The video conferencing application and service, LifeSize Communications, was a privately held company in Austin, Texas. Boasting more than 9,000 clients across 80 countries, the site’s high definition (HD) video conferencing caught the eye of Logitech International (SIX:LOGN, NDQ:LOGI).
In a cash purchase, Logitech acquired LifeSize for $405 million, marking the company as one of many that Redpoint Ventures, a venture capital firm heavily involved in LifeSize, has sold at profit recently. Despite the economic downturn and slow investment climate, Redpoint has successfully made strong exits for several portfolio companies, including Kazeon, WiChorus, and Tellabs. On average they look for a company that will give them 8x or more on their initial investment. Although they wouldn’t disclose the exact return on their investment, “we are happy with our results here”, Jeff Brody of Redpoint Ventures said.
Talking with Jeff Brody of Redpoint Ventures, he made it clear that they had been with LifeSize as an investment because of its innovative use of technology. They found Lifesize to be a meeting replacement tool.
“LifeSize is in video conferencing”, Brody said. “They connect businesses for meeting replacements. It started with Picturetel, which was pretty basic and hard to use, but soon built Telepresence using H264, which was a major improvement over MPEG2.”
LifeSize’s major competition for the past six years has been Go2Meeting and similar sites. Brody feels that the H264 video compression is superior, giving high video compression without losing data.
Logitech, for their part, was enthusiastic about the buy. Gerald P. Quindlen, Logitech’s President and CEO, said “We expect this acquisition to enable Logitech to extend our leadership in video communication beyond the desktop. Together we can make life-like, HD-quality video communications as mainastream and seamless as a telephone..”
That statement makes it clear what Logitech plans and why acquiring LifeSize (and their technology patents) is important to them.
Given Logitech’s market focus, the technology behind LifeSize as well as the hardware and services that Logitech currently provides are a seamless match. In a briefing on November 11, at Logitech’s Analyst and Investor Day, they said as much when explaining the acquisition to their shareholders.
Logitech is based in Switzerland and plans to keep the Austin-based LifeSize in Texas as a separate entity from the parent company. LifeSize expected revenues of $90 million for CY2009 and growth of 40-60% for 2010.
Redpoint Ventures is based in Los Angeles, CA and has a portfolio of 60 companies mixed into 3 funds. They have invested as little as $200,000 into startups and as much as $50 million into operating companies.