TA Associates seems to have hit its sweet spot square on the head with its latest investment in Asurion, a provider of marketing solutions for wireless carriers. A longtime friend of the San Mateo, Calif.-based company, the VC veteran recently pumped $59 million into its coffers.
Although 15-year-old Asurion is far from being a start-up, this latest infusion is actually its first institutional VC round. “This is a typical investment situation for TA, which is often a first institutional investor in a company,” said Jeff Chambers, a managing director at TA and Asurion?s newest board member. “TA?s strategy is to look for established, profitable companies that are growing rapidly and try to initiate investments in those companies.” Asurion certainly fits the bill, he added.
Moreover, TA chose to be the sole investor on the Series A transaction, something it does with about half its portfolio companies, Chambers said. The capital for the investment came from TA?s $2 billion Fund IX, vintaged last year, and its $500 million TA Atlantic & Pacific Fund IV, which closed in 1999. Both funds are very early in their investment lives, Chambers said, so there is plenty of dry powder left for additional deals.
A product of a series of acquisitions that includes its two subsidiaries, Road Rescue Inc. and The Merrimac Group Inc., Asurion touts itself as the “company that created the concepts of roadside assistance and handset insurance programs marketed through wireless carriers.”
In other words, Asurion provides cellular customers with handset insurance and roadside assistance similar to that offered by AAA, but both services are offered through wireless carriers. Currently, the company?s customer roster showcases about 80% of the North American wireless carriers, including Verizon, AT&T Wireless, Cingular, Sprint, ALLTEL and Bell Mobility.
Rather than making customers pay an annual fee for roadside assistance or purchase a blanket handset insurance policy, Asurion?s wireless clients instead bill their cellular subscribers for such services as part of their monthly statement.
Chambers said that Asurion intends to expand beyond its current services, including a likely partnership with Palm Inc. to provide insurance to its Palm VII users.
“We plan to expand our product base significantly, although those products will fit in with our family of offerings now,” said Bruce Jaster, director of marketing services with Asurion. “I can tell you that the products will be specifically targeted to help wireless carriers reduce churn, enhance subscriber satisfaction and enhance carriers? bottom line.”
Besides its San Mateo headquarters, Asurion has operations in Dallas, Houston, Nashville and Toronto. As such, its services are available throughout the U.S. and Canada, as well as Puerto Rico. In order to broaden its global presence, the company will use its latest round of funding to expand into Europe, primarily into the 12 European Union countries, Jaster said. Asurion has no plans to open an office in Puerto Rico, he added.
As Asurion is already profitable and has been for several years, Chambers said it isn?t likely that the company will look for another round of private financing. Additionally, an initial public offering probably isn?t in the cards, as Asurion has plenty of capital to sustain it “for the foreseeable future,” he said.
Contact Robyn Kurdek.