Inside Vuclip-Jigsee: IAN and Sequoia now own a piece of Vuclip

About a year ago, when we last met with Ray Newal, co-founder and CEO of mobile video streaming startup Jigsee, he was in the initial stages of reaching out to venture capital investors to raise a Series B round of funding. A fortnight ago, the Toronto and Mumbai based company was acquired by Vuclip, a Milpitas, California-based startup that also plays in the video streaming space. Apart from creating an entity that will allow Vuclip to leverage Jigsee’s app platform to stream videos on mobile, the other big significance of the deal is that Indian Angel Network (IAN), the country’s largest organized angel investor group, now becomes a stakeholder in Vuclip.

“The acquisition give us (IAN) a stake through a stock-swap in a stronger, larger entity that we think would address the mobile video streaming market more effectively,” IAN member Hemant Kanakia told StartupCentral this morning. The angel network had invested an undisclosed sum in Jigsee in early 2011 in the company Series A round. Early-to-growth stage investor Sequoia Capital India had also participated in the round. For Sequoia, the investment was more in the nature of a seed stage deal. Following the acquisition, Sequoia also joins IAN as a stakeholder in Vuclip. Further details on the transaction have not been disclosed.

Newal came up with the idea for Jigsee while on a backpacking trip in India

While this is not the first time that IAN has been involved in an overseas startup, either through investments or acquisitions and follow-on funding for its portfolio companies, Vuclip gives it a significant foothold in Silicon Valley. The startup, founded in 2008, is backed by blue chip investors such as New Enterprise Associates, SingTel Innov8 and JAFCO and has raised a reported $35 million till date. It offers mobile video streaming services in 200 countries and across more than 5,000 devices. “We do have portfolio companies that are based in the Valley. One example of Druva. But this deal certainly gives us a stronger presence there and is an endorsement of the value that IAN brings to its investee companies,” said IAN president Padmaja Ruparel.

Jigsee, founded in 2007 by former Yahoo! executive Newal and former RIM executive Areef Reza, launched the beta version of its application in India in August 2011. The application, which can be downloaded from mobile app stores, employs a patent-pending streaming technology that helps deliver continuous video on wireless networks with data rates as low as 50 kbps. Initially launched as a direct-to-consumer model, the company later transitioned to a B2B model offering the platform to content providers to enable them to set up and manage their own mobile video applications. Its roster of clients currently includes most major broadcasters in India including UTV and Disney, Sony and Reliance.

“Vuclip was one of Jigsee’s customers and about six months ago the two companies started talking about whether it made sense to explore synergies instead of trying to address the same market separately,” said IAN member Piyush Shah, who led the Jigsee investment for the network along with Rehan Yar Khan. Post acquisition, the Jigsee team, which includes a product development team in Mumbai, will be integrated with Vuclip. The Jigsee brandname will be dissolved post acquisition. The founders are expected to continue with the combined entity. Newal, who is currently based in Mumbai, is expected to move to Vuclip’s headquarters in California. We were unable to reach out to the founders at the time of publishing this story.

For IAN, both the investment in Jigsee and its acquisition by Vuclip has been an experience in working with the complexities of managing a cross-border investment (Jigsee was originally started in Toronto and transitioned to India to address this market). What role will it play in the future of the combined entity? “We’ve built the value into the company. Now we’ll mostly stay out of the way,” said Shah.

Also read our 2011 interview with Ray Newal.

Images credit: Vuclip and Jigsee