Paris, France: A start-up hoping to find a niche in the luxury phone market for lovers of Swiss watch craftmanship has secured funding from one of Europe's biggest venture capital firms, it said.

Celsius X VI III, which was founded by four thirty-somethings a few years ago, has an ambition to take the 500-year old tradition of hand-made watches and use it to make a mobile phone that would replace chips and electronics with moving parts.

Sofinnova Partners has bought into the idea, investing 2.2 million euros ($4.4 million) while AGF Private Equity has invested 500,000 euros and several other private investors have together put forward 600,000 euros.

"Our target is the man who owns a few sports cars and is an aficionado of Swiss watches," said Edouard Meylan, co-chief executive of Celsius, who plans for customers to keep his mobiles for decades rather than tossing them aside after a year.

Meylan knows more about the appeal of fine craftmanship than most: he is the son of George-Henry Meylan, the long-time CEO of Swiss watchmaker Audemars Piguet.

The company's first mobile, dubbed the Papillon, contains a patented mechanism that winds the watch inside every time the user opens and closes the clamshell-shaped phone. It would be sold in a dozen watch or jewellery stores globally and cost around 200,000 euros.

The start-up is entering a market for luxury mobile phones that was pioneered by Nokia in 2002 when it launched the Vertu line of phones that cost 5,000-25,000 euros.

Fashion houses like Georgio Armani, Prada and Christian Dior have also launched mobiles in a bid to capture a slice of the mobile market.

For Celsius, the challenge will be building brand credibility in what is essentially a tiny niche market. It will also have to compete with better known Swiss luxury watch makers like Tag Heuer and Ulysses Nardin that are also expanding into mobile phones.

Meylan says that Celsius aims to sell 50 of its Papillon phones this year and 150 of a lower-priced version. The company wants to increase sales of the lower-priced model to more than 1,000 by 2013, while keeping sales of the high-end version more restricted.

For Sofinnova, the investment represents a bet that there is money to be made in bringing together the world of geeks and fashionistas.

"The intersection between technology and luxury is one of our investment themes in the coming years," said Olivier Sichel, partner at Sofinnova. "We are well placed in Europe to capitalise on this trend."

Sofinnova's investment in Celsius comes as venture capitalists globally have cut back on the money flowing into start-ups due to the economic crisis. The total amount of venture funding last year to November was 1.5 billion euros, down 30 percent from a year earlier.