Saankhya Labs seeks to raise up to USD 75m to increase presence in US and Europe leveraging on 5G adoption – CEO

12 June 2020

Saankhya Labs, a Bengaluru-headquartered wireless communication solutions company, seeks funding of up to USD 75m as it looks to scale its presence internationally on the back of growing demand for wireless communication infrastructure globally, said cofounder and CEO Parag Naik.

 

• Receptive to US-based financial and Indian legal advisory approaches
• Mulls acquisitions post fundraise

Saankhya Labs, a Bengaluru-headquartered wireless communication solutions company, seeks funding of up to USD 75m as it looks to scale its presence internationally on the back of growing demand for wireless communication infrastructure globally, said cofounder and CEO Parag Naik.

It will be receptive to hearing pitches from the US-based bankers as it prefers to bring in US-based investors. It aims to conclude the fundraise in the next six to nine months, he said. Presently, it is holding talks with undisclosed US-based large technology companies. It is also conducting very early stage discussions with Indian telecom giant Reliance Jio as well, he said.

It will welcome approaches from strategic investors such as telecom operators, broadcast networks and large technology companies, he said. It will also prefer US-based technology-focused PE funds as the firm looks to scale significantly in the region. It can look to dilute a significant minority stake, he said.

The proceeds would also be used for marketing and branding and increasing teams in the US and Europe, he said.

He stated that it has received around USD 20m from various investors such as US-based Sinclair Broadcast Group (NASDAQ: SPGI), Intel Capital and angel investors among others early this year till May 2020, he said.

 

The CEO declined to provide details of the previous fundraise and the shareholding pattern. He did not divulge the current shareholding structure of the company which was founded in 2006 by Naik, Vishwakumara Kayyargadde- cofounder & COO and Hemant Mallapur- cofounder & EVP- Engineering.

 

The firm will also be receptive to legal firm approaches to advise on IP contracts, he said.

 

He observed that Indian financial investors tend to have a lack of awareness when it comes to wireless communication space. He also added that the space requires long-term capital which might not appeal to local investors who seek short term ROI (return on investment).

Post the fundraise, it can consider complementary acquisitions in the space, he said adding that during the pandemic it received inbound approaches from an undisclosed US-based firm and another Israel-based firm who were looking at getting acquired by Saankhya.

Presently, it has increased the pace of its R&D around chip-sets and semiconductors for next generation wireless communication which will be dominated by 5G, he said.

Saankhya develops wireless communication infrastructure based on their patented SDR (software defined radio) technology, in broadcast, broadband, convergence and satellite communications and segment. Currently, it holds 27 international patents.

According to Fortune Business Insights report in May 2020, the global wireless infrastructure market size is projected to reach USD 249.87bn by 2026 mostly due to the adoption of 5G technology worldwide.

He noted that in the light of the COVID-19 pandemic and rising US-China tensions, the entire telecom supply chain is undergoing disruption, putting companies such as Saankhya in an advantageous position.

Since the COVID-19 outbreak, the firm has received lot of customer queries from undisclosed US and Europe telecom operators among others. If it succeeds in onboarding these customers, it expects to generate around USD 40m to USD 50m in revenues from them in the next FY.

With expected 5G roll-out in India by 2021, it is also expecting to onboard large private telecom players as its customers. Presently, it has 10 clients globally including ISRO, Indian Railways, Sinclair Broadcast Group among others, and is conducting POCs with various potential clients.

It expects to hit 40% growth YoY this FY despite the pandemic, he said without divulging any revenue details.