On Friday, Control4, one of the first companies to specialize in
home automation technology, had a stellar IPO. It popped 23% from its initial $US16 price to a high of $US20.70 and is still trading at about $US20 today.
That gives the 10-year-old, Salt Lake City, Utah, company a valuation of about $US446 million. Not bad considering it had 2012 revenues of $US109.5 million and posted a loss from operations every year since since 2008, the earliest it reported in its S1 form filed with the SEC.
Control4, however, has one big supporter in its corner: Cisco. Two years ago Cisco made about a $US20 million investment in the company that was undisclosed at the time, but just revealed in Control4’s S-1 form and spotted by blogger Brad Reese.
In 2011, Cisco bought $US1,510,981 shares at $US9.93 and the company promised Cisco (i.e. issued warrants for) another 470,082 shares at the same price. All told, this gives Cisco an 8.8% stake that is now worth nearly $US40 million.
Cisco didn’t just infuse a bunch of money into Control4, it also signed on to sell a Cisco-branded version of its products and to help Control4 develop new products.
Control4 makes a product that let’s you control your home’s locks, thermostat, lights, garage door, television/entertainment systems from a central location, with the click of a button.
Looks like Cisco also helped Control4 nab former NDS Group CEO David Habiger as a board member. (Cisco bought Habiger’s company for $US5 billion in 2012 and Habiger didn’t come to Cisco after the deal closed but joined the Control4 board in September.) He did alright in the IPO, too. His 211,200 shares are worth over $US4.2 million. Not bad for less than a year’s work.
Control4 is part of Cisco’s big vision of a brand new tech market called the Internet of Things (although Cisco prefers the term the Internet of Everything). IoT refers to putting all the inanimate objects in your home, office and city on the Internet and making them interactive.
Cisco’s CEO John Chambers says that IoT will be a massive $US14 trillion market over the next decade. As of Friday, it’s already started generating healthy returns for Cisco.