| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
Ubicom Inc. has raised $18 million in a Series 4 financing round, as the communications chip developer seeks to expand its market from home networking router products to additional home network gadgets, including digital picture frames. Strategic investors Lehman Brothers Venture Partners of Menlo Park, Calif., and Samsung Venture Investment Corp. of Palo Alto, Calif., led the deal, which included previous backers Investcorp Technology Ventures of New York, August Capital and Mayfield Fund of Menlo Park, Levensohn Venture Partners of San Francisco and JatoTech Ventures of Austin, Texas. The new investment follows a $20 million round in April 2006 that was expected to be the company's final private round, but Ubicom chief financial officer Ty Truong said previous investors were eager to put more money to work to solidify the company's market share in home routers and to expand into other digital home network products. Truong did not disclose pricing for the new investment, but said it came at a significant increase to the previous round, which put a post-money valuation of $61 million on the company. "We have been primarily in the router market and have had 35% to 40% market share, but about a year ago we looked at where the technology could be successful in adjacent markets," Truong said. "Our revenue run-rates are growing, and this will mostly go to additional working capital." Ubicom already has chips powering home routers made by market leaders Netgear Inc. of Santa Clara, Calif., D-Link Systems Inc. of Fountain Valley, Calif., and Cisco Systems Inc. subsidiary LinkSys of San Jose, Calif. Truong said the new investment is aimed at expanding partnerships with those companies and other consumer electronics manufacturers. Ubicom's communications processors were recently selected by D-Link to run its new digital picture frame products, and the company expects to announce additional design wins for DPF products, which allow users to send photos or streaming data to small display screens connected to home networks. The new investment is expected to be the company's final private round, ending a 12-year roller coaster in which the chip developer shifted focus before specializing in home networking products. The Mountain View, Calif., company, originally Scenix Semiconductor Inc., was developing system-on-a-chip products for embedded systems, but changed its name and announced a new product line in late 2000. Pascal Levensohn, managing partner of Levensohn Venture Partners, co-led a $21 million recapitalization round in 2004 based on the company's home networking products, and he said Ubicom has established a strong position in the market. Investors chose to raise additional money to expand on that. "The short story is that this is a rich man's problem," Levensohn said. "They are really leading in the emerging digital picture frame market, which is a very large opportunity, and we think this is going to be a bigger company than we thought it was going to be back in 2006." Brian Melton, a partner with Lehman Brothers, said he was attracted to the investment based on Ubicom's opportunity to take advantage of the transition to higher speed networks and the proliferation of network-connected media devices in the home. He also said the company's technology can be applied to existing and future markets. Truong said Ubicom's programmable chips may be adapted for a variety of products and that the company will work with equipment makers on designs as new classes of home-networked gadgets emerge. Ubicom used no outside financial adviser for this round, and had legal work on the deal from Michael Patrick of Fenwick & West LLP in Mountain View.
 Deal Video
    Community
 Elsewhere on The Deal.comDealwatch
The Deal MagazineCorporate Dealmaker
The Deal VideoCategories
Blog roll
Archives
| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
