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Bluetooth start-up snares $43 million

Wireless start-up Red-M, a subsidiary of struggling equipment manufacturer Madge Networks, announced Thursday that it has completed a $43 million second round of funding.

    Wireless start-up Red-M, a subsidiary of struggling equipment manufacturer Madge Networks, announced Thursday that it has completed a $43 million second round of funding.

    The U.K.-based maker of equipment and software for the wireless standard Bluetooth raised the funds from Apax Partners Funds and Amadeus Capital Partners. Red-M will receive up to $35 million from the round, and its parent, Madge, gains $8.65 million from investors in exchange for shares of Red-M.

    Madge financed Red-M's first round of funding, but, as of the second round, goes from being a majority shareholder to owning "a significant minority stake," Red-M CEO Mike Wilson said. He characterized the investment as between 20 percent and 49 percent of the company.

    Wilson and two representatives from Madge will comprise the board of directors for Red-M along with a representative each from Apax Partners and Amadeus Capital.

    Bluetooth is a wireless radio technology that allows handheld electronic devices like PDAs or cell phones within 10 yards of each other to share information. For example, Bluetooth technology will allow a person to print a memo from a handheld on a nearby printer.

    Red-M makes equipment and software that allows an area of a building to become "Bluetooth-enabled" as Wilson puts it. Wilson said Red-M technology can allow a sales clerk in a store to get all the information about a certain product in the showroom and also run a customer's credit card number without having to return to the PC at the sales counter.

    Red-M's technology also aims to make it possible to access corporate networks within the Bluetooth area of a building so employees can use information services while not at their desk.

    The funding "is hugely substantial in terms of the recognition that the Bluetooth market is here," Wilson said.

    Red-M started shipping products at the end of last year.