News Article

Networked Lighting Startup Redwood Systems Acquired by CommScope
Date: Aug 01, 2013
Author: Eric Wesoff
Source: ( click here to go to the source)

Featured firm in this article: Redwood Systems Inc of Fremont, CA

Redwood Systems, a networking lighting startup that controls lights and building sensors over Ethernet cable, was acquired by CommScope, a business partner, for an undisclosed price last month.

CommScope is a communications hardware provider owned by the Carlyle Group with $3 billion in revenue in 2009 for its cabling and network infrastructure products. Redwood Systems had raised more than $30 million since being founded in 2008 from investors including Battery Ventures, U.S. Venture Partners, Index Ventures and Mitsui & Co, Ltd.

As Jeff St. John has reported, the firm has gained some customers and partners including Johnson Controls, SAP, Volkswagen and Facebook.

Redwood also branched out into controlling fluorescent lights and high-intensity discharge lights via its low-voltage wiring network with an eye toward expanding into new markets; Asia is a particular focus. Redwood can also act as a platform for applications such as occupancy sensing.

According to a statement from CommScope, "The acquisition is intended to strengthen CommScope's position in intelligent building infrastructure solutions. This can help CommScope's data center and intelligent building customers maximize their investments in cabling infrastructure and move toward more integrated IT and building systems, thus reducing installation costs and ongoing operational expenses."

"Tremendous insight into building usage can be obtained from analyzing the centrally stored data from the sensor network enabling additional efficiency improvements and enhanced capabilities well beyond efficient lighting," Kevin St. Cyr, senior VP of Enterprise Solutions at CommScope, said in a statement.

Redwood's installations have yielded 70 percent to 80 percent energy savings compared to a typical, high-efficiency fluorescent lighting system, according to the company.

Less than 10 percent of buildings now have smart lighting systems installed, making it a potentially wide-open market for startups, as well as lighting giants like Philips, which estimates the global lighting market at $75 billion and growing strong.

Judging by the undisclosed cash price and lack of hoopla concerning the sale, one could assume that this was not a home-run exit for the VC investors, who have not yet responded to our inquiries. Still, it makes sense that a networking lighting and sensor platform finds a home with a networking hardware company. The only issue is the value placed on a networked LED and sensor platform startup with customers -- and whether the M&A market is bullish on this technology with IT pricing or less-than-bullish with industrial hardware multiples.

There have been a few other acquisitions in lighting controls: Acuity Brands acquired Adura and eldoLED this year, Osram bought Encelium in 2011, and Philips bought Teletrol in 2009.