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Archive for May, 2018

The Funded: 5 Bay Area startups raise over $100M, Google buys one from Santa Clara

By  – TechFlash Editor, Silicon Valley Business Journal

Five Bay Area startups disclosed more than $100 million in funding at week’s end and Google bought another one.

Here are the details.

Parsable Inc., San Francisco, $40 million: Future Fund led the Series C round for this provider of a digital workflow platform for deskless industrial workers. It was joined by B37 and return backers Lightspeed Venture Partners, Airbus Ventures and Aramco Ventures.

DigiLens Inc., Sunnyvale, $25 million: Continental AG invested in the Series C round of this augmented reality display maker for autos, planes and other devices. Read more here.

Mynd Property Management, Oakland, $20 million: Lightspeed Venture Partners led the Series B round for this property management tech startup. It was joined by return backers Canaan Partners and Jackson Square Ventures.

Arevo, Santa Clara, $12.5 million: Asahi Glass led the Series B round for this creator of a 3D printed carbon bike. It was joined by Sumitomo, Leslie Ventures and Khosla Ventures.

BlueCart Inc., Mountain View, $5 million: Greycroft led the Series B1 investment in this hospitality industry marketplace and sales enablement platform provider.

M&A

Cask Data Inc., Palo Alto, undisclosed amount: Google acquired this Big Data analytics startup that had raised around $40 million from firms that included Insight Venture Partners, Ericsson Ventures, Battery Ventures, AME Cloud Ventures and Ignition Partners.

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IBM To Use Stellar For Its First Crypto-Token On A Public Blockchain

, I cover enterprise adoption of blockchain and cryptocurrency.

(Photo by Joan Cros Garcia/Corbis via Getty Images)

The International Business Machines Corporation is issuing its first token using a public blockchain

Developed in partnership with carbon credits startup Veridium Labs Ltd., the “verde” tokens will be issued on the Stellar blockchain, and are designed to give enterprises that pollute the environment a way to offset that damage by supporting a patch of Indonesian rainforest.

While carbon credits in their own right are not new, the process of tracking the full extent of one’s pollution, then providing assurance that the money was actually used to replenish the environment is both time-consuming and opaque.

By moving this process to an easily auditable blockchain, and tokenizing the credits in a similar way that a bitcoin tokenizes monetary value, IBM’s newly appointed blockchain offering manager, Jared Klee, believes a vibrant market could eventually be opened up to a much larger audience.

“We’re creating a fungible digital asset, a token which part of the goal is to create a market where people can buy, sell, trade and then redeem it for the underlying credits,” said Klee, who was put in charge of IBM’s token initiatives earlier this year. “By having a liquid market you open up a world of possibilities.”

The verde carbon credit tokens, are built on top of the public Stellar blockchain and via a series of smart contracts follow the entire process of accounting for a company’s carbon emission and offsetting that pollution.

“Our engagement with Veridium will mark the first public IBM involvement in a token issuance on a public network,” said Klee. But in a twist that is finding increasing favor among blockchain developers, there is also a permissioned component via IBM’s own blockchain technology.

Klee says this “public, permissoined” model is what allows IBM and Veridium to create a market for the buying and selling of the tokenized carbon credits that will also be restricted to participants in accordance with regulatory requirements. To facilitate that permissioning while still capitalizing on Stellar’s public blockchain, IBM manages nine nodes on the Stellar blockchain.

“Not only does that help create stability for the Stellar network,” said Klee. “But that allows us to work with Veridium as the issuer and create a point of review in the transaction flow before it gets committed to the ledger.” But going forward that could be further opened up, with Klee adding that he too would like to someday be able to personally offset his own carbon footprint using the exchange.

More than just a proof-of-concept, the Veridium tokens will be backed by Triple Gold REDD+ credits from Veridium’s sister company InfiniteEarth,  founded in 2008 to help companies offset their environmental impact in a number of ways. While Veridium hasn’t revealed the names of its own potential customers, InfiniteEarth counts Big Four accounting firm PwC, and software giants, SAP and Microsoft among its customers, all of which has their own ongoing blockchain projects, making them possibly suitable adopters.

