The company said it would spend the money to develop and market its first product, a system for next-generation broadband networks. The Vancouver, British Columbia-based company is keeping its product and plans confidential ahead of the launch of its first product, which is slated for the second half of 2007.

Zeugma chief executive Andrew Harries said the company’s product would play into the trend of telecommunications companies deploying high-bandwidth broadband services, such as TV, video and voice over IP.

He strongly hinted that Zeugma’s forthcoming product would aid in the support and delivery of these services.

Because of the way these services compete with each other as well as other services over the Internet … we anticipate that very quickly there will be a shortage of available bandwidth for these new services, Harries said.

We think there’s a need for innovation in this space because of the complexity of delivering all these new service in the manner the require.

He said it remains to be seen what types of broadband networks Zeugma’s product would work with.

However, Harries said the company has already engaged in business development in North America and elsewhere. He did not elaborate on what this means exactly, but said Zeugma was actively engaged in Europe and anticipates some Asian business.

No customer trials have yet begun, he said.

He declined to speculate on which and what type of companies Zeugma hopes to rival. But the product would be deployed inside the network, and not at a customer’s premise, he said. This implies potential competition with various communications equipment makers, including heavyweights Cisco Systems and Nortel Networks.

Zeugma launched in 2004 with an undisclosed amount of seed funding. Its principal product development center is in Vancouver, but has sales offices in a couple of US locations, Harries said.

The company is actively hiring to add to its 55-strong workforce. Harries said the company is recruiting workers from North America, Europe and India. Our hiring net has been cast far and wide, he said.

Current employees include former workers at Sierra Wireless, Redback Networks, PMC-Sierra, Cisco Systems and Nortel Networks.

While it’s still very early days yet, Harries said the company and its investors were open to various exit strategies, including acquisition. If some sort of ownership change transpires along the way, then so be it. But that’s not the focus of the management team or the investors, he said.

In the meantime, he said the company expects to chase another VC round later next year.

New investors BDC Venture Capital and Zeugma management and staff helped raise the final $2.25m to top off the recent round.

Existing investors include Granite Ventures, Ventures West, Yaletown Venture Partners and GrowthWorks Capital.

Harries also said multiple patents on Zeugma’s product have been filed, but not yet granted. Typically, in North America it takes several years for patents to be issued from the date of when they are filed.