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.
So let’s get started...
Subscribe in a Reader
Mergers Acquisitions
Amdocs acquires MX telecom: from business support systems to mobile payments
Amdocs’ acquisition of MX Telecom is interesting in a number of ways.
To take a brief step back, Amdocs has traditionally aimed to help operators align business processes around the end user by centralising the various information assets they have. This could be product, customer or network data. Initially the focus was on billing and CRM solutions but with acquisitions and in-house development, these offerings have grown such that Amdocs is pretty much the backbone of an operator’s service enablement. Now, they even enable operators to establish their customised portals for e-commerce or in current parlance – app stores. Furthermore, they also have solutions which enable advertising across multiple channels.
Before this turns into a marketing pitch for Amdocs, let’s take a look at their acquisition history: In 2006, they acquired QPass which provided software solutions for digital commerce. And then in 2010, they acquired jNetX, a service delivery platform. In the interim, they have acquired firms for various components of OSS/BSS billing solutions.
So where does MX Telecom come in?
First, MX Telecom provides voice and data messaging services – this is to telecom operators and ISPs at one end and content providers and data vendors at the other. The services include SMS, multimedia messaging, IVR, video short codes, location services and Internet and TV related solutions – all of these being a gap in the current Amdocs portfolio.
Second, they have a well established payment platform along with a micro payment facility. In fact recently MX Telecom launched a mobile-crediting solution for pre and post pay users which, I think, may actually prove very useful in the context of micro-payments for virtual goods in the mobile gaming sector (anyone thinking mobile Kwedit).
Interesting enough, these are both gaps in Amdocs’ arsenal. The company had OpenMarket in the US but as they have stated in their press release, MX Telecom will further buttress the OpenMarket offering internationally.
MX Telecom was founded in 2000 and has had a very sound growth path, being ranked first in the Deloitte Technology Fast 500 EMEA awards in 2006. The firm’s been acquired for $104 million net of debt and cash which translates to an estimated 1.2x 2008 revenues and 10-11x adjusted 2008 EBITDA (Source: Megabuyte Newswire). That’s quite a good deal for a sector trading at 1x revenues and 8.5x EBITDA. There should be more on the financials when the firm completes its fillings. Will keep you posted.
Social media, the phrase, is becoming an all-encompassing terminology for multi-people interaction.
I liked seeing the Exact Target acquisition of CoTweet. It is being called the marriage of email and social media but in essence, it is the coming together of all one-to-many forms of enterprise communication and interaction on one platform. I would have imagined that coTweet would have licensed their technology to Exact Target and/or their competitors as they focused on growth. Such an early exit may have had a lot to do with Twitter’s forecasted enterprise focus. But then it also means that Exact Target continues to live up to their innovative leadership position in the on-demand email marketing space.
That was an interesting piece of news today morning – Google’s acquisition of Aardvark, a social search provider started by ex-Googlettes, for $50 million. Aardvark essentially provides a platform which enables a user to ask questions of friends and family aka their social network. From my understanding of the firm, it was an invitation only network so as to maintain the quality of the experience and relevancy of the answers. Sometime in April ’09 they had about 10,000 users. I would have assumed a 10x growth in the user base since then, but fortunately didn’t need to make any assumptions even though accurate. Here’s a research report they published some time earlier this month. http://blog.vark.com/?p=352
What was interesting to me was the transaction from the investors perspective. August Capital invested about $5.5 million in October 2008. With some other VCs and angels, the total investment in the firm was ~$6 million not counting the $750k invested in 2007 when the firm was setup. That’s an IRR of close to 300% with the assumption of a post money valuation of $12 million from the last round. 3x return in one year, that to in a year like 2009.....and these are funds which can now be re-invested during the life of the fund further multiplying returns.
Almost exactly a year ago, another social search engine Delver was acquired by Sears Holding. Delver at that point in time was going to shut shop because they hadn’t been able to get any VC interested and raise funds. What a difference.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_a.png?x-id=60cc2215-bc2b-4277-bdbc-95dcc00002f9)
