The following is a guest post by Mobile Guru.
Just how hot will the emerging mobile market be this year?
If the first notable IPO in the space is any indication, 2011 could be a barn burner. Velti PLC. (VELT), a mobile services provider formed ten years ago in Greece. Now headquartered in Dublin Ireland, Velti had initially planned to issue shares in the $9-11 range with the hope of raising around $120M. As demand increased, they ended up issuing 12.5 million shares at $12, raising $150 million. However, that’s just the start of this story as on Friday, its first full day of trading, its shares impressively closed up another 30% at $15.58, leaving it with an approximate $800 million market capitalization.
Anyone who has been reading my past commentary on the forthcoming mobile revolution should not be surprised. With so much money looking to capitalize on this mobile revolution, a technology movement predicted to possibly dwarf the original PC and internet movement could be in play. Respected technology pundits like Mary Meeker maintain there exists only a limited amount of ways to currently invest in the space. Publicly traded mobile pure plays are simply few and far between. Where the internet revolution provided investors with a myriad of choices to invest in and profit from, the mobile revolution currently requires investors to dig deeper in search of opportunity.
A clear testimonial to this fact can be found by looking no further than Wikimobidex’s December listing of the top 40 mobile companies to watch. Wikimobidex is a Web-based index of mobile marketing and advertising firms. According to their findings, here are the Top 40.
Here’s what we find when taking a closer look at the list ( courtesy ofmobilemarketer):
- 32 are private which could be takeover targets
- 4 are part of larger companies & not for sale
- 2 trade in London, including Velti
- 1 is Augme Tech which trades as “AUGT”
Considering this, it’s easy to understand this increased demand for Velti evidenced Friday. Augme Technologies (AUGT) has also seen its shares hit a new 52 week high of $4.25 in recent weeks. Velti and Augme both provide mobile marketing and advertising solutions across multiple media types and channels into a market that ABI Research estimates will reach $29B by 2014. With billions of dollars looking for a way to invest in this hyper-growth mobile technology revolution, and only two real viable pure play investment opportunities, it will be of little surprise that both companies will continue to outperform.
Lastly, while both Augme and Velti are competing for their respective piece of the multi-billion dollar mobile pie, only one of them owns any intellectual property that may provide it a barrier to entry and that’s Augme. Where Velti acknowledges in their recent filings that they believe Intellectual Property is very important, they have none issued to date, their patents are still pending. Intellectual Property is a key part of any company’s valuation. Now that Velti is operating in the United States, it will be interesting to see if they face any exposure to existing U.S. patents relevant to the monetization of their business model.
The further relevance of IP can be found by looking no further than at Groupon and Facebook, who in past months have purchased intellectual property from companies much earlier to the internet. Groupon bought IP that was filed back in 1999 from MobShop who was in fact an early group buying site that raised large amounts of cash from entrepreneur-turned-VC Marc Andreessen and Mayfield Fund, which unceremoniously folded in 2001, at the height of the early-century Internet boom.
Facebook recently acquired IP from Friendster, the earliest social network to reach mass-market status in the early 2000′s and who was swiftly overtaken. With both these companies fetching pre-public valuations of $6 billion and $75 billion respectively, it’s of no surprise they are rushing to try and acquire IP assets capable of shoring up any technological weakness in their business plans and or operating platforms. With increasing competition as well as valuations, comes an enhanced need to possess assets which may provide for barrier to entry, enhanced market share and increased valuations.
I’m a long time investor with investment experience in high tech, biotechs and precious metals. I blog on topics that are of interest to me and my goal is to generate intelligent discussion. I don’t consider myself an expert in any one area, but continue to further my education as I believe it is a key to a productive life. You can connect with me atSeekingAlpha.
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