ViVOtech, a near field communication (NFC) software and systems company, is shutting down operations due to cash-flow problems. This, despite having raised nearly $100 million in outside funding over the past decade. The company is planning to announce the news to employees later today via conference call, according to a report emerging today from NFC Times.
We tried to confirm the news this morning by calling offices in the U.K. and California, but no one was picking up the phone. Media relations representatives have not returned emails or voicemails.
ViVOtech CEO Mick Mullagh has sent out the following statement:
ViVOtech’s business fundamentals are strong and orders and contracts are building in both its reader and software businesses. Over the last six months the company has been executing a strategy to divest its reader business to a qualified buyer. This sale has moved slower than anticipated. ViVOtech has not ceased operations but is in the process of restructuring operations and has reduced its team to a smaller group with the goals of maintaining customer relationship and core contract work, and to address our supplier relationships and commitments, as the company completes plans to divest the reader business and focus on the Software Business. ViVOtech is in dialog with its customers and suppliers on the current situation but will be no making no other public statements.
We’ve reached out to several other companies and analysts working in the NFC industry, and, apparently, today’s news has taken everyone by surprise.
If true, that means ViVOtech has nothing left from the $96+ million it has raised from a lineup which included Singapore’s EDBI, SingTel Innov8, Motorola Solutions Venture Capital, Alloy Ventures, Citi Ventures (the venture arm of Citigroup), Draper Fisher Jurveston, DFJ Gotham, First Data Corporation, Miven Ventures, Motorola Mobility, Nokia Growth Partners and NCR. Even more interesting, the company just raised another round of financing in March of this year. And it was hiring as of late June.
Founded in 2001, ViVOtech develops payment software and NFC products including smart posters, contactless readers and writers, over-the-air provisioning, and transaction management infrastructure software.
ViVOtech partnered with Google on Google Wallet, the company’s push to become a player in mobile payments, which uses NFC technology. It also partnered with Isis, the NFC joint venture between U.S. mobile operators AT&T, T-Mobile, and Verizon.
The company is responsible for over half the NFC terminals found in big-name retailers like McDonald’s, Home Depot and Whole Foods as well as in taxi cabs. To date, it had shipped almost 1 million terminals worldwide. It also had over 80% U.S. market share for NFC readers, and reported sales in “double-digit millions,” back in 2011. It was even looking to IPO this year.
So what could have happened? NFCtimes’ sources say ViVOtech has “cash-flow” problems. It may have been struggling with hitting the market early, before NFC technology really took off and became mainstream (if such a thing ever occurs, to be fair), and it also suffered setbacks when competitor VeriFone dropped the company as a supplier of readers, in favor of its own. (VeriFone has no comment.)
According to NFCtimes, ViVOtech is now in talks to sell its reader business to PAX Global Technology, the owner of Shenzhen, China-based PAX Technology, which also makes point-of-sale terminals. Vivotech’s software business, TSM and mobile wallet services and products, are also up for sale.
While most in the industry are refraining or unable to comment, having been caught by surprise, DeviceFidelity COO and co-founder Amitaabh Malhotra did offer an opinion on the situation. He sent us the following statement:
“We at DeviceFidelity are surprised to see this news. Vivotech is a great partner and at the forefront of NFC technology. Vivotech has a very interesting product portfolio and they have often complemented our product portfolio in various projects globally to provide a complete NFC solution. The way we look at Vivotech, they have several major areas of focus – the POS contactless reader business, the TSM services and solutions business, the merchant integrated couponing and loyalty business, and the mobile wallet business. In each area, Vivotech has unique IP, and have often been the pioneers in developing industry relevant and neutral solutions.
We would not be surprised to see that unique IP in each of the burgeoning areas of mobile payments become an acquisition target or for Vivotech to be able to spin off one of these businesses to focus on the others. Their products are a part of pretty much every major NFC program, and they are probably one of the most well known brands in contactless payments and NFC.”
Meanwhile, Daniel Trigub of BlueBite, a company which produces NFC-enabled ads, was not taken aback by the news. He provided the following commentary:
Not surprised one bit. Given how much of a mess NFC is in the U.S. when it comes to payments this does not surprise me one bit. There are too many cooks in the kitchen when it comes to mobile payments via NFC – handset manufacturers, carriers, credit card companies, the Googles of the world and POS providers like Vivotech to just name a few. The politics to make NFC payments happen in the U.S. are mind boggling. That said, NFC has great potential and more on the content delivery and user engagement aspect. Not convinced (as evidenced by what looks like to be happening with Vivotech) that NFC will succeed (at all) as a payments solution – folks like Square (who do not rely on the technology) will dominate the payments space. Folks like us at Blue Bite who use NFC for content delivery have much greater potential.