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Archive for September, 2012

Bidding Process – Procedures for the Sale of certain Assets and Intellectual Property of AQT Solar, Inc.

Posted in "Date Certain M&A Process", AQT Solar, Distressed Intellectual Property, Gerbsman Partners, Inetellectual Property, Solar on September 4, 2012| Leave a Comment »

Bidding Process – Procedures for the Sale of certain Assets and Intellectual Property of AQT Solar, Inc.

Further to Gerbsman Partners e-mail of August 20, 2012 regarding the sale of certain assets of AQT Solar, Inc.., I attach the draft legal documents that we will be requesting of bidders for certain Assets and Intellectual Property of AQT.  All parties bidding on the assets are encouraged, to the greatest extent possible, to conform the terms of their bids to the terms and form of the attached agreement.  Any and all of the assets of AQT Solar, Inc.. will be sold on an “as is, where is” basis.  I would also encourage all interested parties to have their counsel speak with Stephen O’Neill, Esq., counsel to AQT Solar, Inc.

For additional information please contact Stephen O’Neill, Esq, 408 907 9200   soneill@murraylaw.com

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the AQT Solar, Inc.’s Assets.  A sealed bid must be submitted so that it is actually received by Gerbsman Partners no later than Thursday, Sept 20th 2012 at 3 p.m.Pacific Daylight Time (the “Bid Deadline”) at AQT Solar, Inc.’s office, located at 1145 Sonora Court, Sunnyvale, CA – 94086. . Please also send an email to  steve@gerbsmanpartners.com with your bid.

Interested parties who wish to participate in the Bidding Process must also wire transfer a $ 200,000 refundable deposit to Murray & Murray Trust Account.  Information will be forthcoming.

For your convenience, I have restated the description of the Updated Bidding Process.

The key dates and terms include:

The Bidding Process for Interested Buyers

The Bidding Process for interested  and qualified parties will be required to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” documentation (the “Due Diligence Access”).  Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the AQT Solar, Inc.’s Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the AQT Solar, Inc.’s Assets.  A sealed bid must be submitted so that it is actually received by Gerbsman Partners no later than Thursday, Sept 20th 2012 at 3 p.m.Pacific Daylight Time (the “Bid Deadline”) at AQT Solar, Inc.’s office, located at 1145 Sonora Court, Sunnyvale, CA – 94086. . Please also send an email to  steve@gerbsmanpartners.com with your bid.

Bids should identify those assets being tendered for in a specific and identifiable way.  The attached fixed asset list may not be complete and Bidders interested in any fixed assets must submit a separate bid for such assets, be specific as to the assets and any sale of the fixed assets or Intellectual Property of AQT Solar, Inc.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable.  All bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to AQT Solar, Inc.). The deposit should be wired to AQT’s attorneys Murray & Murray, a Professional Corporation. The winning bidder will be notified within 3 business days of the Bid Deadline.  The deposit will be held in trust by Company’s counsel.  Unsuccessful bidders will have their deposit returned to them within three business days of notification that they are an unsuccessful bidder.  AQT Solar, Inc. reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale.  Interested parties should understand that it is expected that the highest and best bid submitted will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.

AQT Solar, Inc. will require the successful bidder to close within a 7 day period. Any or all of the assets of AQT Solar, Inc. will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.  All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the AQT Solar, Inc. Assets shall be the sole responsibility of the successful bidder and shall be paid to AQT Solar, Inc.’s at the closing of each transaction.

 

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Multinationals Stake a Claim in Venture Capital

Posted in Board Of Intellectual Capital, Business models, Economy, Entrepreneurship, Investments, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , on September 4, 2012| Leave a Comment »

Article from NYTimes.

MENLO PARK, Calif. — New York, London and Hong Kong are common addresses for blue-chip multinationals. Now Silicon Valley is, too.

From downtown San Francisco to Palo Alto, companies like American Express and Ford are opening offices and investing millions of dollars in local start-ups. This year, American Express opened a venture capital office in Facebook’s old headquarters in downtown Palo Alto. Less than three miles away, General Motors’ research lab houses full-time investment professionals, recent transplants from Detroit.

