3VR Raises $17 MillionBy John Honovich, Published on Dec 20, 2010
In one of the largest VC investments ever for a video recorder/analytics company, 3VR announced a $17 Million investment (see filed SEC Form D). This follows an August 2009 $12 Million investment bringing the total raised to approximately $60 Million (since inception in 2002). During the last investment, 3VR was projecting total 2009 revenue of approximately $15 - $20 Million.
In a conversation, 3VR noted the following points on its new funding / positioning:
- 3VR reports that 2010 sales are roughly double 2009 sales. 3VR did not disclose a specific sales number nor range and it is not feasible to accurately guess with known public information.
- Developing their sales channel will be the most important use of the funding. Through integrator partnerships, 3VR will look to expand sales globally and to new channels (such as healthcare, hospitality and critical infrastructure). Historically 3VR primarily focused on banking and retail in North America.
- With the new funding, 3VR is open to acquiring technology/companies but currently has no specific plans or intentions. This is in addition to ongoing partnership development such as the December 2010 partnership with HTS for ANPR.
- 3VR is looking to expand the use of their offerings as data mining / business intelligent solutions. While many have promoted such efforts, we've yet to see substantial sales traction for this type of solution.
A few general observations:
- While there are a handful of companies who embed analytics/intelligence inside their recorders/VMS, there's no clear competitive comparison (at least among well funded surveillance companies). Given the surveillance market's focus on software only (Genetec, Milestone, DvTel, etc.), relative to the industry, 3VR's approach is quite contrarian. 3VR's core competitive advantage is deeply embedding their own video analytics inside of their video recorders.
- Considering the company's high valuation (probably $100 Million or more), it is unlikely that 3VR will be acquired by security/surveillance companies as those companies generally have competing recorders and have difficulty justifying high multiple purchases.
- We would expect 3VR is targeting acquisition by an IT or 'non-traditional' security provider who can easily justify much higher valuation / multiples.
- Relative to the market size and revenue potential of the video surveillance market, $60 Million in investment is quite high. Maybe the overall global surveillance market is $8-$10 Billion, the market for recording is a few billion (depending on how you segment). Within that, nobody is truly dominant and even the 'leading' companies are generating $30-$40 Million in revenue (e.g., Genetec financials).