The increase in mobile devices over the past few years has led to a rapid growth in advertising targeting them and, in turn, a number of large acqusitions of venture-backed businesses.
As global mobile advertising is predicted to be worth about €6bn ($8bn) this year, according to consultancy Berg, up from €3.4bn in 2010, Singapore-based telecoms group SingTel bought mobile advertising company Amobee, which has corporate venturing backing from corporations Telefónica, Vodafone, Motorola, Amdocs and Cisco, for $321m.
What makes the deal the exit of the year is less the multiple of invested capital – about a six-times return on aggregate capital committed – but that Singtel won out reportedly against Spain-based telecoms company Telefónica.
While entrepreneurs and some venture capital firms worry that having a strategic investor might limit exit options, Amobee is part of the vast majority of usually more than 90% in any given year, according to academic research by Martin Haemmig using Dow Jones VentureSource data, sold to a third party rather than one of the investors.
Since 2005, Amobee had reportedly raised at least $54m from venture capital firms Sequoia, GlobeSpan Capital and Accel, Telefónica, UK-based telecoms peer Vodafone – David Leftley from its ventures unit picked up the Global Corporate Venturing award on the night – US-based mobile phone manufacturer Motorola, document company Amdocs and US-based technology company Cisco Systems.
Amobee used part of its financingto buy UK-based peer RingRing Media for $20m in 2010.
Where Amobee’s peers, such as Quattro and AdMob, had been bought by technology companies – Apple and Google for $275m and $750m respectively – SingTel’s purchase “marks an interesting turn” for mobile advertising businesses with phone call carriers like SingTel directly entering this space.
As Globespan partner Venky Ganesan told news provider VCCircle: “The first 1 billion to 1.5 billion users on the internet came through the PC [personal computer] and the next 3 billion are going to come in through the mobile phone.
“What is happening is carriers used to charge you for the calls, texts and data usage. But the problem is that you can-not do that on a variable basis and data services will go at a flat rate.
“But how do you make money when you are capped at a flatsubscription rate? The way to do that will be through mobile advertising which will become a critical part of every carrier’s strategy.”
Amobee, backed at an early stage by Vodafone and Telefónica, had positioned itself to be of interest to both as potential acquirers through having carrier-grade services, Ganesan added in the VCCircle interview.
Amobee, therefore, represents long-term strategic thinking by its corporate venturing backers into a white space of future growth for their businesses and a strong financial return operated on a level playing field for bidder
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