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As Graduation approaches for High School, College and Graduate School, I have been sharing the “Words of Wisdom from my Grandma Sarah” that she gave me upon my graduation and the same words I passed along to my son and relatives.
It is an interesting time of life as many family relatives and friends have children graduating this June.
Grandma Sarah was a wise woman.  She was born in Greece, grew up in Turkey and emigrated to the US in early 1900’s.  She raised 4 children as a single mother and was an “entrepreneur”, owning four retail flower stores in and around New York City.  Her words and guidance had an effect on all who knew her.
Words of Wisdom from Grandma Sarah for Graduates
1.  Go forth into the world with “Bravery”
2.  Fear NO ONE
3.  Always do the “Best you Can”
4.  Have “Ethics and Integrity”
5.  Ask for “Help” in school, in business and in life if you need it
6.  Live Life – “For the Integrity of your Name”
7.  Always “Support and Love of your Family”
8.  “Have HOPE for the Future
 
9.  Always remember – “Your Name is your Bond” and “Your Bond is your Name
With loving memory, honor and respect for Grandma Sarah

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Now is the worst time to buy any MacBook laptop from Apple

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macbook pro 2017 Apple

It is currently the worst time to buy a new MacBook laptop directly from Apple.

By MacBook laptop, I’m not just talking about the lightweight and portable MacBook. I’m referring to any model that Apple currently offers on its main website. That includes the early 2015 MacBook, the early 2015 MacBook Pro, the mid-2107 MacBook Pro, and the 2015/2017 MacBook Air.

It’s not just a question of age, even though age is a major reason why it’s not a good idea to buy some of these laptops. Some of Apple’s latest models also have unreliable keyboards, and it’s not an easy or cheap fix to get it repaired once the warranty runs out.

Check out why it’s not a good idea to buy any of the laptops you can buy directly from Apple right now:

View As: One Page Slides

The current MacBook Pro models have unreliable keyboards that could cost you a lot of money to repair.

The current MacBook Pro models have unreliable keyboards that could cost you a lot of money to repair. Hollis Johnson/Business Insider

Just about everything about Apple’s recent crop of 2016 and 2017 MacBook Pros is great. The Touch Bar might be a little divisive, but you can buy models without the Touch Bar, or ignore it altogether. And the fact these models only come with USB-C ports is also a little divisive, but Apple isn’t likely to add all the ports from older models back onto its upcoming laptops.

The major thing that’s getting a lot of negative attention is Apple’s new “butterfly”- style keyboard on the newer 2016 and 2017 models. It’s a new design that lets Apple make thinner laptops, and it supposedly offers a better typing experience.

But some users – myself included – have reported that certain keys stop becoming responsive. AppleInsider also reported that the 2016 MacBook Pro keyboards with the butterfly-style keyboards were failing twice as often as older models.

In my 2016 MacBook pro, the “G” key became unreliable and would often skip when I pressed it. I brought it to the Apple store to get repaired, and thankfully it was still under warranty. Apple couldn’t simply replace the “G” key. It had to replace the entire top portion of my MacBook Pro, including the battery. An out-of-warranty repair can cost upwards of $700, according to AppleInsider.

Hopefully Apple fixes the keyboard issues in its next MacBook Pros. There’s no way of telling if they are, but if you’re looking for a new MacBook Pro now, it’s worth waiting until Apple comes out with new models to see if Apple resolves the keyboard issues.

The older MacBook Pro model you can buy, which has a better keyboard, is too old to justify its $2,000 price tag.

The older MacBook Pro model you can buy, which has a better keyboard, is too old to justify its $2,000 price tag. Apple

You can buy an older 2015 15-inch MacBook Pro from Apple for $2,000, which still has an older-but-reliable keyboard.

The problem with the 2015 model is that it’s from 2015. That means it’s running on parts that are almost three years old.

Now, that said, the three-year-old components in the 2015 MacBook Pro will work just fine, even in 2018. It won’t be as fast or future-proof as the recent models, but it’ll handle basic tasks well. But the other problem linked to the older parts is that the 2015 model still costs a whopping $2,000, which is a poor deal for an older computer, especially if you just want to run basic apps like a web browser, or if you plan on using the laptop for several years.

The MacBook Air is also too old, and there are rumors that Apple will soon announce an updated model.

The MacBook Air is Apple’s cheapest MacBook laptop at $1,000, but it’s an old and tired laptop in 2018.

The latest model that was refreshed in 2017 doesn’t actually have 2017 parts. It’s running on a 5th-generation Intel processor from 2014. To give you an idea, Intel is currently on its eighth generation of processors in 2018.