“American Express is a 162-year-old company, and this is a moment of transformation,” said Harshul Sanghi, a managing partner at American Express Ventures, the venture capital arm of the financial company. “We’re here to be a part of the fabric of innovation.”

The companies are raising their profiles in Silicon Valley at a shaky time for the broader venture capital industry. While top players like Andreessen Horowitz and Accel Partners have grown bigger, most venture capital firms are struggling with anemic returns.

The market for start-ups has also dimmed, in the wake of the sharp stock declines of Facebook, Zynga and Groupon, the once high-flying threesome that was supposed to lead the next Internet boom.

But unlike traditional venture capitalists, multinationals are less interested in profits. They are here to buy innovation — or at least get a peek at the next wave of emerging technologies.

In August, Starbucks invested $25 million in Square, the mobile payments company based in San Francisco, which will be used in the coffee chain’s stores. This year, Citi Ventures, a unit of Citigroup, invested in Plastic Jungle, an online exchange for gift cards, and Jumio, an online credit card scanner.

Banco Bilbao Vizcaya Argentaria, the large Spanish banking group, opened an office in San Francisco last year. The team, which has about $100 million to fund local start-ups, is looking for consumer applications that will help the bank create new businesses and better understand its customers.

“We are in one of the most regulated and risk-averse industries in the world, so innovation doesn’t come naturally to us,” said Jay Reinemann, the head of the BBVA office. “We want to avoid the video-rental model. We want to evolve alongside our consumers.”

The companies are hoping to tap into the entrepreneurial mind-set. Multinationals, with their huge payrolls and sprawling operations, are not as nimble as the younger upstarts. While they are rich in resources, big companies tend to be more gun-shy and usually require more time to bring a product to market.

“Companies cannot innovate as fast as start-ups; increasingly they realize they have to look outside,” said Gerald Brady, a managing director at Silicon Valley Bank, who previously led the early-stage venture arm of Siemens. “We think it’s happening a lot more than people recognize or acknowledge.”

Of the 750 corporate venture units, roughly 200 were established in the last two years, according to Global Corporate Venturing, a publication that tracks the market. In the last year, corporations participated in more than $20 billion of start-up investments.

Big business has played the role of venture capitalist before, with limited success. During the waning days of the dot-com boom, financial, media and telecommunications companies sank billions of dollars into start-ups.

The collapse was devastating. Although some managed to make money, far more burned through their cash. In 2002, Accenture, the consulting firm, scrapped its venture capital unit after taking more than $200 million in write-downs. The previous year, Wells Fargo reported $1.6 billion in losses on its venture capital investments. Dell, the computer maker, closed its venture arm in 2004 and sold its portfolio to an investment firm. (It resurrected the unit last year).

Companies say they are taking a different approach this time. Rather than making big bets across the Internet sector, investments are smaller and more selective.

“We invest with the idea that we’re a potential customer for a company,” Jon Lauckner, G.M.’s chief technology officer said. “We’re not looking to make several $5 million investments and make $10 million on each. That would be nice, but it’s not important.”

As they try to find the right start-ups, some are forging tight bonds with local firms. BBVA, for example, is an investor in 500 Startups, a venture firm that specializes in early-stage start-ups and is run by Dave McClure, a former PayPal executive.

Unilever and PepsiCo are limited partners in Physic Ventures, a venture capital firm designed to help corporate investors build commercial partnerships with portfolio companies. Both Unilever and PepsiCo have installed full-time employees in Physic’s downtown San Francisco offices.

American Express has stacked its investment team with technology veterans. Mr. Sanghi, the head of the office, has spent roughly three decades in Silicon Valley and formerly led Motorola Mobility’s venture arm. Through its network of relationships, the office has met with roughly 300 start-ups in the last six months.

The connections have started to pay off. Vinod Khosla, the head of Khosla Ventures and a co-founder of Sun Microsystems, introduced the American Express team to the executives at Ness Computing, a mobile start-up. In August, American Express partnered with Singtel, the Singapore wireless company, to invest $15 million in Ness.

Mr. Sanghi says Ness is a logical investment and a potential partner. The start-up’s application connects users to local businesses through customized search results.

“It’s trying to bring consumers and merchants together in meaningful ways,” he said. “And we’re always trying to find new ways to build value for our merchant and consumer network.”

