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A little bit about me

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...

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Femtocell - Expansion vs Consolidation PDF Print E-mail
Blog - Mergers Acquisitions
Friday, 29 October 2010 19:44

 

Broadcom recently acquired Percello, a maker of system-on-chip solutions for WCDMA and LTE femtocells for approximately $86 million. There is an additional payout of $12 million for performance related goals. Percello’s investors were T-Venture, Granite Ventures, Vertex Venture Capital and 7-Main Limited, a family office.

I did wonder – why Percello?


I think Percello’s closest competitor may have been UK based picoChip. They have multi-user (upto 16)SOC solutions for the full array of 3G technologies too. They also have a well-established customer base with Ubiquisys, Zyxel, Sagem, ip.Access, Alcatel Lucent, Alpha Networks.....and the list goes on.


But then they also have a roll call of investors – Atlas Ventures, Highland Capital Partners, Pond Venture Partners, Rothschild Group, Scottish Equity Partners, AT&T, Intel Capital and Samsung Ventures – with about $110 million invested till date.


I would believe it was just a mismatched expectation of pricing.


No harm done however – the market is still inchoate and there is significant scope for development. Qualcomm is a new entrant but needs to develop their platform. In addition, there is ambiguity around the market for separate femtocell  gateways versus the integration of the chipset within the main broadband gateway itself. That would determine merger or acquisition partners for PicoChip (chip vendors like Ikanos, Atheros, Lantiq, Realtek....)or perhaps they prefer maintaining their independence and going the IPO route.


It all boils down to the market propensity for triple-play operators (voice, broadband and TV) or quad-play vendors (voice, broadband, TV and mobile).

 

Another play I’d like to consider here is the discussions Apple is having with Gemalto for a dedicated  iPhone SIM independent of telecom operator and potential repercussions but more on that tomorrow.

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