San Francisco based Pure Digital Technologies, the seven year old company behind the Flip Video line of video cameras, is considering a sale of the company, multiple sources have confirmed. One interested buyer is rumored to be Cisco.
Flip cameras – dead simple and small video devices that are tailored towards users who want to upload video to the Internet – have become massively popular. One source says the company has sold more than $200 million worth of the tiny cameras in the last couple of years. Based on reviews of the recently released Flip Mino HD, we’re not surprised. The devices cost between $130 and $230 and have spawned a large group of copy cat competitors.
One potential buyer, says a source, is Cisco, which has been more active recently in acquisitions. Ned Hooper, Cisco’s chief M&A guy, is said to be actively looking to buy or invest in consumer startups that offer high-bandwith-using services. A hot startup like Flip, which is helping to fuel the explosion in user generated video (much of which makes its way online), fits in perfectly with that strategy.
The company is backed by Sequoia Capital, Benchmark Capital, Crescendo Ventures, Focus Ventures, Morgan Stanley, AllianceBernstein and Steamboat Ventures (the venture capital arm of the Walt Disney Company) and has raised at least $68 million in venture funding.
Update: We’re getting another source that says this “is a done deal,” that Cisco is confirmed as the buyer and that the price is “north of $500 million.” Founder and CEO Jonathan Kaplan is said to be taking around $80 million off the table personally. This hasn’t been confirmed.
Update: It’s a done deal.
“the price is “north of $500 million.” Founder/CEO Jonathan Kaplan is said to be taking around $80 million off the table personally.”
Is it normal that the founder has only a stake of 16 percent?
First of all, these number are still speculative, but yes they add up. In fact, for a company that’s done at least five rounds of financing, it’s surprising that he still owns that much.
Yes 16% is actualy VERY large for a company with 5 rounds. Usually you would expect someone at this stage to get diluted to under 5 percent. He obviously had some very good lawyers and negotiating skills if this is true, especially going head to head against Sequoia and Benchmark.
That said, this will probably turn out to be a very bad mistake for Cisco. There really are not that many synergies that can be had here, and 2.5 times rev for what is likely to be still a loss making company is not cheap. Cisco’s brand does not translate well to the end consumer, and its salesforce is not really suited to dealing with Wal Mart and the like.
From India
Anjali Sen
Jonathan,
You are 100% correct. I am sorry. Because I am from India, I should not know about Sequoia and Benchmark.
Hmm, let’s just see if Sequoia has anyone in India …
KP Balaraj
VT Bharadwaj
Mohit Bhatnagar
Sumir Chadha
Raja Ganapathy
Ravi Shankar GV
Krishnan Iyer
Surendra Jain
Shailesh Lakhani
Gautam Mago
Naresh Malhotra
R Narayanan
Abhay Pandey
R Ramaraj
Rajiv Sabharwal
Shailendra Singh
Sandeep Singhal
You are a stupid ignorant idiot.
Jonathan, the depth of your ignorance is hard to measure. You speak as if someone from India would have no VC experience, yet many Western VCs are located there.
Sure, 17 names, plus yourself, who would’ve known… you all *own* the VC industry, plus, the Internet…. Hehehehehehehe.
smelly pathetic spammer…
What is this? “17 names, plus yourself” to prove what? –besides ‘dominating’ the ‘Net?
Really! really small minds. But wait! I get it now… you are so intelligent that you could count up to 17 on your smelly toes, plus of course writing inane comments on TC. Good enough for someone “From India?”,
@Wow and @Marley,
you guys are pathetic. Get well soon.
I think its a good deal for the founder. The flip is a great product but that space will soon be pretty crowded. I doubt that they could defend it on their own like Apple defended the iPod. So they brought a clever product to market, showed early success and the future potential and get out of it at the right time.
Speaking of which do the founders plan to stay involved?
Was waiting for this, I own 3 of them. Smart move.
Wow – I’m actually shocked. I thought Pure Digital was doing so well.
For a company with very limited product breadth, this is not a distressed sale. North of $500 million is not a sign of doing poorly.
This is ridiculous. They have sold 200M worth of product and they are valued at 500M – a product that is more or less a commodity now!
I love the product but frankly there is nothing that is so special except at the beginning when it was new…
I would like to know if Flip video cameras are being sold in European Union.
definitely on sale in Europe
Are stocked by Dixon’s, one of Europe’s largest retail group.
Do you know other Flip Video Cameras brands?
I dont see the Cisco connection. Help?
They probably just want to get a piece of the new social media growth.
Cisco and Intel both have this idea that if they buy companies that will tend to increase use of their core products, then drive costs down, sales of core products will benefit enough to make the whole effort worthwhile.
Intel has bought companies making modems, graphics processors, networking peripherals and even MP3 players. They probably made their business cases in ethernet and graphics, have probably lost everywhere else.
Cisco has bought Linksys, Webex and other SOHO/consumer companies, hoping to increase demand for their enterprise/carrier products, and probably hoping to get enough consumer visibility to get their marketing people laid more often. I’m guessing they’re failing on all counts here.
