Toronto-based Relay Ventures is one of North America’s most active investors in mobile technologies. Over time, the firm has invested in some 66 companies, including Canadian advocate marketing software developer Influitive, which just closed its second acquisition in a month.
Led by Co-founders and Managing Partners John Albright and Kevin Talbot, Relay is currently investing from its US$150 million second fund and is in the process of raising a third.
PE Hub Canada sat down with Albright to discuss Relay’s deals, a recent run of lucrative portfolio exits, and emerging trends in the mobile space.
Q:Earlier this year, one of your portfolio companies, Fuse Powered, was acquired by Upsight. How significant is this deal in mobile market terms?
A: It’s very significant. These were two strong startups that had been talking for a year about forming a single platform that combined Upsight’s mobile analytics with Fuse Powered’s mobile ad technology. They were responding to demand from mobile game developers, who wanted to see an end-to-end user lifecycle management solution. The result was a merger of equals, a real synergy, with minimal customer overlap. I call it one-plus-one-equals-four. The customer reaction has been overwhelmingly positive and there has been lots of pick up. Relay is a backer of the merged company (Upsight) and we plan to reinvest in the near future.
Q: Relay has recently exited several investments, including Achievers, Appcelerator and Millennial Media. How have these impacted your bottom line?
A: The sale of these companies provided a significant payback to our investors. For example, the sale of Achievers (an employee engagement platform bought last July by Blackhawk Network for US$110 million) was a very profitable transaction, giving Relay four times our invested capital. It also served to inspire entrepreneurs in the company, many of whom have joined other startups, some of them backed by Relay. The sale of Millennial Media (a mobile ad marketplace bought in October by AOL for US$238 million) resulted in the same multiple: four times Relay’s invested capital.
Q: One of Relay’s most recent investments was Axios Mobile Assets, a Canadian developer of pallet-based logistics systems for food producers. What drew you to this company?
A: We led a $14 million financing of Axios that supported its buy of Axsense, a provider of mobile sensor technology. Relay was interested in the combined business. Axios has developed a composite bio-based pallet technology that is not currently available in the market. Its replacement of traditional wood pallets in logistics systems is a multi-billion dollar opportunity. The addition of Axsense allows the pallets to be connected to the Internet, creating a smart supply chain solution. We believe the result is highly disruptive technology that will generate huge sales in markets in the United States.
Q: Many of your deals involve acquisitions. How important are these to the growth strategies of early-stage mobile companies backed by Relay?
A: An acquisition like Axsense is strategic in nature. It will make a substantial contribution to Axios’ product offering and maximize the company’s value and revenue potential. The same can be said of Upsight’s merger with Fuse Powered. Many of our other acquisitions are tuck-ins that help portfolio companies secure talent and a minimum amount of product development in a shorter time than would otherwise be possible. So they are highly efficient. And they are important to picking up mobile developers who possess unique skill sets. Talent of that variety is hard to find.
Q: Relay has been investing in mobile technologies for close to a decade now. What excites you most about emerging trends in the space?
A: I’m most excited about the potential of the Internet of Things to transform mobile technologies as we know it. Connected things already number in the billions, and soon everybody with one or more mobile device will be addressable 24 hours a day. You can see the trend across Relay’s portfolio. Axios is one example; Nymi, creator of a wearable biometric authenticator, and Scanadu, creator of a mobile vital signs monitor, are two more. Another investment of ours, PubNub, provides messaging infrastructure that allows connected devices to talk to one another. So it’s empowering all of these connected devices. Relay’s portfolio is increasingly focused on opportunities of this kind.
Photo of John Albright courtesy of Relay Ventures
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