Hi. While this blog is a part of Seed Catalyst’s website, I realised over the initial few weeks that a lot of you are first introduced to the firm via the blog rather than our home page.
So to introduce myself - I’m a business consultant working with early stage technology firms to help streamline their strategy and go-to-market approach and support them for fund raising.
With this blog, I aim to capture key market trends that I see in the industry, the ecosystem and cross-plays in some of the more interesting and upcoming sectors, as well as cover interesting companies that I meet.
I will also be addressing vexing and interesting valuation and deal/term-sheet structures that would be of interest to technology start-ups at various stages of their growth.
Pond Ventures is a VC I have been following for quite a while now. The first interaction was while working on an early stage fund-raising for a semiconductor firm in early 2008. While searching for VCs who may be interested, it was disheartening to note how few there were – that is firms interested in investing in:
- Early stage
- Capital intensive
- Semiconductor
Pond Ventures was the only one which fit the bill on all counts. There were a few others but they had diversified portfolios. Pond had a very semiconductor focused portfolio which was quite surprising for Europe. But then unfortunately I didn’t see much activity from them over the last 2-3 years; had started wondering if they have gone under and have just enough financial bandwidth to do follow-ons in existing investments. It does happen to the best of us.
Well, I haven’t seen them raise any new funds but on a positive note they have had a spate of interesting exits. So let’s hope that their model of a ‘capital efficient investment model...to commercialise ground-breaking technology’ continues for some time (http://www.thedeal.com/magazine/ID/038545/community/a-new-model-for-vc-investing.php). After all we can’t have all venture capitalists investing in facebook, groupon, color and other social/digital media upstarts, can we?
Some of the recent Pond exits:
Nanotech Semiconductor was acquired by Gennum Corporation (6th April 2011) for $34 million with $6 million in potential earn-outs over the next twelve months. The firm is focused on analog and mixed signal driver and receiver ICs for fibre optic networks. Revenues for the FY 2010 were $7.4 million; a 5x P/R exit. They have received $13.5 million of total investments since 2005; approximately a 16% IRR.
Gigle Networks was acquired by Broadcom Corporation (22nd November 2010) for $75 million with $8 million in earnouts. The firm focused on S-o-C solutions for home networking on power lines. The firm received $31 million in investment over 2006-07; a 24% IRR.
4Home was acquired by Motorola (3rd December 2010). The firm focused on energy management, home security, home health and media management through a carrier grade software platform. The firm had raised $9 million in funding. Terms of the transaction not disclosed; hence no IRR calculation.
Broadway Networks was acquired by Finisar (20th September 2010), all cash transaction, terms not disclosed. The firm had developed a pluggable transceiver that allowed switches and routers to connect directly to passive optical networks.
They still have a few other investments like PicoChip, Mirics and Acco in their portfolio. All in all nothing sensational in terms of exits but slow and steady. I wonder if such a performance helps in raising a new fund. I would sincerely hope so. After all someone has to invest in hard core R&D and technology innovation.
