The voice-over-internet-protocol space just got less crowded. Big name BroadSoft has just acquired long-time competitor Sylantro Systems for an undisclosed sum. The merger may portend many to come for VoIP companies in 2009 as the recession encourages further consolidation, industry insiders predict.
BroadSoft and Sylantro are unique in that both enjoyed generous venture backing going into the deal — raising $72 million and $113 million respectively to date. Even though it brought in less, Broadsoft was able to outstrategize its rival, growing ten times over in the last five years alone, company executives told VentureWire.
Few immediate changes will result from the deal. Customers currently using Sylantro’s VoIP platform, Synergy, will be able to continue doing so for the time being. There are eventual plans to integrate it with BroadSoft’s system as seamlessly as possible. And most Sylantro employees will retain their jobs. However, the biggest boon for BroadSoft is Sylantro’s client base, which includes AT&T and China Telecom. These additions will round out the marquee names it already works with, like Verizon and Sprint Nextel, quite nicely.
According to Gigaom’s Om Malik, no cash was exchanged in the deal — it’s likely that BroadSoft simply absorbed Sylantro’s debt. This marks the company’s second acquisition in 2008, having purchased GENBAND’s M6 Communication Applications Server in August — gutsy moves for a firm that recently had to cut staff in the double-digits due to a dip in sales. As Malik points out, this leaves Sonus and MetaSwitch as the other two major players standing in the field.
BroadSoft’s investors include Bessemer Venture Partners, Charles River Ventures, Columbia Capital, Comdisco Ventures, Crescendo Ventures, Grotech Ventures, RRE Ventures and Meritech Capital Partners. There’s no overlap with Sylantro’s flock of backers: Mayfield Fund, Vanguard Venture Partners, Accel Partners, Argo Global Capital, Hook Partners, JPMorgan Partners, Bowman Capital, Azure Capital Partners, VLG Investments and Summerhill Venture Partners. Past coverage of its investment history can be found here.
Both companies were founded in 1998. BroadSoft is located in Gaithersburg, Md., and Sylantro is based in Campbell, Calif.