Even for $1,000 – Apple’s cheapest MacBook computer – the MacBook Air is bad value. It has a lower resolution display that basically looks fuzzy compared to Apple’s recent laptops with the company’s “Retina” display. The MacBook Air display also has comparatively poor color and contrast compared to the Retina displays on more recent MacBook laptops.

Plus, it’s rumored that Apple will soon release a new MacBook Air sometime in 2018. So, if you’re looking for a portable and capable machine like the MacBook Air, it’s worth waiting to see if Apple comes out with a newer model with better specs.

MacBooks are extremely light and portable, but they have the unreliable keyboard, and they’re expensive for their performance.

MacBooks are extremely light and portable, but they have the unreliable keyboard, and they're expensive for their performance. Apple

Apple’s MacBooks are incredibly light and portable, even more so than the MacBook Air. And that extra portability is reflected in its relatively high price tag.

But MacBooks also come with Apple’s butterfly-design keyboards and could potentially face the same issues as the butterfly-design keyboards on the recent MacBook Pros. Hopefully, Apple will redesign the butterfly-style keyboard to be more reliable.

For the price and despite their portability, MacBooks are also relatively underpowered and are only suited for basic productivity. They should only really be an option if you highly value their ultimate light weight and portability.

So what do you do if you need a new MacBook laptop right now?

So what do you do if you need a new MacBook laptop right now?
My refurbished 2016 15-inch MacBook Pro.
Antonio Villas-Boas/Business Insider

You can still buy Apple’s latest MacBook Pros, but you should go into the purchase knowing that several users have reported problems with the new butterfly-style keyboard. You may find that you’re one of the lucky ones that don’t encounter a problem.

Either way, I’d suggest you look at Apple’s refurbished laptops. They come in pristine condition and you can get a few hundred dollars knocked off the price of a new laptop.

As for the older 2015 15-inch models, I’d only recommend buying them from Apple’s refurbished Mac store, as you can get them at a better price that reflects their older innards than buying them new.

Same thing goes for the MacBook Air: Check out the refurbished Mac store. Better yet, wait until Apple releases a new model.

MacBooks? As I mentioned earlier, you could face similar issues that others faced with Apple’s butterfly-style keyboard. MacBooks are also expensive relative to their performance. But if you prize portability over everything else, MacBooks are the Apple laptops of choice. Again, I’d check out the refurbished Mac store to get a little discount.

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IMG
Silicon Valley Venture Capital Survey – First Quarter 2018
First Look
By Cynthia Clarfield Hess, Mark A. Leahy and Khang Tran

View the “First Look” report.

Background
This report analyzes the terms of 200 venture financings closed in the first quarter of 2018 by companies headquartered in Silicon Valley.

Overview of Results
Valuation Results Remain Strong But Have Flattened
Valuation results were generally flat in Q1 2018 compared to the prior quarter. Overall, valuation metrics are well above historical averages, but have plateaued since Q3 2017.

Up rounds exceeded down rounds 75% to 15%, with 10% flat in Q1 2018, an increase from Q4 2017 when up rounds exceeded down rounds 70% to 19%, with 11% flat.

Internet/Digital Media Continues to Score Highest Valuation Results
Similar to the prior quarter, the internet/digital media industry recorded the strongest valuation results in Q1 2018 compared to the other industries, with an average price increase of 101% and a median price increase of 59%.

However, the valuation results for the internet/digital media industry were moderately weaker compared to the prior quarter. In contrast, the software, hardware and life sciences industries all recorded stronger valuation results in Q1 compared to the prior quarter.

This quarter we are giving you, our readers, a “First Look” report that allows us to provide you the top-line trends for venture capital financings of Silicon Valley companies in Q1 more quickly. This “First Look” will be followed in several weeks with a more in-depth “Full Analysis” that will provide a broader perspective and include coverage of venture capital financings in other geographies drawing on data from a variety of industry reports.

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Advantages of ‘Date-Certain M&A Process over Standard M&A’

Every venture capital investor hopes that all his investment will succeed. The reality is, however, that a large percentage of venture investments eventually are shut down.

In the extreme they end in bankruptcy or assignment to creditors. The majority falls into the category of the “living dead.” Such companies are not complete failures, but their prospects do not justify continued investment, yet they are rarely shut down quickly.

Once reality has been recognized, most investors engage investment bankers to sell their investment off through prevailing M&A processes. Unfortunately, seldom with good results.

