Navigator Technology Ventures announces acquisition of Sand Video by Broadcom
April 8, 2004

Cambridge, MA Navigator Technology Ventures (NTV) announced the acquisition of Sand Video, Inc. by Broadcom (Nasdaq: BRCM), a leading provider of highly-integrated semiconductor solutions enabling broadband communications. Other investors in Sand Video were CommonAngels, of Lexington, MA, and Baker Capital of New York.

Sand Video, a privately-held, Andover, Mass based company, was founded in January 2001 with the goal of providing superior semiconductor-based video compression technology to be used with a broad range of consumer video applications. Recognizing the Sand Team’s superior technology, Navigator and CommonAngels led a seed round of financing for Sand in the spring of 2002, which was quickly followed by an $8M first round of financing in the fall of 2002 with Baker Capital joining the investor group. Sand Video has staked out a leadership position in the development of semiconductor- based H.264 technology, a new ITU standard.

Sand Video’s implementation of H.264 provides the full compression benefit of the standard without sacrificing image quality while maintaining complete backwards compatibility with the existing MPEG standards. Future versions of their chips will also provide compatability with Microsoft’s Windows Media 9 standard. This technology provide a radical 3x (three times) improvement in compression over today’s standard MPEG-2 encoding used for all digital TV signals, videoconferencing, mobile TV, DVD’s, digital cameras, streaming video over the internet, and other applications. With H.264, now renamed MPEG-AVC (Advanced Video Coding) after its adoption by the MPEG group, 3 times as many standard definition (SD) signals can be carried over the same communications channel or satellite channels, or stored on disks. More importantly, HDTV signals using AVC require a small additional bandwidth over SD to be carried over the same wires and satellites or to be stored on computer disks or DVD’s, thereby enabling the upcoming transformation to HDTV worldwide. Sand Video is the first (and only) company in the world to demonstrate working chips that decode the new standard in real time, introducing it at the Consumer Electronics Show in January 2004. It is currently shipping samples to interested potential partners. Broadcom Corporation, also a fabless semiconductor vendor, is a leading provider of highly-integrated semiconductor solutions enabling broadband communications. The synergistic combination of Broadcom’s system expertise in total digital communications systems with Sand Video’s unique encoding technology will increase Broadcom’s potency in the communications market.

“We were very pleased to work with the Sand Video team, brilliantly led by Peter Besen and Don Shulsinger, and assist in the buildup of their company”, said Alain Hanover, Managing Director of Navigator, a member of CommonAngels, and Board Member of Sand Video. “The team executed perfectly and has at least one year’s lead in the market for this revolutionary technology. In addition to being first to demonstrate and ship samples of their H.264 decoder, they were on the verge of completing a full Codec to also demonstrate the world’s first real-time encoder chip for H.264. Broadcom saw the obvious value of merging Sand’s capabilities with their system know-how and made us an offer we couldn’t refuse”, added Mr. Hanover.

In connection with the acquisition, Broadcom will pay a total of up to approximately $77.5 million – $70.1 million in the form of 1.666 million shares of its Class A common stock issued or reserved for future issuance (valued at the NASDAQ National Market closing price on April 6) and $7.4 million in cash consideration – in exchange for all outstanding shares of Sand Video capital stock and upon exercise of outstanding employee stock options and other rights of Sand Video. For NTV, the investment represents an IRR of over 150%.

NTV is an early-stage, technology venture capital firm that seeks to fund technology rich start-ups and is an affiliate of the Charles Stark Draper Laboratory of Cambridge, MA and led by Alain Hanover and Rana K. Gupta. With the assistance of Draper Laboratory, NTV invests in unique, highly proprietary technologies. NTV’s other portfolio companies are Polychromix, Inc, Sionex, Corp, Actuality Systems, Inc., Aircuity, Inc., PLEJ, Inc., Polnox, Inc., and FQS International, Inc.

For additional information contact:
Nicole Eagon at 617-494-0111 or
Email: info@ntven.com