NW Venture Voice

WSA Strategic Partners
Parker LePla; Primus Knowledge Solutions, Inc.

WSA, Connecting Washington's Technology Leaders

2200 Alaskan Way, Suite 390

Seattle, WA 98121

p. 206.448.3033

f. 206.448.3103

e. info@wsa.org

w. www.wsa.org

Posted by Martin at 11:09 AM | Comments (0) | TrackBack

Voyager Capital Innovate event invitation...

My friends at Voyager Capital have a nice event happening soon. Everyone in the NW should attend.

Last Chance to Register!!!



VoyagerCapital, a leading Pacific Northwest information technology venture firm, invites you to attend INNOVATE, an exclusive series featuring the very best ideas, insights and people in the technology industry in an invitation-only setting. INNOVATE offers a special opportunity to explore relevant industry topics, socialize with peers and network with technology executives and investors.



Wednesday, December 1, 2004
Science Fiction Museum @ EMP
325 Fifth Ave North, Seattle
5:30 - 8:00 PM

Keynote: Keith Krach, Co-Founder and Former CEO of Ariba
"Building A High Performance
Team"



5:30  Registration

5:30 - 6:30  Cocktail Hour

6:30 - 6:45  Predictions

6:45 - 7:30  Keynote

7:30 - 8:00  Open Forum

We're pleased to have Keith Krach, Co-Founder, Former CEO and Chairman of Ariba, join us to talk about building a high performance management team during periods of growth. As Chairman of the Board and CEO for the first five years of Ariba's history, he grew the company from a start-up to annual revenues of over $500 million, becoming one of the fastest growing software companies in history.
After earning his B.S. Degree in industrial engineering from Purdue and an MBA from Harvard, Krach spent ten years with General Motors, and became their youngest-ever Vice President, leading GM's robotics operations. Keith then took a position as Chief Operating Officer at Rasna Corporation, a rapidly growing software company that was sold in 1995 for $500 million. Krach then became the first entrepreneur-in-residence at Benchmark Capital and in 1996 formed the team to start Ariba. In 2000, he was presented with the Technology Pioneer Award at the World Economic Forum in Switzerland. Additionally, Keith was named National Entrepreneur of the Year in recognition for his accomplishments in eBusiness.

In addition, Jesse Berst, President of the Center for Smart Energy and internationally known technology writer and analyst for PC Week, Computerworld and ZDNet AnchorDesk, will emcee the evening's event and offer his predictions for the technology industry in 2005.

To confirm your attendance or for more information please contact:
rsvp@voyagercapital.com or Blythe Mayer at 206-438-1810.





Innovate Series brought to you by:

 

 

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Posted by Martin at 9:35 AM | Comments (0) | TrackBack

November 22, 2004

DWT Venture Series Dec. 16 at the Rainier Club

Posted by Martin at 1:09 PM | Comments (0) | TrackBack

Maveron Raises $200M fund

Congratulations to your friends over at Maveron on their new fund. The Seattle Times, Business Journal and VCA Online have reports on it. This is great news for all entrepreneurs in the Northwest. Maveron says they will continue to focus on a segment they are calling "Consumer Continuum" which is the intersection of consumer and technology. This is a less servered segment of venture capital and it is good to have Maeveron focusing there. Start sending them plans!

Posted by Martin at 9:57 AM | Comments (0) | TrackBack

November 10, 2004

A Rising Wave of M&A Activity - a view from the trenches

This is a recent newsletter that Cascadia released that briefly describes our views on the M&A market. You can read the entire entry by clicking on the extended version. I have additional data behind it if you are interested.

