When Swedish students David Löwenbrand and Påhl Melin met in the late 1980s, they discovered that an interest in technology was their common denominator. It was when they both studied civil engineering at Linköping University that they came up with the idea for an initial product: A device known as a line selector that automatically finds the telephone operator that is cheapest. The idea resulted in an inventor’s prize of SEK 175,000 – money that could be used as initial capital in their own company.

The Kreatel company was born. The first order worth SEK 12 million came a few years later and the company started to grow. However, as the market for line selectors was limited, a new sales concept was needed.

In 2000, Kreatel entered the market for broadband telephony (IPTV) with a set-top box. In order to launch its product, the company needed more venture capital. SEB Venture Capital, the private equity firm focusing on small, fast growing companies, came into the picture as one of a group of investors. And this was not the first time SEB Venture Capital had invested in a company with its origins in Linköping University:

“Linköping University is a young and dynamic centre of technological research and innovation, where we have found several innovative companies to invest in. Focusing on digital communication, signal processing and compute architecture, the Linköping research activities are a good base for companies with a high growth potential and a sustainable competitive advantage,” says David Sonnek at SEB Venture Capital.

Together with other investors SEB Venture Capital provided the funds needed – and other interested parties started to line up. But luck did not last; soon thereafter the telecommunications industry experienced a sharp downturn and the company plunged into a deep crisis. Line selectors no longer sold and the market for set top boxes had not taken off.

It all took a turn when an Italian broadband operator, who had been involved in discussions over a long period, placed an order for 50,000 broadband boxes. From nowhere, Kreatel was now listed as one of Sweden’s hottest IT companies. And shortly thereafter, in 2006, it was announced that Motorola was to buy the company. David Sonnek explains:

“Together with our co-investors, we had managed to support the company along a growth path through the difficulties, providing not only capital but also strategic insight, industrial experience and an international network of contacts.”

“But after establishing international sales of more than EUR 30 million, it was crucial to find a partner with a global presence and capacity for large-scale manufacturing and distribution.” “Motorola became that partner,” says David Sonnek.

And at Kreatel they were more than happy with the deal:

“This agreement is a very good example of a successful transfer of ownership from private equity firms to a strategic owner. ABN AMRO Capital, SEB Venture Capital and Innovationskapital have supported Kreatel’s growth over the last couple of years – we found a group of partners with the expertise and financial strength to achieve our goals and help us find the right partner to further strengthen our operations,” explains Kreatel’s CEO Lars Bengtsson in connection with the deal*.

*ABN AMRO Press Release, January 17, 2006.