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$40 million bet on high-tech television

Hefty venture capital outlay helps Ensequence's interactivity aims

Ensequence, a seven-year-old Portland-based high-tech company, planned to announce Tuesday that it has secured $40 million in venture capital financing - thought to be the largest venture capital investment in a local company in at least five years.

Dalen Harrison, founder and chief executive officer of Ensequence, is betting that people are no longer willing to simply watch television, and the big money apparently is saying others agree with him.

Ensequence, which employs 60 people in its downtown Portland office, makes software that allows televisions and mobile phones to become interactive - virtually telling networks and advertisers what they want to see.

The privately held company has signed up some major clients in recent years, including the British Broadcasting Corp., the Disney Channel, Major League Baseball and Comcast. In fact, Harrison says, his favorite Ensequence application to date is the company's work with Major League Baseball.

Using Ensequence software, subscribers to a baseball premium package are able to watch six live baseball games at one time, dragging and dropping from a side menu to choose the games they wish to follow.

Viewers are able to customize views to make one game larger than others and even to track their own fantasy-team players and clubs.

The interactive technology pioneered by Ensequence alerts viewers when their fantasy-team players are at bat and allows them to switch immediately to those games.

The new financing will allow Ensequence to expand internationally, according to Harrison.

Interactive television has gained a greater foothold in Europe than in the United States, and Harrison said the company would look to increase its sales and marketing forces there, as well as open satellite offices in New York and Los Angeles, where much of the company's sales take place.

Locally, the big news is the amount of financing the company has been able to collect at a time when many local high-tech firms are struggling to lure venture capital.

Eric Rosenfeld, a managing partner at Capybara Ventures, a Portland-based company that provides financing for startup companies, said the $40 million doubles what other companies have been able to secure.

According to Brent Bullock, a partner at Perkins Coie law firm, which represents many venture capital-backed companies, no local companies announced funding of more than $15 million in 2006.

'There aren't a lot of companies in Oregon that have raised $40 million,' Bullock said.

Rosenfeld said the amount of money Ensequence was able to raise in this, its third round of capitalization, was significant. But an even greater turning point for Portland companies will come when local money is able to supply more of the needs of local companies, Rosenfeld said.

The $40 million Ensequence has raised is being supplied by a single anonymous investment group that is not from Oregon, according to CEO Harrison.

'In a way, it (the $40 million) does dispute anything being said about there not being any venture capital,' Rosenfeld said.

But Rosenfeld said Seattle, with major high-tech successes in Microsoft and Amazon, has about 15 times as much local venture capital to help feed local companies.

'We haven't had a lot of wealth creation in the technology sector,' Rosenfeld said, 'and therefore there hasn't been a lot of dollars reinvested locally.'

The success of a local company such as Ensequence, Rosenfeld said, could lead to more available capital for other companies.

'Things like this can help jump-start that type of cycle,' Rosenfeld said.

As for Ensequence's product, Rosenfeld said the company may be situated to reap rewards from a technology just coming into its own.

'People have been talking about interactive television for quite a while,' Rosenfeld said.

'With television historically, it's been a lean-back experience. You want to be entertained. Interactivity has always been a forward-lean activity. It will be interesting to see whether people are willing to change, to interact with their TVs in a way they've never done before.'

CEO Harrison said he recognizes having the technology and now the funding does not guarantee Ensequence's success.

'There's lots of hungry people out there,' he said. 'We have to run as if there's somebody on our heels. But today we're showing things and doing things that nobody else does in the marketplace.'

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