Massana, the semiconductor intellectual property company with bases in Dublin and Silicon Valley, has secured $16.5 million (€19.64 million) in funding from a combination of Irish and international investors.

This represents one of the largest second-round venture capital investments in an Irish company to date and is likely to be followed by a further round of funding before any future flotation.

Massana specialises in designing high-technology silicon chips that optimise the performance of broadband networks, enabling data to be transferred at very high speeds.

The company hopes to cash in on the roll out of broadband networks worldwide, which analysts have estimated should be worth up to $16 billion to semiconductor companies by 2003.

Massana chief executive Mr Paul Costigan said the company would use monies raised to boost its research and development and deploy the company's flagship Gigabit Ethernet products in the market.

These products enable broadband networks to run up to 100 times faster by applying smart maths and proprietary methodologies to silicon in a process known as "fattening the pipe".

Mr Costigan said Massana was confident its technology could compete in the area against much larger multinational competitors. The company is applying for six to 10 patents on its own technology, he added.

He said the company would compete with established players in the semiconductor chip sector. These include the US company, ARM, and its smaller competitor, Aware.

"In its initial stages the company has to invest heavily in R&D to expect to emerge as a global player in this market," he said.

Massana generates revenue through licence fees and royalties, which are charged on a percentage of revenue generated over networks that use its Internet protocol (IP) technology.

The company has not released details of any contract wins, but Mr Costigan said he expected to be able to announce one shortly with a leading semiconductor company.

He said the company's priority was growth rather than profitability, although he said he was aware that the global syndicate of investors in Massana would aim to make a return on their investment.

"We now have high-profile investors in Massana who obviously aim to make a return on their investment," he said. "But an IPO is not an endgame for us," he added.

Two new international investors came on board through the funding round: Dresdner Kleinwort Benson, a European investment bank, and the Tokyobased investment group JAFCO Ventures.

Massana's existing shareholders are ACT Venture Capital of Dublin, BancBoston Capital based in Boston, USA, and Vision Capital, based in Menlo Park, California, USA.

Mr Costigan would not reveal how the fund-raising affected the shareholding within the company.

However, he said ACT Venture Capital was now the largest venture capital investor in the company, while several well-known private Irish investors also held stakes in Massana.

He said the company had tripled in value since the initial $7 million fund-raising last December.