For start-ups, a big corporate benefactor can bring resources and an established platform to promote and distribute products. Envia Systems, an electric car battery maker, picked General Motors to lead its last financing round because it wanted to have a close relationship with a major automaker, its “absolute end customer,” said Atul Kapadia, Envia’s chief executive.

Although the company received higher offers from other potential corporate investors, Envia wanted G.M.’s advice on how to build the battery so that one day it could be a standard in the company’s electric cars. After the investment, G.M. offered the start-up access to its experts and facilities in Detroit, which Envia is using.

“You want to listen to your end customer because they will help you figure out what specifications you need to get into the final product,” said Mr. Kapadia.

A marriage with corporate investors can be complicated. Besides G.M., Asahi Kasei and Asahi Glass, the Japanese auto-part makers, are also investors in Envia. They both build rival battery products for Japanese car companies.

Mr. Kapadia, who prizes their insights into Japan’s market, says his company is careful about what intellectual property information it shares with its investors. At board meetings, confidential data about Envia’s customers is discussed only at the end, so that conflicted corporate investors can easily excuse themselves.

“In our marriage, there has not been a single ethics concern, because all the expectations were hashed out in the beginning,” Mr. Kapadia said. “But I can see how this could be a land mine.”

For the big corporations, start-up investing is fraught with the same risk as traditional venture investing. Their bets might be modest, but blowups can be embarrassing and can rankle shareholders, who may see venture investing as a distraction from the core business.

OnLive, an online gaming service, offers a recent reminder.

The company was once a darling of corporate investors, with financing from the likes of Time Warner, AutoDesk, HTC and AT&T. At one point, it was valued north of $1 billion.

Despite its early promise, the start-up crashed in August, taking many in Silicon Valley by surprise. The company laid off its employees, announced a reorganization and in the process slashed the value of the shares to zero.

“It can be painful when a deal goes sour,” James Mawson, the founder of Global Corporate Venturing, said.

Read more here.

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Webvan Who? Investors Hungry for Online Specialty-Food Start-Ups – Venture Capital Dispatch

Posted in Venture Capital Dispatch on September 3, 2012| Leave a Comment »

By Lora Kolodny

Although online grocery services like Webvan and HomeRuns failed badly in the dot-com era, venture and angel investors now appear bullish on the digital grocery business.

Bloomberg News

In particular, start-ups that meet consumer demand for organic and specialty food in the U.S. are drawing seed and venture investments.

Among the digital grocery businesses that attained funding recently are Good Eggs, Relay Foods and Instacart, backed by Collaborative Fund, Battery Ventures and Y Combinator, respectively.

Beyond these, AngelList—a site where accredited investors can learn about, connect with and fund promising start-ups—currently features 74 start-ups seeking funding in the “grocery” category.

Organic and specialty food sellers on that platform, Greenling in Austin and Mouth Foods in New York, already raised some funding, among others. More than 600 accredited investors follow the grocery category.

Do investors have Webvan amnesia? If they do, that’s a good thing, according to entrepreneur and investor Ali Partovi. An early backer of Facebook, Zappos and Dropbox, he recently invested in Farmigo, a Palo Alto, Calif., start-up helping food producers use the Web to sell directly to consumers, including on a subscription (community-supported agriculture, or CSA) basis.

“Amnesia is one of Silicon Valley’s greatest strengths,” Partovi says. “Things change, and an idea that was bad several years ago may be a good one today because of a change in underlying circumstances.”

In food consumption and purchasing in the U.S., key circumstances began to shift in the early 2000s, around the buzzwords “organic and local.”

Focusing on organics and locally made products, the brick-and-mortar grocery Whole Foods Market helped drive the trend. So did films like Super Size Me by Morgan Spurlock in 2004, and books like The Omnivore’s Dilemma by Michael Pollan, in 2006.

According to the U.S. Department of Agriculture, over the past decade consumer demand for organic food and other products has grown by double digits every year.

An angel investor in Mouth Foods (and 24 other start-ups), Jason Calacanis says that “food is the new health care.” Mouth Foods bills itself as “an online store for local, artisanal foods.” Namely, they sell subscriptions and one-time gift bags full of organic and locally made snacks from around New York.

