A START-UP company out of Edinburgh has defied the technology slump to raise (pounds) 1.25m in first-round funding.

CriticalBlue, which is developing software that provides an ''adrenaline boost'' to hardware processing power, has secured the cash from Pentech, the Glasgow-based venture capital fund, and a small group of private investors.

The money will be used to complete development of CriticalBlue's Cascade software tool suite.

The deal has been described as the ''main phase'' of CriticalBlue's first funding round, but could be followed in the coming six to eight weeks by further news.

David Stewart, co-founder and newly-promoted chief executive of CriticalBlue, spent last week in California talking to various groups interested in his company's technology.

Formed in May 2002 from the merger of two existing software businesses, CriticalBlue is focused on developing ''electronic design automation'' tools that can speed up the design process for new generations of consumer electronics. It does this by translating software into the embedded hardware that is currently needed to provide the increasingly complex array of functions available in small devices such as mobile telephones and palmtop computers.

''We figure this can help in any area where there is a high fluctuation of products entering the market,'' said Ben Hounsell, who will take the role of vice-president of business development.

''When you've got a high fluctuation like that, you need to be able to develop the next generation of products very quickly. We believe Cascade can significantly reduce development times.''

Hounsell was the founder of one of CriticalBlue's predecessor companies, Adaptive Programmable Silicon (APS), which he set up in 2001 with the assistance of an Enterprise Fellowship. APS later secured (pounds) 400,000 in seed funding from the Edinburgh Technology Fund, which was set up to assist in the commercialisation of technology coming out of the University of Edinburgh.

Hounsell then met up with Richard Taylor, whose Metachip company was operating in a similar field to that of APS. They merged their businesses in May of last year to form CriticalBlue, with Taylor now working as the company's chief technology officer.

Edinburgh Technology Fund maintains a shareholding in CriticalBlue, while the investors from this latest round have taken an undisclosed equity stake. However, the founders maintain a majority share-holding.

CriticalBlue is the fourth investment this year for Pentech, which has invested a total of nearly (pounds) 3m so far in 2003.

Eddie Anderson, founder of Pentech, said his firm was drawn by the potential for CriticalBlue's technology to radically alter the market in which it competes.

''We think the approach they are taking to this hardware-software co-design space will be disruptive,'' he said.

As part of the funding deal, Peter Denyer has been appointed a non-executive director of


Denyer founded and ran Edinburgh-based technology company Vision until it was sold to ST Microelectronics in 1999, and he now serves on Pentech's advisory board.