In Nuance’s Snapping Up of SnapIn Software, Investors Get a Better Deal—Some Further Analysis

8/22/08Follow @gthuang

The big-time acquisition train keeps on rolling through town. The latest Seattle-area company to get bought for big bucks is SnapIn Software, based in Bellevue, WA, which announced earlier this week that it is closing a deal with Burlington, MA-based Nuance Communications worth an estimated $180 million in Nuance stock.

On the surface, it’s not the most obvious pairing. Nuance is a speech-recognition giant. SnapIn makes mobile software for, among other things, automating customer support by providing a menu on the screen of your cell phone. But where they connect is in the market potential for providing customer service without a real live person on the other end of the phone—and in their combined access to the big wireless carriers, provided the two companies’ technologies can be integrated successfully. (I hate automated phone trees as much as the next guy, but if they can solve my T-Mobile problems faster than waiting 15 minutes for a representative, I’m all for it.)

To get some perspective on the deal, I caught up with Tom Huseby, who is chairman of SnapIn’s board— as well as the founder of SeaPoint Ventures and a venture/strategic partner at Oak Investment Partners, Hunt Ventures, and Voyager Capital. Huseby’s expertise is in the wireless sector. He couldn’t give too many specifics yet, because Nuance is driving the deal and it won’t close until October. But he seemed pretty impressed with how things were done. “Nuance was pretty damn smart to find us when they did. They looked at this market very early on and identified SnapIn as having a key position,” says Huseby. “They had a single-minded focus on what this means to them… and how to integrate [SnapIn] with their technology.”

Over the past few years, SnapIn has secured more than $30 million in capital from area firms Frazier Technology Ventures and Trilogy Equity Partners, as well as Hunt Ventures and Oak Investment Partners. Given the size of the Nuance deal, it seems like a solid exit for the startup and its investors. “I think SnapIn was worth more to a big company than it could grow to be on its own,” says Huseby. “As we checked out the deal, the price was something we found acceptable.”

Huseby says he will stay involved with SnapIn for the next year and a half, and the management team has agreed to sign on as well. Looking ahead, he says, “It’s a natural extension of the mobile market—1.2 billion phones are sold each year, and they’re all getting smarter and smarter. I’m just glad we started working on this when we did, five or six years ago…Nuance said, why not take advantage of this huge capability to solve a lot of problems?” Huseby mentions a lot of positive feedback from customers and end users in field tests of SnapIn’s software. “It’s a very positive product to have if you’re a carrier,” he says.

Which only reinforces the sentiment from SnapIn CEO Robert Lewis, who earlier this week pointed to “deeper relationships with carriers and every major handset vendor” as a key selling point of the Nuance deal—and a crucial step towards the widespread adoption of his company’s mobile software.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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