Consumers would rather spend money on a healthier diet than pay “large surgery and drug bills when they get sick from eating poorly,” Calacanis says. Artisan food and co-op markets, including digital ones, provide an “antidote to mainstream food…that is somewhere between low quality, garbage and dangerous.”

Mass consumer buy-in to organic and local food has created some problems in the market, however.

“The food supply chain was caught off guard,” Partovi said. ”It hasn’t grown fast enough for the frenzy of people seeking out organic and local food.”

But supply and distribution problems represent new opportunities for investors and entrepreneurs.

Brian O’Malley, general partner with Battery Ventures, says that the lower cost of starting a tech business and the higher cost of food represent stronger potential margins for companies working to solve food supply and delivery problems today, compared with the early dot-com era of Webvan.

Battery has backed Relay Foods and another undisclosed food business, O’Malley said. Relay Foods, like Capital Factory-funded Greenling in Austin, Texas, operates food pick-up sites around U.S. cities. Shoppers order locally made and organic groceries online through the site, then pick them up later at a designated place.

Many prefer this option to spending time at a crowded store, driving around to different local farm stands, or buying goods from conglomerates like Nestle, PepsiCo, Kraft and Coca-Cola.

According to O’Malley, investors all hope the food sellers they’ve backed will be able to scale. The trick is to do so while providing a great user experience and food to consumers, minimizing overhead costs, and winning the love and loyalty of food producers, market-by-market.

Write to Lora Kolodny at lora. kolodny @dowjones.com. Follow her on Twitter @lorakolodny

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GSV Capital, Placing Bets on Start-Ups, Falters

Posted in Board Of Intellectual Capital, boic, Business models, Distressed IP, Economy, FaceBook, Gerbsman Partners, Intellectual capital, International Finance, internet, Investments, IPO news, Market research, Social Networks, Startups, Strategy, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , on September 2, 2012| Leave a Comment »

Article from NYTimes.

Few investors have ridden the recent Internet boomlet like the GSV Capital Corporation.

After GSV announced in June 2011 that it was buying a stake in the privately held Facebook, the closed-end mutual fund surged 42 percent that day. Capitalizing on the euphoria, GSV sold another $247 million of its shares, using the money to expand its portfolio of hot start-ups like Groupon and Zynga.

Now, GSV is feeling the Facebook blues.

When the public offering of the social network flopped, GSV fell hard, and it still has not recovered. Shares of GSV, which were sold for an average of $15.35, are trading at $8.54.

“We probably benefited from our stake in Facebook more than we deserved on the way up,” said GSV’s chief executive, Michael T. Moe, “and were certainly punished more than we deserved on the way down.”

GSV, short for Global Silicon Valley, is the largest of several closed-end mutual funds that offer ordinary investors a chance to own stakes in privately held companies, at least indirectly. Closed-end funds like GSV typically sell a set number of shares, and their managers invest the proceeds. In essence, such portfolios operate like small venture capital funds, taking stakes in start-ups and betting they will turn a profit if the companies are sold or go public.

“I think GSV was really innovative in creating a kind of publicly traded venture capital fund,” said Jason Jones, founder of HighStep Capital, which also invests in private companies.

But the shares of closed-end funds trade on investor demand – and can go significantly higher or lower than the value of the underlying portfolios. The entire category has been hit by Facebook’s troubles, with GSV trading at a 38 percent discount to its so-called net asset value.

Mr. Moe, 49, has previously experienced the wild ups and downs of popular stocks.

A backup quarterback at the University of Minnesota, he started out as a stockbroker at the Minneapolis-based Dain Bosworth, where he wrote a stock-market newsletter called “Mike Moe’s Market Minutes.” He met the chief executive of Starbucks, Howard Schultz, on a visit to Seattle in 1992, and he began covering the coffee chain after its initial public offering.

“I left believing I had just met the next Ray Kroc,” Mr. Moe wrote in his 2006 book, “Finding the Next Starbucks,” referring to the executive who built the McDonald’s empire.

After stints at two other brokerage firms, Mr. Moe became the director of global growth research in San Francisco at Merrill Lynch in 1998. There he ran a group of a dozen analysts at a time when mere business models “were going public at billion-dollar valuations,” he said.

