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January 23, 2007
3i Finds The Mobile Sector Exit
We’ve posted here several times about the hazards of VC investment in the wireless and mobile sector. Over the past few years we’ve seen lots of money going in and very little coming out. But we noticed that 3i has been divesting often enough that the activity stood out in the flow of news we eyeball at the a:c euro.
We checked that impression with Go4Venture, the technology oriented corporate finance firm, whose data resources are better than ours. Xavier de Lecaros-Aquise, analyst at Go4Venture, wrote back: "It seems your hunches are correct. Not only has 3i been very successful in doing so … it turns out they have been the most active too.”
Here is a list of trade sales and IPOs that we requested from 3i
• Trade Sale: Bitfone to HP USdollars $160m
• Trade Sale: Mobile365 to Sybase USdollars $300m
• Trade Sale: Sychip to Murata USdollars $140m
• IPO: Eleksen GBP £18m
• Trade Sale: UbiNetics 3G business to CSR USdollars $48m
• Trade Sale: UbiNetics test and measurement business to Aeroflex GBP £46m
• Trade Sale: Xenicom to Andrew Corp USdollars $11.5m
• Trade Sale: Trigenix to Qualcomm euro €36m
• IPO: CSR euro €301m
• Trade Sale: Magic4 to Openwave euro €82.6m
• Trade Sale: K-Mobile to American Greetings
In the meantime, the sale of NordNav and Cambridge Positioning Systems to Cambridge Silicon Radio was announced. The NordNav deal gave 3i and InnovationsKapital "up to 8 times" their total investments in the company.
With all that in mind, the following Q&A with Ian Lobley, a senior partner on its VC team, should be of interest to some of you. The interview was done via email and telephone.
a:c euro – How did you manage to find the exit, when many of your peers haven’t?
IL – We’ve had a good run over many years. We’ve been investing in the market for 15 years, across the mobile value chain, investing in software, components, handsets, download platforms and operators….
a:c euro – So have some of your peers in the Nordics and France and they are not yet getting good-sized trade sales or IPOs.
IL: I think that some other investors had a narrower focus in certain areas of mobile, eg ringtones.
a:c euro - How do you interest the big name buyers, like HP, which acquired Bitfone?
IL: Trade sales don't happen in a vacuum - typically there are long term relationships preceding the deals. Helping to get those relationships for our portfolio is one thing we do, for example. Bitfone was an HP partner.
a:c euro – Which area delivered 3i the best returns ?
IL – Investments around the semiconductor area, CSR, Sychip, Ubinetics – have been a great area for us. But middleware and software to the handsets has been good too: Magic4, Trigenix, and Bitfone. Even content, K-mobile was a content company.
a:c euro – Your positive comments on middleware and content are surprising.
IL- It’s true that the most frustrating and challenging wireless model is anything where the operator is part of the value chain – especially marketing content via the operator, or where the success depends on getting into the handset. But even there we have startups that have done it and when they do it and overcome the initial barriers, they can do very well – Magic4 is a great example of this.
a:c euro – Where are you investing now?
IL – DiBcom, chip company for mobile TV where it is market leader; ScreenTonic, mobile ads – it's French and offers a full-set of tools and a platform for mobile phone advertising – its customers are the operators and advertisers; Nujira, which makes components to improve significantly the efficiency of wireless base stations. This allows dramatic reductions in power consumption and, for example makes, Wimax base stations work at unprecedented levels of efficiency.
a:c euro – We haven't heard of Nujira.
IL- It’s founders are ex-Symbionics which was acquired Cadence back in 1998. Nujira is delivering something that network equipment makers’ customers want : a cellular basestation that consumes less power and gives off less heat so meeting one of the operators’ environmental targets. You don’t need air conditioning in the basestation cabinet for one thing and the total cost of ownership is slashed. But it also enables a much smaller basestation, small enough to mount on a pole – so called remote radio heads. There is a press release about it here
a:c euro – What’s your approach to new mobile sector investments?
IL – we are trying to build on our success over 15 years; thoughtful and cautious!
a:c euro – thanks for the interview.
Posted on January 23, 2007 09:57 AM | Posted to Venture Capital | Wireless | Permalink
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