3VR Stays Alive With $8 Million Financing

By John Honovich, Published Jan 23, 2015, 12:00am EST

Now 13 years old, 3VR is the last of a generation of the hyped video analytic startups to find an exit.

And with a new $8 million financing, 3VR has gained a little more runway.

In this note, we examine the financing, 3VR's growth, internal and market challenges.

Financing - Likely More Debt

In 2013, 3VR raised a small round (~$4 million) of debt. Before that, 3VR had received ~$50 million in equity financing from many of the biggest name VCs (e.g., Kleiner Perkins).

Now, this 2015 financing is $8 million from Opus Bank, a commercial, not investment bank. 3VR described it as 'growth capital' but declined to confirm whether it was equity or debt.

We believe this new $8 million is debt, given the type of bank Opus is, and 3VR's response.

3VR also said that some of the financing would be earmarked for acquisitions, though, even in the best case, $8 million would hardly buy any company.

Growth / Revenue

3VR's revenue is in the ~$20 million range, according to multiple sources.

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3VR said they "grew 33% last year with higher growth planned for 2015."

Internal Challenges

3VR has had significant internal issues in the past year - losing both of their two most tenured, highest producing sales people, losing their head of product management and head of technical services. Moreover, they demoted their VP of Sales, bringing in a new VP of Sales [link no longer available] who left Sony under mysterious circumstances.

Engineering / product development pace has clearly declined, starting with the layoffs 2 years ago and continuing as the company has sought to reduce costs / burn rate. The big new release for 3VR has been a 3D people counter appliance, though that appears to be an OEM for people counting specialist Hella [link no longer available].

Given of all of these internal changes, we are skeptical about 3VR's claimed growth rate. However, 3VR's revenue has historically been driven by a few large accounts, most notably Wells Fargo. Depending on those customer's buying cycles, revenue could temporarily spike or drop.

Market Challenges

The fundraising, revenue and internal challenges primarily reflect 3VR's market positioning. All analytics providers have struggled to match their investment expectations. And 3VR has never become one of the mainstream recorder lines in the industry. 3VR's best fit has become in banking / retail, though that is a competitive market and now 3VR even competes there with their ex-CEO's highly funded startup Prism Skylabs.

When Will They Exit?

It is inevitable that 3VR exits, as after a dozen years, it is clear that it is not viable as profitable independent business nor has it reached their revenue levels that would justify a massive acquisition price or an IPO.

The $8 million should provide them more runaway to determine / negotiate the ultimate exit, a key factor for those using or re-selling 3VR.

 

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