Battery Ventures’ Startup Swoops Into Boeing for $400M

Score one for Battery Ventures, which just landed a big exit from Insitu, a 16-year-old company that other venture firms might have overlooked, and which Battery first backed less than two years ago.

Insitu makes 10’x 8′ unmanned aerial vehicles from its sprawling headquarters in Bingen, Washington. The company started out doing offshore weather reconnaissance, but in recent years, demand for its aircraft, which it sells for $500,000 a pop, has ballooned along with the need for high-quality, high-resolution video. (Think forest fires, border patrol, and surveillance use in Iraq and Afghanistan. Insitu’s aircraft can fly out of earshot and out of sight — even while its on-board video cameras can record the numbers on a license plate from as far away as 10,000 feet.)

Insitu, which Battery has backed twice since 2006, seemed like an odd investment for a firm that has lately stuck largely with software and Web technologies. Among Battery’s other recent investments is Angie’s List, an online source for local service ratings; electronic procurement startup Coupa Software; and online game maker World Golf Tour.

Odd or not, turns out it was a very smart move. Insitu, on track to recording $150 million this year, was just acquired by aviation giant Boeing. Boeing isn’t disclosing the transaction amount, but The Oregonion is reporting that Boeing agreed to pay slightly less than $400 million for Insitu. Even if that figure isn’t completely accurate, I’d guess it’s close. Insitu’s most direct competitor in the marketplace is AeroVironment, a company that went public in January 2007. AeroVironment’s shares have jumped from $17 to $31 since then, and it has a market cap of $650 million.

The acquisition is great for Battery, a star of the late-’90s telecom boom, with offices in Waltham, Mass., and Menlo Park. Though Battery isn’t Insitu’s only backer — Seattle-based Second Avenue Partners joined in its two institutional rounds, which raised about $55 million — I gather that Battery owned most of the company. “We put a good chunk of that [capital] in,” said Battery general partner Roger Lee, who led the investment for Battery and who added in a brief phone call yesterday that “investors owned a significant majority of the company,”

The sale is also nice news for 36-year-old Lee, who between 2001 and 2006 rose from associate to general partner at Battery, which is currently investing a $750 million fund. Insitu is his first exit as a GP.