Index Invests $25 Million in Sonos (Plus a Video Interview With VC Mike Volpi)
Earlier this week, BoomTown had lunch with Michelangelo “Mike” Volpi, the high-profile tech exec who turned into a venture capitalist recently at Index Ventures.
We also did a video interview (see below) about his new life as an investor, based in London, although Volpi managed to leave out the big news.
That would be a just-inked $25 million investment by Index from its growth equity arm in wireless home music system maker Sonos, as well as a new board seat there for Volpi. (Sonos’s hot new S5 unit is pictured here.)
In an interview this morning, Sonos CEO John MacFarlane said the money would be used for expansion at Sonos, which is just about to introduce its products to China and Japan.
“This investment is going to help us grow,” said MacFarlane. “We have wind at our back and this will help us a lot in keeping up that momentum.”
MacFarlane said the focus for Sonos, which has garnered $65 million–from BV Capital and mostly angel investors–with the Index investment included, is growth. He declined to give Sonos’s valuation in the new round.
The private company has been profitable, MacFarlane said, but its goal is to break even as it takes advantage of interest in its devices globally. Only about 35 percent of its business is now in the United States.
While running a small independent consumer electronics company is a dicey proposition, MacFarlane said Sonos is not interested in selling, as Pure Digital–maker of the Flip digital camera–did to Cisco (CSCO) a year ago for $590 million in stock.
In fact, Santa Barbara, Calif.-based Sonos, which is well known for its innovative top-line (and high-priced) music players, recently moved its business more mainstream with the introduction of the S5 unit in November.
The S5 allows control of the system via an Apple (AAPL) iPhone and only costs $399. (Here is a review of it by The Mossberg Solution’s Katie Boehret.)
The basic idea? A smart speaker paired with a smartphone.
The S5 has been a big seller and has increased product registration–when the software is activated by a user–by five times previous numbers so far, according to the company.
That could get a further boost with the April launch of the iPad, which seems perfect for controller software apps.
“The popularity of the iPhone is great for us,” said MacFarlane. “And we’ll do something great with the iPad.”
It will be nice to have a big score for Volpi, the former Cisco wunderkind. In fact, he invested in one of MacFarlane’s previous start-ups, Software.com, in 1995 when he was in charge of a variety of businesses there.
But the affable Volpi hit a bad patch recently while CEO of a much hyped but ultimately failed video service called Joost. It was that job that landed him in even hotter water.
In the wake of the decline of Joost, which he left to join Index, he was personally sued, along with Index, by its litigious co-founders over Index’s planned investment in Skype, the online telephony service they also co-founded.
Confused? Well, it was confusing.
And not the best start in the investment business for Volpi, after Index pulled out of the high-profile deal in a settlement of the lawsuits.
But, that’s “ancient history,” as Volpi said in the video interview below, which focuses on what’s next.
(News of the Index involvement in Sonos was first reported by TechCrunch earlier this week, though it did not have any details on the amount of funding.)
Although he did not mention the $25 million Sonos funding specifically in the video, Volpi does discuss his bullishness for consumer electronics.
Volpi presumably hopes others share his enthusiasm.
Here’s the video of my interview with him: