Billion dollar exits are what drive venture capitalists (VCs) to take risks. They are the proverbial “homeruns” that create excitement and generate the returns needed for a firm’s long term survival. Finding and ultimately investing in these exceptional companies requires a great deal of foresight, conviction and like so many things in life, a bit of luck.
Qualcomm Ventures, the investment arm of Qualcomm Incorporated, was created to discover potential home run companies, spur innovation in the wireless tech arena, and give those companies with promising business ideas the opportunity to grow and become market leaders.
One such company is InvenSense, a hardware-based technology company founded in 2003. Years before the smartphone revolution began, InvenSense’s visionary leader, Steve Nasiri, had high aspirations to be the leader in motion sensing technology in mobile devices. The company’s initial products were MEMS-based gyroscopes that were quickly being adopted by consumer electronics (CE) manufactures that needed low-cost/high-performance solutions for such things as image stabilization in cameras, dead-reckoning for navigation devices, and video game controllers.
In the VC community, hardware deals are often considered more risky relative to software deals because they require higher levels of funding and there are inherently more complexities in terms of technology and execution. But in January 2007, Qualcomm Ventures became a principal investor in InvenSense. Long story short, the calculated risk paid off and today an every growing number of mobile phone makers use InvenSense’s sensors in their devices, making InvenSense a market leader in motion sensing technology.
InvenSense’s dual-axis gyro was the first consumer-grade gyro in the market and it had a robust roadmap to get to a 6-axis integrated solution (three-axis accelerometer + three-axis gyroscope). It went on to win major design wins with Nintendo, which used InvenSense’s solutions in large volumes in its MotionPlus controllers. In retrospect, this was a critical juncture for the company as it needed to show other OEM’s that it had matured and could deliver large volume orders. To its credit, InvenSense’s management pulled it off, which enabled the company to grow and become a bigger, more powerful player.
From a Qualcomm Ventures perspective, InvenSense’s vision was directly aligned with its own: more CE functionality would get incorporated into mobile devices, making motion sensing a necessity. This in turn would enable more feature rich handsets, driving faster upgrade cycles and higher average selling prices.
Today, the world is experiencing a global explosion in smartphone sales, and InvenSense is sitting in an enviable position as one of the dominant player in the motion sensing marketplace. The company has secured multiple design wins with major handset OEM’s and is currently shipping millions of units globally. It has also proven to the market that hardware companies are not passé and can deliver meaningful returns to investors. InvenSense (INVN – NYSE) went public in November, 2011 and today has a market cap of $1.5B.
To learn more about Qualcomm Ventures and its portfolio of big hitters, visit here.