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Venturefest 3 November, workshop B3, Steve Allpress
The document summarizes Icera's background and technology, as well as its exit options. Icera developed cellular modems using an approach that gave it a huge cost advantage over competitors by making its chips up to 6 times smaller. This allowed for improved performance. The company had been successful in partnering with several major carriers. Its exit options included an IPO, acquisition, or remaining private. Acquisition by Nvidia was presented as one of the options.
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Venturefest 3 November, workshop B3, Steve Allpress
- 1. Exit Options Steve Allpress Vice President, Nvidia Corp. 3rd November, 2011 1
- 2. Agenda • Icerabackground • Technology • History • Exit options • Acquisition by nVidia • Summary 2
- 3. The Founders: a motley crew Stan Boland Simon Knowles Steve Allpress Nigel Toon CEO VP Silicon VP/CTO Software VP Sales/Mktg 3
- 4. What we do – cellular modems ICE 8065M 40nm baseband stacked with 512Mb 200MHz DDR in 8x8 BGA ICE 9225 Quad band HSPA+ w/diversity 65nm RFIC 21/28Mbps HSPA+, EDGE in 6x6 BGA voice & data 4
- 5. Our approach gives us a cellular modem with a huge cost advantage Intel MC ST-Ericsson Qualcomm Qualcomm Qualcomm Icera XMM6260 M5730 MDM8200A MDM8220 MDM9200 ICE806x LTE LTE LTE LTE LTE LTE DC-42 DC-42 DC-42 DC-42 DC-42 DC-42 MIMO MIMO MIMO MIMO MIMO MIMO HSPA+ HSPA+ HSPA+ HSPA+ HSPA+ HSPA+ 3G/ 3G/ 3G/ 3G/ 3G/ 3G/ HSPA HSPA HSPA HSPA HSPA HSPA GSM/ GSM/ GSM/ GSM/ GSM/ GSM/ EDGE EDGE EDGE EDGE EDGE EDGE 15.6m m2 20mm2 28mm2 61.6mm2 91.4mm2 91.4mm2 As small as 1/6th 53mm2 normalized to 40nm the size of Digital Baseband compe4tor digital die-‐size chips 5
- 6. And a better user experience through advanced signal processing in software Time for modem to download in urban Intel MC ST-‐Ericsson ICERA 10dB PB3 channel 4MB MP3 file 30s 37s 25s 50MB 1 min 6 mins 8 sec 7 mins 44 sec 5 min 10 sec YouTube video 6
- 7. Company history – what we did Vodafone T-‐Mobile K4510z WebRocket LTE 2.0 Vodafone K3805z AT&T Lightning AT&T Quicksilver LTE multimode 21 HSPA+ SoftBank C01SI 28 HSPA+ 14 HSPA+ 7.2 UPA First Silicon 3.6 UPA & EDGE Sampled Company 3.6 DPA Founded 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TTPCom PS Sirific acquired acquired 7
- 8. Exit Options • Initial Public Offering • Acquisition by public or private company • Merger with complementary company • Remain private (swap venture capital for private equity) 8
- 9. Time to Exit M&A IPO 9 Years from First Funding to M&A 8 7 6 5 4 3 2 1 0 1998 2000 2002 2004 2006 2008 2010 Year Source: Jefferies Broadview • Steady increase in “time-to-exit”, since the technology bubble burst • Add about a year for median IPO times compared with M&A • Large amount of capital required • Certain to hit some turbulent waters during this long period 9
- 10. IPO 800 700 600 Number of IPOs 500 400 300 200 100 0 Year • IPO market does exist but it’s smaller than it used to be • Potential upside from an IPO much larger than private sale • Intense scrutiny on solid fundamentals • Focus on quarterly revenue stability can make it challenging for a start-up • Limited or no liquidity for founders and employees initially 10
- 11. An example IPO:Sequans Initial Lock-out Lock-out Extension 25 20 Price Per Share ($) 15 10 IPO Pricing 5 0 14/04/2011 15/05/2011 15/06/2011 16/07/2011 16/08/2011 16/09/2011 17/10/2011 17/11/2011 18/12/2011 Date • Lock-out period frustrating and risky for management and employees • Volatile public market can force subsequent sale for a low value 11
