Teradici Receives $17M in New Funding

Teradici, a 5-year-old Canadian startup that works with heavyweights such as IBM, Dell and VMware, is receiving an additional $17 million in funding from several venture capital firms.

Teradici, founded in 2004 by Dave Hobbs and Dan Cordingley, a former Intel executive, is expected to officially announce the $17 million in series C funding on April 8. Companies investing in Teradici include Telus Ventures, Alloy Ventures, GrowthWorks Capital, Skypoint Capital, BDC Venture Capital, and Alta Berkeley Venture Partners.

Since its founding, Teradici has focused on ASIC (application-specific integrated circuit) microprocessor technology, and the company has developed a product it calls "PC over IP."

The PC over IP technology works by compressing rendered display data and USB signals into a digital format and then sending a signal from a company's network through an IP network to the desktop. This approach not only provides for a better desktop display but also a more secure connection between the client and the company's data center.

With the additional capital, Teradici hopes to expand its technology from the enterprise and into the midmarket and the small and midsize business space.

"Consumers and small business owners will become part of the desktop virtualization revolution that is transforming large enterprises," Cordingley wrote in a statement. "They will benefit not only from lower costs, but will transfer the worry of software management and maintenance to their service provider."

The type of technology Teradici is developing is considered one of the cornerstones in the emerging market of desktop virtualization and VDI (virtual desktop infrastructure). While there are security and management benefits to having company data and desktop images centralized in one area and then streamed to individual desktops, there are also drawbacks such as the reduced ability to take advantage of rich media, graphics, audio and video.

Teradici has attracted several major companies with its technology. In addition to IBM, VMware, which is still considered the leading provider of x86 virtualization technology, has signed an agreement with Teradici. VMware also uses software from Wyse Technology called TCX-MMR that enhances Microsoft's Remote Desktop Protocol.

Both the Teradici and Wyse technologies are part of VMware's View 3 suite for virtual desktop infrastructure.

The news that Teradici is receiving additional funds is a welcome sign in the IT industry, which is being hit hard by the U.S. recession and the worldwide economic slowdown. In recent weeks, however, some companies have signaled that they want to continue to invest despite the hard economic times.

Nvidia, the world's leading graphics producer, announced that it would invest up to $5 million in startups that are working with graphics processing units or GPUs, and Google also recently announced a new entity that will invest capital in promising companies the same way Intel and Cisco Systems have for years.