Marvell nabs Innovium for 11B as it delves deeper into cloud ethernet switches

Marvell nabs Innovium for 11B as it delves deeper into cloud ethernet switches

Tue, 03 Aug 2021

[Marvell](https://www.marvell.com/) announced this morning it intends to acquire [Innovium](https://www.innovium.com/) for $1.1 billion in an all-stock deal. The startup, which raised over $400 million according to [Crunchbase data](https://www.crunchbase.com/organization/innovium-inc), makes networking ethernet switches optimized for the cloud. Marvell president and CEO Matt Murphy sees Innovium as a complementary piece to [the $10 billion Inphi acquisition](https://techcrunch.com/2020/10/29/more-chip-industry-action-as-marvell-is-acquiring-inphi-for-10b/) last year, giving the company, which makes copper-based chips, more ways to work across modern cloud data centers. “Innovium has established itself as a strong cloud data center merchant switch silicon provider with a proven platform, and we look forward to working with their talented team who have a strong track record in the industry for delivering multiple generations of highly successful products,” Marvell CEO Matt Murphy said in a statement. Innovium founder and CEO Rajiv Khemani, who will remain on as an advisor post-close, told a familiar tale from a startup CEO being acquired, seeing the sale as a way to accelerate more quickly as part of a larger organization than it could on its own. “As we engaged with Marvell, it became clear that our data center optimized portfolio combined with Marvell’s scale, leading technology platform and complementary portfolio, can accelerate our growth and vision of delivering breakthrough switch silicon for the cloud and edge,” he wrote [in a company blog post](https://www.innovium.com/blog-post/marvell-to-acquire-innovium-for-1-1-billion-on-to-next-phase-of-growth/) announcing the deal. > [2021 will be a calmer year for semiconductors and chips (except for Intel)](https://techcrunch.com/2020/12/28/semiconductors-in-2021/) The company, which was founded in 2014, raised over $143 million last year on a post money valuation of $1.3 billion, [according to Pitchbook data](https://my.pitchbook.com/profile/117920-17/company/profile#deal-history). The question is was this a reasonable deal for the company given that valuation? No company wants to sell for less than it was last valued by its investors. In some cases, such deals can still be accretive for early backers of the selling concern, but not always. In this case TechCrunch is not privy to all the details of the Innovium cap table and what its later investors may have built into their deals with the company in the form of downside protection; such measures can tilt the value of the sale of company more towards its later and final investors. This is usually managed at the expense of its earlier backers and employees. Still, the Innovium deal should not be seen as a failure. Building a company that sells for north of $1 billion in equity value is impressive. The deal appears to be slightly smaller in enterprise value terms. In the business world, enterprise value is a useful method of valuing the true cost of an acquisition. In the case of Innovium, a large cash position, what was described as “Innovium cash and exercise proceeds expected at closing of approximately $145 million,” lowered the cost of the transaction to a more modest $955 million in net outlays. Our general perspective is that the sale is probably not the outcome that Innovium’s backers had hoped for, but that it may still prove lucrative to early workers and early investors, and still works at that lower figure. It’s also notable how in today’s market of mega-rounds and surfeit unicorns, an exit north of the $1 billion mark in equity terms can be viewed as a disappointment in any terms. Innovium is selling for around the price that [Facebook paid for Instagram](https://techcrunch.com/2012/04/09/facebook-to-acquire-instagram-for-1-billion/) in 2012, a deal that at the time was so large that it dominated technology headlines around the world. But with so much capital available today, private valuations are soaring and [mega deals abound](https://techcrunch.com/2020/12/01/salesforce-buys-slack/). And recent rounds north of $100 million, much like Innovium’s 2020-era, $143 million round, can set companies up with rich valuations and a narrow path in front of them to beat those heightened expectations. What likely happened? Perhaps Innovium found itself with more cash than opportunities to spend it; perhaps it simply needed a large partner to help it better sell into its market. With expected revenues of $150 million in Marvell’s fiscal 2023, its next fiscal period, Innovium did not fail to reach scale. It may have simply grown well as a private, independent company, and stalled out after its last round. Regardless, a billion dollar exit is a billion dollar exit. The deal is expected to close by the end of this year. While both company boards have approved the deal, it still must clear regular closing hurdles including approval by Innovium’s private stock holders. > [More chip industry action as Marvell is acquiring Inphi for $10B](https://techcrunch.com/2020/10/29/more-chip-industry-action-as-marvell-is-acquiring-inphi-for-10b/)

Related Articles

In Russia, Apple and Google Staff Get Muscled Up By the
State

In Russia, Apple and Google Staff Get Muscled Up By the State

Vizio’s M-Series TV Is Affordable and Mantle-Worthy

Vizio’s M-Series TV Is Affordable and Mantle-Worthy

Our Favorite Smart Pens for Writing Digital Notes

Our Favorite Smart Pens for Writing Digital Notes

The Complex Truth About ‘Junk DNA’

The Complex Truth About ‘Junk DNA’

How to Go Passwordless on Your Microsoft Account

How to Go Passwordless on Your Microsoft Account

Drones May Help Replant Forests—If Enough Seeds Take
Root

Drones May Help Replant Forests—If Enough Seeds Take Root

How a plant virus could help stop cancers from reaching the
lungs

How a plant virus could help stop cancers from reaching the lungs

New tech to prevent Li-ion battery fires

New tech to prevent Li-ion battery fires

Even the CIA and NSA Use Ad Blockers to Stay Safe
Online

Even the CIA and NSA Use Ad Blockers to Stay Safe Online

Content Creators are Recreating Homelessness in The
Sims

Content Creators are Recreating Homelessness in The Sims

Valley Fever Is Spreading Through a Hotter, Drier Western
US

Valley Fever Is Spreading Through a Hotter, Drier Western US

Hiking 101: Everything You Need to Head for the
Hills

Hiking 101: Everything You Need to Head for the Hills

The 17 Best Weekend Deals on Phones, Face Masks, and
Keyboards

The 17 Best Weekend Deals on Phones, Face Masks, and Keyboards

10 Awesome Management Games for Armchair Tycoons

10 Awesome Management Games for Armchair Tycoons

Here’s how you can upgrade to Windows 11 early

Here’s how you can upgrade to Windows 11 early

Best Help Desk Software (2021): Reviews &
Pricing

Best Help Desk Software (2021): Reviews & Pricing

Super73 ZX electric bike hands-on: The power and range you
need

Super73 ZX electric bike hands-on: The power and range you need

How To Use Walmart Pay

How To Use Walmart Pay

How To Build In Minecraft

How To Build In Minecraft

Upcoming PUBG game is being developed on Unreal Engine 5:
report

Upcoming PUBG game is being developed on Unreal Engine 5: report

How do you help someone with their leg bitten off by a
shark?

How do you help someone with their leg bitten off by a shark?

Sci-Fi Can Help Teach Us About Political Theory

Sci-Fi Can Help Teach Us About Political Theory

The Road Ahead for Self-Driving Taxis

The Road Ahead for Self-Driving Taxis

A 3D-Printed Chicken Breast Was Cooked With Frickin’
Lasers

A 3D-Printed Chicken Breast Was Cooked With Frickin’ Lasers

Machine learning in the wild

Machine learning in the wild

PM Imran Khan launches Digital Media Development
Program

PM Imran Khan launches Digital Media Development Program

Please, No More Tiger King

Please, No More Tiger King

A New Book Chronicles the Art of the Thiel

A New Book Chronicles the Art of the Thiel