Shortly after the dot-com bubble burst, he founded a banking boutique now called ThinkEquity. At the time, he expected the I.P.O. market to shrug off the weakness and recover in a couple of years. Instead, it went into a decade-long slump.

“Market timing is not my best skill,” Mr. Moe said. In 2007, he sold ThinkEquity.

The next year, he started a new firm to provide research on private companies, NeXt Up Research. He later expanded into asset management, eventually changing the name to GSV. Within two months of starting his own fund, he bought the shares in Facebook through SecondMarket, a marketplace for private shares.

GSV soon raised additional funds from investors and put the money into start-ups in education, cloud computing, Internet commerce, social media and clean technology. Along with Groupon and Zynga, he bought Twitter, Gilt Groupe and Spotify Technology. The goal is finding “the fastest-growing companies in the world,” he said.

But Mr. Moe has paid a high price, picking up several start-ups at high valuations on the private market. He bought Facebook at $29.92 a share. That stock is now trading at $19.10. He purchased Groupon in August 2011 for $26.61 a share, well above its eventual public offering price of $20. It currently sells at $4.31.

Max Wolff, who tracks pre-I.P.O. stocks at GreenCrest Capital Management, said GSV sometimes bought “popular names to please investors.”

“This is such a sentiment-sensitive space, the stocks don’t trade on fundamentals,” Mr. Wolff said, adding, “If there’s a loss of faith, they fall without a net.”

GSV’s peers have also struggled. Firsthand Technology Value Fund, which owns stakes in Facebook and solar power businesses like SolarCity and Intevac, is off 65 percent from its peak in April. “We paid too much” for Facebook, said Firsthand’s chief executive, Kevin Landis.

Two other funds with similar strategies have sidestepped the bulk of the pain. Harris & Harris Group owns 32 companies in microscale technology. Keating Capital, with $75 million in assets, owns pieces of 20 venture-backed companies. But neither Harris nor Keating owns Facebook, Groupon or Zynga, so shares in those companies have not fallen as steeply.

GSV is now dealing with the fallout.

In a conference call in August, Mr. Moe was confronted by one investor who said, “the recent public positions have been a disaster,” according to a transcript on Seeking Alpha, a stock market news Web site. While Mr. Moe expressed similar disappointment, he emphasized the companies’ fundamentals. Collectively, he said, their revenue was growing by more than 100 percent.

“We have been around this for quite some time, and we are going to be wrong from time to time,” Mr. Moe said in the call. “But we are focused on the batting average.”

In the same call, Mr. Moe remained enthusiastic – if not hyperbolic – about the group’s prospects. Many of GSV’s 40 holdings are in “game-changing companies” with the potential to drive outsize growth, he told the investors.

Twitter, the largest, “continues to just be a rocket ship in terms of growth, and we think value creation,” he said. The data analysis provider Palantir Technologies helps the Central Intelligence Agency “track terrorists and bad guys all over the world.” The flash memory maker Violin Memory “is experiencing hyper-growth,” he wrote in an e-mail.

But Mr. Moe was a bit more muted in recent interviews. While he says he still believes in giving public investors access to private company stocks, he recognizes the cloud over GSV. “We unfortunately have a social media segment that got tainted. I completely get why our stock is where it is. It’s going to be a show-me situation for a while.”

Acknowledging some regrets, Mr. Moe said he was angriest about overpaying for Groupon, saying, “Yeah, I blew Groupon.” He said that he also did not anticipate what he called a deceleration in Facebook’s growth rate, and that it was “kind of infuriating” that some of its early investors were allowed to exit before others. GSV often must hold its shares until six months after a public offering.

But the downturn in pre-I.P.O. shares has a silver lining, Mr. Moe said. Since the Facebook public offering, he has been able to put money to work “at better prices.” He recently bought shares of Spotify at a valuation of about $3 billion, roughly 25 percent below the target in its latest round of financing.

The I.P.O. market is also showing signs of life, he said, with the strong debuts of Palo Alto Networks and Kayak Software. And he still has faith in Facebook.

Whatever its current stock price, at least it is a “real company” with revenue and profit, Mr. Moe said, adding, “It’s not being valued off eyeballs and fairy dust.”

Read more here.

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