Shops Eye Electronics Startup

Los angeles—A consumer electronics startup with a gee-whiz product in the works is talking to West Coast agencies about its ad account, which it says is worth $75-100 million, sources said. Some shops see the company as a possible diamond in the rough, while others view financing issues and a glutted category as red flags.

Red Jade in Palo Alto, Calif., is developing a mobile device it says will revolutionize personal entertainment through the convergence of video game, music, personal digital assistant and wireless technology. The firm, founded in February, is talking to shops about a 2001 consumer ad campaign, sources said.

Two major West Coast agencies are known to be eager to participate in a possible review.

“They want someone that knows the category and the consumer,” said a source close to the review. “They plan to come out big and strong with a product in the third or fourth quarter.”

Red Jade representatives did not return phone calls seeking comment.

Some agencies see potential stumbling blocks with the company, though, including a cluttered media/gaming device category and the issue of dried-up financing following the dip in dot-com fortunes.

“They got to name the product, develop the software and develop the hardware,” said another source. “They’re claiming $100 million, but they don’t have anything yet.”

Some are also questioning the device’s chances of success in a market that’s perceived to be crowded already, featuring stacks of gaming and palm computing products.

Ericsson Business Innovation, a subsidiary of Ericsson, has so far invested $7 million in Red Jade. IT Provider, a Swedish venture capital firm, has invested $3 million, bringing total known investment to $10 million.

Red Jade expects to combine innovations in technology, industrial design and marketing.

Earlier this month, Red Jade named Gunnar Tyrsing as CEO and Fredrik Liliegren as president and chief content officer. Tyrsing is also vice president of Ericsson Business Innovation. He will be responsible for strategy, recruitment, securing funding and overseeing partnerships. Lilie gren’s background is in entertainment software development . He will handle day-to-day operations at Red Jade and supervise content creation.