Wi-Fi startup Xirrus raised an undisclosed amount of venture financing from Microsoft-backer David Marquardt Monday to help accelerate sales of its multifunction access point for businesses.

The money came from August Capital’s David Marquardt, Steve Krausz of U.S. Venture Partners, and Bill Schroeder, the former CEO of Diamond Multimedia Systems.

Xirrus soups up Wi-Fi access points for businesses, giving them more bandwidth, a wider coverage range, and switching capabilities. It also has security features not found on the typical Linksys home Wi-Fi access point.

Mr. Marquardt said his firm was “singularly impressed by Xirrus’ innovation.”

The additional bandwidth and coverage area means businesses will not have to install as many separate access points to cover the same area. Fewer access points mean lower installation costs.

The startup has been running on the investment of its founders since early 2003. Most of the founders’ money came from the sale of the last company they ran, Xircom, to Intel for $748 million in January 2001.

Some 60 percent of the company’s 50 employees are from Xircom and Monday’s financing is a validation of their commitment.

Take John DiGiovanni, Xirrus’ director of marketing, for example. The father of three joined the company during 2003 as the fifth employee and spent his first few months working off a desk made from a door. He went without pay for his first year, hoping he would be paid when the company started making money.

Yet the decision to join up with his former boss in a new venture was a no-brainer. “The product itself was pretty sexy and the concept of building something new was very attractive,” Mr. DiGiovanni said.

“I talked to my wife about it and she said, ‘How many times in your career can you do this?’”

Well-Established Competition

Xirrus will be fighting against a number of well-established competitors. Cisco, for example, acquired Airespace for $450 million in March 2005 to establish a foothold in the corporate Wi-Fi market (see Airespace’s Disappearing Act).

Aruba Networks, another Xirrus competitor, has collected $84 million from venture investors such as Sequoia Capital and Trinity Ventures. The Red Herring 100 Company recently beat out Cisco for a $20-million contract to install Wi-Fi for Microsoft (see Aruba Adds $25M in Funding, Microsoft Opts for Aruba Wi-Fi, and The Hottest Private Companies in North America).