Firms Form Wireless Web Developer

In a complicated transaction that will create a pure-play wireless Internet
professional services firm, Web development shop K2Design Inc., venture capital player
Unwired Ventures I, and wireless specialist SilverCube Inc. on Tuesday agreed to
form a joint venture to exploit the potential of the wireless marketplace.


“We created the new company because we need to stay on top of the competing
standards and technologies in this complex, fragmented and fast moving
arena,” said Matt de Ganon, executive chairman of K2 Design.


“This will allow us to quickly amass leadership in expertise and experience,
with an organization clearly focused on a singular mission wireless
applications.”


Basically, K2 will shed all of its current wireless operations and give them
to the joint venture, hoping that the combination of these resources,
SilverCube’s existing expertise, and Unwired Ventures’ cash, will help the
new, singularly-focused, company get ahead in this rapidly-changing
marketplace. It’s a way for SilverCube to gain more resources, and for K2
and Unwired Ventures, a partnership of Emerald Venture Capital, to get a
stake in what they apparently believe will be a winning business model.


The cash-and-stock deal, valued at $14.8 million, will create a stand-alone
entity called SilverCube, which will have offices in New York, Detroit,
Philadelphia, and Silicon Valley.


The complex deal calls for K2 to acquire a majority interest in the original
SilverCube in a stock-for-stock exchange. Unwired will take a minority stake
in the firm, in exchange for cash. Then, all three firms will contribute
their respective interests to the joint venture. Unwired will then
contribute more cash — for working capital — to the joint venture, in
exchange for shares in the JV. K2 will end up holding the largest interest
in the new firm. Meanwhile, Unwired Ventures has taken an undisclosed, but
“significant” equity stake in K2, “as a vote of confidence in the direction
the company has taken.”


Initially heading up the operation as chief operating officer will be Greg
Guidice, the founder and chief executive officer of SilverCube. Gary Brown,
the chief operating officer of K2, will serve as interim chief financial
officer.


The new SilverCube will create wireless content for its clients, as well as
mobile commerce applications. Its services will include analysis, strategy,
systems design, creative, and application development. The JV has partnered
with Aether Systems Inc., a
wireless software firm, which has already been working with K2. It will also
inherit all of K2’s wireless partnerships, including one with ThinAirApps.


Like many Web professional services firms, SilverCube aims to put together
partnerships that cover all of the bases in the wireless arena, so its
clients can come to the company for a one-stop shopping experience.


SilverCube has, thus far, concentrated on developing wireless content and
e-commerce solutions for companies in the technology, automotive,
manufacturing and public sector markets. Clients include General Motors, Edmunds, e-Chemicals and Automation Alley.

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