- 12. 0.00% 1.00% 2.00% 3.00% -‐3.00% -‐2.00% -‐1.00% Sep-‐86 Jun-‐87 Mar-‐88 Dec-‐88 Sep-‐89 Jun-‐90 Mar-‐91 Dec-‐91 Sep-‐92 Jun-‐93 Mar-‐94 Dec-‐94 Sep-‐95 Jun-‐96 Mar-‐97 Dec-‐97 Sep-‐98 Jun-‐99 Mar-‐00 Dec-‐00 Sep-‐01 Jun-‐02 Mar-‐03 Quarterly Change in US GDP (%) Dec-‐03 Global Economy: GDP • Only the Great Depression topped that Sep-‐04 Jun-‐05 • Technology bubble barely impacted GDP Mar-‐06 Dec-‐06 Sep-‐07 Jun-‐08 Mar-‐09 Dec-‐09 • Global economic meltdown from September 2008 Sep-‐10 Jun-‐11 12
- 13. 0.00% 5.00% -‐5.00% 10.00% -‐25.00% -‐20.00% -‐15.00% -‐10.00% Jan-‐02 Apr-‐02 Jul-‐02 Oct-‐02 Jan-‐03 Apr-‐03 Jul-‐03 Oct-‐03 Jan-‐04 Apr-‐04 Jul-‐04 chips than usual Oct-‐04 Jan-‐05 Apr-‐05 Jul-‐05 Oct-‐05 Jan-‐06 Apr-‐06 Jul-‐06 Oct-‐06 Jan-‐07 Apr-‐07 Jul-‐07 Oct-‐07 Jan-‐08 Apr-‐08 Jul-‐08 Oct-‐08 • Everyone always buys less chips in Q4/Q1 Change in Global Monthly Silicon Billings Jan-‐09 Apr-‐09 Jul-‐09 Oct-‐09 Jan-‐10 Apr-‐10 Jul-‐10 Oct-‐10 • Unfortunately, at the end of 2008 they bought a lot less Jan-‐11 Apr-‐11 Global Economy: Silicon cycles Jul-‐11 13
- 14. Global Economy: Funding • Sequoia Capital sends a letter to all its CEOs in October 2008 • “We are in drastic times. Drastic times mean drastic measures must be taken to survive.” • “Forget about getting ahead, we’re talking survive. Get this point into your heads.” • “There will be consequences for those who hesitate. Act now.” • “Cut burn-rate by at least 25% if you want to survive” • “Cut deeper is the formula for survival” • “Cut spending. Cut fat. Preserve capital” • “Survival of the quickest” • “Spend like it’s your last dollar” • Effect ripples throughout VC industry • “Down valuation rounds” the norm • “Zero valuation rounds” common price- tag to stay alive 14
- 15. Company history – what it took Siri7ic Acquired 25% cost cut 15
- 16. Company history -‐ investment Capital Raised Post-‐money ValuaKon 400 Exit 350 300 Amount ($M) 250 200 150 100 50 0 08/04/2002 08/04/2003 08/04/2004 08/04/2005 08/04/2006 08/04/2007 08/04/2008 08/04/2009 08/04/2010 08/04/2011 Date New lead investor Inside rounds 16
- 17. Company history – how much we sold 14,000,000 12,000,000 10,000,000 Cum baseband shipments 8,000,000 6,000,000 4,000,000 2,000,000 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Now in >100 products >50 global networks 2008 2009 2010 2011 17
- 18. Industry consolidation • Our competitors: • Qualcomm • Infineon • ST-EMP • Intel buys Infineon’s wireless business for $1.5B • Desktop sales fall • Smartphone and iPad sales take off • Target market moves for application processor vendors • Cellular modem becomes a rarer and valuable commodity • Presents a narrow window of opportunity for Icera to be acquired
- 19. Icera + nVidia • On May 10th 2011 it was announced that nVidia would acquire Icera for $367M in cash (plus an employee retention plan) • On June 15th 2011 the deal closed 19
- 20. nVidia can now supply both AP and modem Antenna Voice and data connectivity over cellular networks 3G PA Dup Switch EDGE PA Baseband chip RF chip Radio frequency front-end Unmodulated or Up-convert “baseband” Down-convert processing MODEM 20
- 21. Summary • Verybig technology developments mean a very long- term commitment so: • Raise enough capital to weather storms • Build a successful business first, plan for an exit second • Semiconductor segment is mature • Competitors in major markets provide complete solution • Customer concentration is intense • Successful outcomes are either small, lucky or very big • Paradox: if you can exit quickly, you should but how then do we create new big companies in the UK? • Always try to create competitions for investment and exits 21