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Decathlon-backed V5 systems hits the market

The private equity firm, with other quasi-investors, is evaluating an exit.

Decathlon Capital Partners-backed V5 systems, a maker of portable ‘OnSound’ gunshot detection devices, is seeking a buyer, sources familiar with the process told PE Hub.

A formal process has been underway over a month, although it’s unclear if the company has received bids. Berkery Noyes and a second investment bank have been hired as financial advisors on the sell-side, sources said.

The process is targeting both private equity and strategic buyers, they said.

Park City, Utah’s Decathlon, which makes investments between $500,000 and $10 million, is evaluating an exit along with other investors, but is also open to other structures.

Based in Fremont, V5 Systems is projected to generate annualized recurring revenue in the upper single-digit millions range in 2021. More than 90 percent of its total revenue is recurring or based off contractual agreements with orders worth over $100 million projected for the next two years, said the source.

Subscriptions, offered through a Security-as-a-Service model, are priced at $299 per month, per unit for a 60-month period, excluding initial fee and installation charges. Apart from long-term contracts, the target also offers temporary rentals and direct purchase options with a 2-year support and warranty, according to its website.

Founded in 2014, V5 Systems has been looking to execute its sales pipeline and commit to new and existing customers, a key impetus for the sale process.

Decathlon announced a seven-figure investment aimed at advancing the AI technology in late 2018, but now the security solution company hopes to “aggressively grow,” the source said.

Consider the gunshot detection pilot program launched by the San Jose Police Department in partnership with V5 Systems. The outdoor security system – which detects the source of gunfire and consists of video cameras, microphones and license plate readers – will be mounted on poles in the Cadillac Winchester neighborhood.

The six-month agreement with V5 Systems comes at no cost to the city, plus it raises the chances of future adoption by other cities, schools, retail parking lots etc.

Prior to Decathlon’s investment, V5 Systems’ total investor funding was reported as $20 million in 2017, according to publication VC News Daily.

Since its inception, V5 Systems has closed multiple rounds of investments, including a $7 million Series A financing round in 2016 from Taiwanese electronics manufacturer Foxlink Group. The funding was aimed to drive international expansion, with Freddy Kuo from Foxlink Ventures joining V5’s board of directors. The company has offices in Russia, India and four in the USA.

More broadly, companies within this space typically trade hands for 5x to 10x revenue. “It can go up to 15x revenue, but it all depends on the growth rate of the technology,” the source told PE Hub.

Decathlon did not respond to a request for comment. V5 Systems and Berkery Noyes declined to comment.