well as single-function network device companies such as Packeteer, Sitara, Celera, and Peribit.

Does your company already generate revenue? If so, how much? Are you cash flow positive?

End II End currently has paying customers already using our product on their network, and is actively selling its software. The company does not disclose revenue or other financial information.

What is your target market? What is the size of that market in terms of dollars? What share of that market do you believe you can win?

End II End’s market segment is focused on companies with Remote offices in rural locations. The target verticals are: Agribusiness, Finance, Insurance, Manufacturing, Retail, and Hospitality.

The Firewall-VPN security product market, not including services, will grow to $9.7 Billion in 2005 according to IDC-Commerce Capital Markets. With at least 2 million remote offices worldwide (Instat/MDR) attached to enterprise networks and no more than 50% having access to DSL/cable modem service, End II End’s goal is to capture 5% of the Remote Office market over the next five years.

What will you do with the invested funds? What is the timeline for product delivery? If you have existing products and services, how will additional funding help you expand your company, if that is the intention, or will you develop new products?

Sales — Expand sales channel with qualified Resellers, OEM Partners and Service Providers.

Marketing — Build industry acceptance of End II End’s technology through security certifications, trade shows, publications.

R&D — Incorporate new security technologies into existing software and fully develop patent-pending technologies into new features.

What do you want from an investor other than money?

Quality venture firms should be able to offer a powerful Rolodex with C-level contacts to strategic partners, and enterprise customers as well as assist in building a strong board of directors and advisors.

Why will investors be impressed with your management team?

End II End’s management team contains a remarkable breadth and depth of business and technology skills including enterprise sales, finance, operations, research and development, along with management of rapid growth situations and previous startup experience.

What is the exit strategy for the investor from your company? Are there potential strategic alliances with larger companies? Do you wish to take the company public? Or do you wish to grow the company and either sell it or acquire other companies?

The current investment climate does not favor the IPO as an exit strategy, though circumstances are likely to change at some point over the next five years. Management is focused on growing the company through a channel/partner sales model in which strategic alliances play a vital role. Given the consolidation that is already begun to take place in the networking/security sector an exit through merger/acquisition is not unlikely.

Fact box: www.localtechwire.com/article.cfm?u=7868