Rehovot-based startup eMikolo Networks has launched its first private placement, hoping to raise $10 million from local and foreign VC funds, TheMarker.com has learned.

President and chairman Moshe Raines estimates that in spite of the current state of the economy, the round will be completed by the end of Q1 2002.

Jerusalem-based VC fund Israel Seed Partners, which invested $5.5 million in the seed funding round eMikolo held in October of 2000, is expected to take part to prevent its 30% stake from being diluted.

eMikolo will try to rope in European investors, taking advantage of the Go4Europe convention, the fourth to be held by the Cockerman investment house. The convention takes place next week.

The startup develops software to streamline communication networks of large corporations, at low cost. Its technology enables corporate satellite offices remote access to central applications in organizations, such as corporate files and e-mail.

Setting their sights on the American marketThe United States, with 2.5 million satellite offices, is eMikolo's chief target market. According to Raines, the company is currently negotiating with companies regarding paid field studies, which are expected to lead to commercial installations as early as Q1 next year.

Raines claims that the company¿s software solution takes the market recession into account, which could help it achieve significant sales next year and achieve profitability towards the end of 2002.

Raines founded eMikolo in 1999 along with Oded Regev, PhD, now eMikolo's chief scientist, and with Ittai Golde, a former employee of the Israeli firm UBIQUE, which was later sold to the IBM Corporation (NYSE:IBM).

Elliot Jaffe, the founder of PictureVision, which was acquired by Kodak in May of 2000, is the general manager and chief development officer of eMikolo Israel. The startup employs 17 workers at its Rehovot facility. David Butler, eMikolo's CEO, works out of the company's U.S. headquarters.