Next Gen

I love articles which can streamline the growth of technology rather than throwing terminologies which leave you feeling really dense.

So, after a whole lot of reading on LTE, here goes all that I gathered:

There is the CDMA2000 standard which uses the frequency range of 800 Mhz and 1900 Mhz. Loads of implementations but since we always US focused, it has been implemented by Sprint and Verizon. As improvements for data download speeds, the next level of technology will be EVDO Revision C (Revision A already had download speeds of 3 Mbps) which will look at download speeds of.
And then we have AT&T and T- Mobile which have implemented W-CDMA. Historically, they have faced rather low data download speeds of 384 kbps. And hence the planned migration to HSDPA and finally LTE - which is where I started from. HSDPA download speeds - 3.6 Mbps. Frequency range ~ 2100 Mhz . Since it is higher than the CDMA2000 operators, there are higher costs due to lower coverage area and hence the requirement for a larger number of base stations.

But then what is LTE - well, you can call it 4G. It is essentially upgrades to HSDPA using a different air interface, OFDMA, Orthogonal Frequency Division Multiple Access. Download speeds - 100 Mbps; Uplink - 50 Mbps.

Commerical deployments for LTE and Revision C - 2010.

Suprisingly enough, this article talked about WiMAX as a 4G technology too with the difference that it has not evolved from other standards and hence may not have the economies of scale required for a wide spread deployment.

Structure

How do I want to collect my data:

Size of the venture capital fund market in Europe:
Size of the venture capital funds focused on seed and early stage in Europe:
Size of the VC capital in FGS:
Size of VC funds focused on seed and early stage in FGS:
Size of valued firms which have gone for a merger:
Size of valued firms which have gone for an IPO:

Collect the funds in FSG which are focused on the seed and early stages
...and where are they invested.

A useful link: http://www.thecoffeeshopsofmayfair.com/2007/01/2006_early_stag.html

Valuation continued

The focus here is on the valuation of seed stage and early stage venture firms. In traditional environments, the standard methods used are Discounted cash flow, comparable transaction multiples and trading multiples based on a firm factor.

And now the VC environment. Out of the ten firms invested in, 4 will loose their shirt, 2 will break even+/-, 3 will gain in the range of 2-5x and 1 will be the blockbuster 8-10x. (A report talks of VCs aiming for 10x and P/E firms aiming for 3-5x due to a lower risk profile). Due to this inherent variability in revenues, DCF cannot be the recommended approach even with the consideration of multiple scenarios. What then?

One of the approaches - The Cost Basis Valuation - is deciding the cost involved in developing the venture.

The Final Valuation approach entails determining the valuation at the end of, say, 5 years. Then determine the capital to be invested for a 10x return. You have the pre-money valuation and you determine the post money valuation and invest accordingly.

Interesting read - the original article. it even had quotes from an ivvestor putting the average IPO in the US markets at $180 million and an average M&A valuation at $120 million, 90% of the exit.

http://www.valuecruncher.com/wordpress/?cat=2

VC Valuation

A tit-bit I picked up on VC valuation of ventures in the seed and early stage:

Some of the valuation errors from the hype years:
Multiples of monthly unique users, eyeballs or web users
DCF on a terminal value
Efficient IPO money machine (I'll explain this one when I understand it)
Valuations based on the latest market transactions - you tend to get caught up in the market frenzy

And a couple of recommended procedures:
Percentage of ownership
A very interesting point - DCF based on the terminal year of the holding period. That means exit forward multiples or compounded hurdle rates
Pre money post money ranges
Comparable company approach - Projected profitability and ratios such as firm value to sales/EBIT/EBITDA
And the final is of course scenario analysis with multiple probabilities

Services and markets

A lot of talk at the forum was centered around the security of data on mobiles. Found a company which supplies the clients to help with mobile data backup and data synchronisation. Their target segment is the OEMs and the telco service providers - their statement - it brings smart phone functionality to everyday phones.

Bell Canada

A huge private equity telecom operator acquisition - Teachers Private Capital, Providence Equity Partners and Madison Dearbon in an all cash deal valued at $48.5 billion. Some facts:
The share price is at a 40% premium to the average share price over the first quarter of 2007
For the deal, $15.9 billion is in debt, preferred stock and minority interest
The purchase price is at 7.8 times EBITDA for the next 12 months till March

Providence has $21 billion in assets under management with investments in about 100 companies. Madison, meanwhile, has $14 billion assets under management with investments in about 200 companies. Of this, $6.5 billion was raised in their 5th fund last year.

Now, comparing this with the AT&T acquisition of Bell South: The acquisition value was $ 72.6 billion. Key difference - it was an all stock swap deal. The value - 8.7 times EBITDA.