Flip + EyeFi = !
or any such concept of wireless network video for telepresence
Maybe Cisco will buy tokbox too.
maybe they will buy scoble too
eating up bandwidth = more Cisco equipment sales
and yes, founders often end up with far less than that, especially after multiple rounds – and usually there is more than one founder
congrats to them. cisco is known to buy a lot of companies.
I just got a Mino HD and LOVE it… smart move by Cisco.. I see high quality user generated video content as BIG
mike…
i thought you guys reviewed the fiip products awhile ago, and panned/ripped the devices as being substandard!!!
comments welcome…
peace
I have one of these cameras. They’re cool, but, not that cool. The quality is just not very good. The attractiveness of the product is the plug~and~play feature (USB to computer). But, that’s it.
If I was a Cisco shareholder I’d be pissed for spending $500M on this company.
shareholders…
Cisco does not comment on rumors or speculation. Follow us on twitter @CiscoSytems.
I guess all of the financing was worth it….. Good for them…
whoops… @CiscoSystems
are you serious ?
500 million for a firm that sells a design of commodity hardware
the BOM cost must be around $10 to produce if that and I have not seen a single one… as far as I am concerned this is a usa product and unless they have some fancy software/hosting or a big channel I really dont get it
640 x 480 recording standard mpeg
PHONES do this better you crazy americans…
good luck to them if they can get cisco to part with the money
regards
John Jones
Actually it is around $93 a unit and the HD version does 720p so I seriously doubt a phone even comes close! Besides, us poor americans have crappy ass phones.
first…don’t listen to people that say the Flip Mino HD is “not that cool”…seriously…compared to what? the sony version? this is a TINY camera that produces HD and is the size of a voice recorder. Sure, compared with a sony or canon HD camcorder it’s not as good, but this is $200 an weights almost nothing and fits in your pocket. Now, valuation – as we all know – is a separate issue. since multiples are in the 2X range these days that may be high.
I don’t know why Cisco/Linksys just can’t build their own camera. What is the technology that this company owns that makes it worth $500M – it doesn’t seem the brand is that strong.
hey, that’s cool
Mike has now updated the story to say Cisco has acquired Pure Digital for north of $500M.
I believe that who ever came up with the Flip Video Camera was genius and advertising with YouTube was another genius move WAY TO GO FLIP VIDEO!
I am surprised…
GotMilk? Moo
Very cool to see. I remember watching this company when they first started out. I must have one or two cameras from each version they have come out with.
The Flip people have launched a great idea-small, easy to use portable cameras that shoot relatively high-quality video. And for less cash than one is used to shelling out for HD video.
The drawbacks? The audio sucks. Plain and simple. This ruins most professional uses of the Flip.
If someone were to add an external mic jack?
That would be amazing…
Interesting direction for Cisco to be branching out. 1/2 billion is quite a foray into the consumer space. Best of luck to the flip folks in closing the deal.
Flip’s like Twitter, I don’t want it to change.
Has anyone made the possible Scoble connection here??? Scoble recently announced he was leaving FastCompany.TV. He has also said that he would possibly making a major announcement at SXSW and then we get this news. We all know how much Robert loves his Flip cameras…so is out of the realm of possibility that Cisco brings in Scoble to become Flip Camera/internet video evangelizer???
Even in his post about his leaving, he mentions the Flip and how he has used it to record for some of the FastCompany.tv pieces. Plus maybe he knew he would have to wait at least until SXSW because the sale and negotiations were still ongoing at the time of the post.
Michael, do you know if anything like this would be possible?
A B2B company buying a B2C company?
Is CISCO Desperately seeking a new business?
Cisco already owns Linksys and Scientific Atlanta set-top boxes so I don’t see this as much of a stretch into a new space.
And as powerpop mentioned, anything that eats up more bandwidth is right up Cisco’s alley.
Better not let it happen. Cisco is a stupid dumb networking company and they should focus on their boring products. What the hell do they want to do with an excellent brand like Pure Digital? LEAVE THEM ALONE!!!
that’s it, the acquisition terms are nearly agreed.
Cisco will pay approximately $590 million in stock in exchange for all shares of Pure Digital.
see more at newsroom@cisco
first…don’t listen to people that say the Flip Mino HD is “not that cool”…seriously…compared to what? the sony version? this is a TINY camera that produces HD and is the size of a voice recorder. Sure, compared with a sony or canon HD camcorder it’s not as good. sikiş videoları but this is $200 an weights almost nothing and fits in your pocket. Now, valuation – as we all know – is a separate issue. since multiples are in the 2X range these days that may be high.
Iphone added a video recording and publishing function into new 3gs, other mobile phones will follow. Therefore I think paying $500MM for a device only captures video is dumb! Sorry cisco.
Dave you r stupid the iPhone is 3 mega pixels not HD. Maybe if cell phones where HD you would be right. I’m using the 3gs iPhone and the pics and video are NOTHING to write home about! I have seen this cam from a friend at cysco and it kicks ass!