Bessemer Scores Big With Intucell Acquisition

Bessemer Ventures Partners scored big Wednesday when Cisco Systems said it will acquire Intucell for $475 million in cash and retention incentives.

Bessemer owns a little less than half of the company after making a $6 million Series A investment in January 2011. The roughly 33x return is an indication that money can be made in the out of favor networking sector with the right technology and team.

Bob Goodman, founding partner in Bessemer’s New York office, said the deal fit with one of the firm’s investment themes, or roadmaps, around mobile data and the traffic crunch that comes from capacity constraints. Intucell, an Israeli company with a CEO Bessemer Herzliya office head Adam Fisher had backed previously, developed a technology that in real time analyzed cellular traffic patterns and routed calls to cell towers with available capacity.

“It was that kind of gee-whiz moment” that opened the firm’s eyes to a solution to the traffic issue, says Goodman. He helped steer the company to a key $50 million contract with AT&T that enabled it to expand from six to 85 workers.

Goodman declined to discuss the precise returns Bessemer expects from the acquisition. But the payback is likely to cause other GPs to think again about the networking space, especially now that Cisco has picked up its M&A activity for core technologies.

One of the reasons Bessemer was attracted to the space is that its hasn’t always been well supported by VCs, says Goodman. Not a lot of innovation is taking place because not a lot of money is going in, he says.

Asked if he will continue to place networking bets, Goodman quickly answers, “absolutely.”

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