Financial News

Tobii Technology, a company that develops technology allowing people to control computers using only their eyes, will announce on Friday it raised €16m ($21.7m) in venture funding.

The deal shows that new investments are still being made by European venture capital groups, even as the industry faces a much tougher environment in the wake of the collapse of Lehman Brothers (NYSE: LEH - news) in September.

Only the top-tier firms have been able to raise funds in the past year, meaning many groups are finding it increasingly tough to support their portfolio companies or finance new investments.

Amadeus Capital Partners, Northzone Ventures and Investor Growth Capital have all provided expansion capital, which Tobii will use to develop products, enter markets and expand its sales force.

Stockholm-based Tobii makes eye-tracking equipment used by disabled people to write text messages with their eyes by looking at a sensor-enabled keyboard.

It is also installed in PC monitors to help designers understand how people's eyes move around a website.

But the potential applications are numerous, including checking that drivers are not asleep at the wheel.

Eventually it is thought that eye-tracking equipment could replace the computer mouse.

"Excellent technology and demonstrated ability to grow rapidly puts Tobii in a unique position to capitalise on the huge opportunities of eye tracking," said Hans Otterling of Northzone Ventures.

John Elvesjö, executive vice-president and founder of Tobii, said the company was able to choose between several potential investors at a time when many young companies were struggling to secure funding.

Tobii began operating in 2001 after spinning out of the Royal Institute of Technology, a large Scandinavian technology university.

It became profitable after its first year, without taking external financing, and has increased sales to €19.1m, with 200 employees.

Mr Elvesjö said revenues had grown at an average of 90 per cent for the past six years.

Tobii's patented eye-tracking technology uses a small optical sensor, similar to a camera, which is embedded in monitors, cash machines or portable computers.

A low-intensity LED shines a pattern of infra-red light into the eye. "Like a candle light, it forms glints in the corner of a person's eye," Mr Elvesjö explained.

The pattern's curve or distortion changes according to where it is on the retina, allowing the sensor to figure out the position of the head and the direction of gaze.