Regards,

Kevin Cable

M&A transactions accounted for nearly 90% of all venture capital exits in the past three years. Will the trend continue? The following is a brief look at some of the most recent strategic, financial and execution trends in the market that seek to answer this question. In response to intensified end-user demand for product as well as pressure from institutional investors, companies are creating shopping lists of bolt-on and platform acquisitions to augment their growth strategies. Large enterprises are both expanding existing product lines and buying adjacent vertical market domain expertise in an effort to drive growth and solidify their defensive positions. The proof exists in the deals our firm recently completed where 70% of the transactions received multiple term sheets. The clear theme was a stronger focus on the strategic value of the combination. The result was better pricing. Numbers don't lie. Total M&A transactions announced in the third quarter of 2004 were up 14% versus the same quarter last year. Average EV/EBITDA exit multiples are at their highest level in two years, partially due to the supply and demand imbalance in the marketplace. Over the past year, reported venture exits with returns of greater than four times paid-in capital have gone from non-existent to nearly 50% of reported venture-backed transactions.* *Source: VentureXpert™ Database by VE & NVCA Valuations are being driven by strategic premiums. The auction-style M&A process has become a mainstream method to force buyers to "fully price" their offers, incorporating strategic value that is created as a result of consummating a transaction. It is not uncommon to see five or more term sheets on a single deal, with the price getting bid up 100 to 300% or more over the opening bid. Stand alone valuation multiples have become less relevant for highly strategic deals. The focus has shifted to total return on assets and accretion of proforma financial results. Source: Mergerstat / Factset Note: Q4 '03 includes the Bank of America/FleetBoston merger valued at almost $50bn EMC's recent acquisition of Dantz underscores the trend of large companies aggressively targeting applications to fill solution gaps and looking for greenfield opportunities to deliver on Wall Street's revenue growth expectations. By acquiring Dantz, EMC is now poised to compete head-to-head with Veritas Software and Computer Associates in the small and medium-sized storage software backup market. EMC's strategic rationale: Immediate presence in the fast growing small and mid-sized business (SMB) market segment and the ability to extend the customer life cycle. EMC plans to accelerate its expansion into the SMB market by leveraging existing products and Dantz's expertise and presence in the SMB distribution channels. The Dantz acquisition is in line with EMC's spate of recent buys, which includes 14 other software companies since 2000. Clear customer traction, product strength and respect for the Dantz business model drove interest in the transaction. Consolidation in the wireless LAN (WLAN) sector of enterprise communications typifies another recent driver of M&A activity—end user demand. Historical over-funding in the sector has created a highly fragmented market with many venture-backed players. As the market has matured, customer demand has shifted from point solutions to a need for holistic solutions. Due to the competitive nature of this marketplace, and in an attempt to decipher who will emerge as a true market leader, public companies have put more of an emphasis on partnerships than exits (i.e., WLAN switching company Airespace's partnerships with NEC, Alcatel and Nortel). In lieu of public consolidation, private companies have begun to merge to achieve scale and to fill out the feature sets that customers are demanding. These private-to-private transactions (i.e., WaveLink's recent acquisition of Airprism and Fortress Technologies' acquisition of Legra Systems) are the precursor to the impending consolidation in the space by public company incumbents. 2005 will see an increasing amount of consolidation by public players, some of which we have begun to see in the fourth quarter of 2004. An example is Cisco's acquisition of wireless network access company Perfigo. The disequilibrium of supply and demand from the capital markets continues to drive interest in profitable companies. The competition is fierce, sparking a significant trend toward private-to-private transactions where private equity firms are selling portfolio companies to each other. Clearly, locating companies with sufficient growth potential has become the rate-limiting step for this class of buyer. Debt continues to play a role in most financial sponsor transactions. Equity requirements have been relaxed and debt is cheap and plentiful. Hedge funds have entered the scene as a new competitor and they are driving the already substantial leverage available for acquisition capital. Buyers today are generally required to fund 30% of a deal with equity—down from 35%-40% over the past few years. Lenders are allowing higher Debt/EBITDA ratios, which paves the way for greater investor returns. Source: Mergerstat / Factset The execution phase of mid-market transactions is changing with the market dynamics. Diligence and terms negotiation are shifting to the front-end of the process prior to term sheet. This allows the target to retain greater leverage and flexibility for a longer period in the process and also enables the buyer to assess the real risk in a deal. Acquiring companies are focused on risk transfer, and are pushing this risk off to the target as long as possible. In turn, there is a much greater emphasis on deal points other than price—particularly in public-to-private transactions. The pace of the market also gives rise to warning signs. Strategic buyers must be wary of attempting to bulk up revenues when there is limited strategic rationale for the transaction. Targets lacking brand strength, competitive industry position and revenue quality will not be looked upon favorably by the capital markets. Exit opportunities are limited for companies that are trying to use M&A as a means of disguising fundamental weaknesses in their core business or an inability to raise capital. In fact, it is taking longer for companies to achieve an M&A exit from their initial round of financing due to the desire on the part of buyers for more mature, profitable businesses.

Posted by Dave at 2:22 PM | Comments (0) | TrackBack

November 6, 2004

Salaries in NW up in techland

Many of you may have already seen the wsa: nw tech industry salary survey data indicates cautious but brighter picture. It is great news for a number of reasons. Not just because tech types are going to make more money, but more importantly because jobs are expanding causing salaries to go up. In the last six months I have seen more NW tech companies start than in the last 3 years combined. Many of my friends who dropped out of the job market are now actively back in. We even see that in the overall economy with the latest outstanding job growth numbers. The unemployment rate went up because jobseekers re-entered the market. I see that happening in the Northwest as well. I expect that a meaningful number of those thinking of entering the market again will instead start their own companies. This is all good news for NW venture funded companies. Look for an accelerating pace of new company formation and tech hiring. If you are looking for a job, look at the startups. Now is NOT the time to go back to Microsoft.

Posted by Martin at 9:14 AM | Comments (0) | TrackBack