VentureBeat

Aerial surveillance startup Insitu surprised everyone Tuesday when it said that it would sell to Boeing, one of the world’s largest aviation firms. The company, which makes unmanned aerial vehicles (UAV), had been expected to go through an IPO within a year or two.

UAV makers have met with plenty of success in the past few years, in part because of the vast military expenditures in Afghanistan and Iraq, as well as growing markets for applications like tracking forest fires. We reported late last year that Insitu was probably bringing in about $80 million a year in revenue.

Neither the two companies or Insitu’s investors disclosed the official acquisition price, with Roger Lee of Battery Ventures, which led two rounds totaling $50 million in the company, saying only that it was a “great return, both at a multiple and IRR [internal rate of revenue] level”. However, according to the Oregonian, the price was at least $400 million.

The most interesting piece of this acquisition may not be the UAVs — although there are certainly plenty of other companies in the field, including Aurora Flight Sciences and General Atomics. But Insitu itself has implied that the surveillance aspect is the vital one, in suggesting that it might also work on vehicles for land or sea.

Lee says that surveillance startups will continue doing well. “We’ll continue to look at similar things,” he replied when I asked if the UAV field was too crowded. “The world is only getting more suspicious, and people’s interest in data is only increasing.”

Visit the venture capitalists on Sand Hill Road, and you’ll sense significant confusion about how to invest in the latest Internet technologies.

The old guard can’t keep up. Young, smart engineers are proposing ways to exploit the paradigm shift of Web 2.0, and it takes the younger, more curious venture capitalists to understand it all. One solution would be to promote more younger partners, but older VCs are only slightly less tenacious than Supreme Court justices — very slow to give up the perks of being a full partner, and the share of profits that status bestows.

Moreover, there’s the question of profile, and how a venture firm stays visible at a time when there are hundreds, if not thousands of wealthy angel investors running around seeding the more promising ideas.

There’s a story about Roger Lee (pictured here), 35, a venture capitalist at Battery Ventures, in the Mercury News today, which follows his efforts to promote the firm. It doesn’t delve into the generational shift mentioned above, but Lee’s quick rise in the firm reflects his own experience at founding Internet companies, including while he was still in college. Not covered in this story is how Lee made it to partner, even as many of his contemporary associates were let go.

One clarification on the story, which says Battery has seen two IPOs. There were three in the last twelve months: CBeyond, Optium and Omniture.

Also not mentioned: Lee was an angel investor in Friendster, the early, hot social networking company which was doing fine in those early days, but somehow lost direction around the time it took venture money from higher profile firms.