Case Study: AWR Corporation. Wireless software company sought more than just funding.

When Applied Wave Research (AWR) Corporation first sought capital to grow its profitable wireless software business, the founders met with as many as 10 venture capital firms, most of whom focused exclusively on the financial projections. Only one firm looked beyond the spreadsheets and explored AWR’s strategic potential – CMEA.

“The reality was that, of all the firms we talked to, CMEA was the only one that could add value beyond money,” said AWR CEO Dane Collins.

AWR develops software for engineers designing wireless devices like cell phones, Blackberries, Direct TV and communications satellites. The software allows designers to create a prototype and test performance of a new chip or circuit board before the manufacturing phase, rapidly shortening the development process and cutting costs.

AWR is a classic venture capital success story. Founder Joseph Pekarek quit his job to develop the software in the spare bedroom of his home. The company launched in 1997 with $270,000 in Series A financing from “friends and family.” They were profitable from the start and by 2002 looking to grow. That’s when they met Faysal Sohail, one of CMEA’s Managing Directors.

“CMEA and Faysal understood us right from the start,” Collins said. “More than any other firm we talked with, they were the most strategic. They dug pretty deep and asked lots of tough questions. In their due diligence they were trying to push us forward and make us more solid.” Sohail, who sits on the AWR board, echoes Collins’ comments. “It’s been a good relationship from the start. It’s a great example of how a VC firm can add value beyond just the money.” Collins believes the relationship is unique in the industry. Few of his peers in other companies speak so positively about their investors. “Most of the firms I speak with think of their investors as a chore or a burden to bear,” he said. “We don’t feel that way. CMEA always puts our interests first. That doesn’t mean they don’t ask hard questions, but whenever they do it’s clear that the purpose is to make us better.”

The key is to strike a balance, Collins said. He likes the fact CMEA knows when to lead and when to get out of the way. He calls them a “distant advisor” who’s there when you need them but otherwise “they know what we’re good at and don’t try to run our company.”

It’s hard to argue with the results. Consistently profitable, AWR has averaged about 15% annual growth over 10-plus years and supports more than 100 employees in eight offices in North America, Europe and Asia. Initially focused on military customers, today they service several wireless device manufacturers like Nokia as well as defense contractors like Northrup Grumman. They’ve also built key alliances with other semiconductor companies.

AWR’s “path to liquidity” remains open, Collins said, whether it’s going public or through acquisition. For now, he’s focused on maintaining what has historically been a strong balance sheet, and is proud of the fact AWR has remained profitable throughout the economic slowdown. Like everything else they hear from AWR, CMEA likes the sound of that.