Why is This VC Smiling? Amobee's Sale

Venky Ganesan, a managing director in the Palo Alto office of venture firm Globespan Capital Partners, is known for his expansive smile. He has good reason to be wearing one today, too. In 2006, on behalf of his firm, Ganesan led the Series B round of Amobee, a mobile advertising startup. Last night, Singapore Telecommunications, the largest telco in Southeast Asia, announced it was buying the Redwood City, Calif., company for $321 million.

Get for SingTel

Amobee is something of a "get" for SingTel, considering its $30 million in revenue last year was up 3x from 2010, and that the nearly-profitable startup is expected to triple its revenue again this year.

The acquisition as well marks a solid financial win for a number of investors. Sequoia and Accel led the company's $5 million Series A in 2005. Following Amobee's $15 million Series B, Vodaphone, Telefonica, Motorola and Cisco invested another $22 million.

As for Globepan, the exit is one in a recent series. Just in case to Amobee, Dotomi, an ad optimization firm that had raised approximately $25 million, sold to ValueClick last August for $295 million. Next, in October, network security software developer Q1 Labs sold to IBM for an undisclosed amount. The company never disclosed how much it had raised, however a source close to the startup had, at that time of its sale, pegged the acquisition price at $600 million. Globespan had as well assembled a small stake in the social game company Zynga, which went public last December.

We knew that mobile advertising was going to happen and the question was: which is the best way to play it? We figured there was a carrier-centric way [as with a telecom like SingTel buying Amobee] and a non-carrier-centric way [as when Apple acquired Quattro Wireless for a reported $275 million in 2010; Globespan co-led Quattro's Series C round in 2009]. A lot of times, you have a thesis and nothing happens. When you have a plan and it works, it's nice.

The company wandered in the desert for a during

The company wandered in the desert for a during, between 2006 and 2010, however an interesting acquisition - RingRing Media — allowed us into [the mobile advertising agency business]. At the time we brought over Trevor Healy [as CEO last year, replacing founder Zohar Levkovitz]. Trevor was CEO of [the VoIP (Voice over Internet Protocol) Service] Jajah, which we'd backed with Sequoia and helped sell to Telefonica. And Trevor was able to fashion Amobee into what it’s become, including a as a matter of fact fast-growing company. It tripled revenue from 2010 to 2011 and it will triple its revenue again this year.

I think the most interesting story here is that a change is happening, where telco companies are becoming tech companies. Carriers have historically been very vertically integrated, selling you your phone, your service, and [ring tones and whatever else they could sell you from] their own Web store. And that worked until Google and Apple threw open the smart phone market. Since at that time, carriers have had to become horizontally integrated, forming digital units that sell services to other carriers. You see it with SingTel Digital [a wholly owned subsidiary, formed in 2009]. You've seen it with Telefonica Digital [run as a business division]. You'll see nearly every carrier going this way because they must to grow. If not, they're in a commodity-type business, where margins will continue to shrink.

It's as well pretty clear that at this stage, following five years in which we've seen the advent of the LTE (Long Term Evolution, latest standard in the mobile network technology) network and smart phones, the center of gravity in the mobile world has shifted from Europe to Silicon Valley. Between Cupertino and Mountain View, we're leading the world on this.