REASON #1

The main reason for that sad result is a fundamental misunderstanding of buyer psychology. In general, buyers act quickly and pay the highest price only by force of competitive pressure.

Potential buyers of the highest probability are those already familiar with the company for sale, such as competitors, existing investors customers and vendors. Once a sales process starts the seller is very much a diminishing asset. Both financially and organizationally.  Unless compelled to act, potential buyers simply start to draw out the process, submit a low-ball offer when the seller runs out of cash, or try to pick up key employees and customers at no cost.

REASON #2

The second reason is usually a misunderstanding of the psychology and methods of investment bankers.

Most investment bankers do best at selling “hot” companies. Companies whose value is perceived by buyers to be increasing quickly over time, and where there are multiple bidders.

They tend to be more motivated and work harder on such cases because transaction sizes –and resulting commissions– are larger and surrounding publicity can bring in new assignments, among others. They also tend to be more effective in maximizing value in such situations by using time to their advantage, pitting buyers against each other and setting very high expectations.

In a situation where time is not your friend, the actions of standard investment banking practices often make a bad situation much worse. Such actions include assigning less experience B-Teams to smaller transaction size cases, “playing out the process” which works against the seller, and pitting multiple players against each other which can drive away potential buyers who often know far more about the seller than does the banker.

 

THE GERBSMAN PARTNERS ‘DATE-CERTAIN’ M&A PROCESS

The most effective solution in situations where time is not on your side is a Date-Certain Merger and Acquisition Process.

Under this proprietary process, the company’s board of directors hires a crisis management/private investment banking firm (‘advisor’) to wind down business operations in an orderly fashion and to maximize the value of their intellectual properties and tangible assets. The Advisor works closely with board and corporate management to:

  • Focus on Control, Preservation and Forecasting of CASH
  • Develop a Strategy/Action Plan and Presentation to Maximize Value of Assets.
  • Plans to include Sales Materials, Due Diligence access. a list of all possible Interested Buyers for Intellectual Properties and Assets and Identify and Retain Key Employees on a go-forward basis.
  • Stabilize and provide Leadership, Motivation and Moral to all Employees.
  • Communicate with the Board of Directors, Senior Management, Senior Lender, Creditors, Vendors and all other Stakeholders in Interest.

THE PROCESS:

The company attorney prepares a simple “As-Is/Where –Is” asset sale documents. This document is very important and includes a “No-Reps or Warrantee” Agreement, as the board, officers and invertors typically do not want any additional exposure on a deal.

The advisor then follows up systematically with ALL potentially interested parties and coordinates their interactions with company personnel, including on-site visits.

Typical terms for a Date-Certain M&A asset sale exclude representations and warranties and include a sales date –typically four to six weeks – from the point of readying sales materials for distribution, a refundable CASH deposit in the range of $200,000, a strong preference for cash consideration and with the ability to close a deal in seven business days.

Date-Certain M&A terms can be varied to suit needs unique to given situations. For instance, the board may choose not to accept any bids, or to allow re-bids if there are multiple competitive bids, and/or allow early bids.

The typical workflow timeline from advisor hiring to transaction close and receipt of consideration is four to six weeks. Such timelines may be extended as circumstances warrant. Upon receipt of considerations, the restructuring/insolvency attorney then distributes funds to creditors and shareholders (if there is sufficient consideration to satisfy creditors), and takes all needed steps to wind down the remaining corporate shell. Typically in coordination with the CFO.

PROCESS ADVANTAGES:

Speed:   – The entire Date-Certain M&A Process can typically be concluded in 4 to 6 Weeks. Creditors and investors receive their money quickly. A negative PR impact on investors and board members related to a drawn out process is eliminated. Where required, such timelines can be reduced to as little as two to three weeks, however severely compressing the process often impacts the final value received during asset auction.

Reduced Cash Requirements:  – Owing to the Date-Certain M&A process’ compressed turn-around time, there is a significantly reduced need for any additional investor cash to support the company during the process.

Maximized Value:  – A quick and effective process during wind-down mode minimizes strain and rapid asset depreciation and thereby preserves enterprise value. The fact that an auction will occur on a certain date typically brings truly interested and qualified parties to the table. In our considerable experience, this process strongly aids in maximizing the final value received.

Cost:  – Advisory fees consist of a retainer and a performance fee, which is a percentage of the sales proceeds.

Control:  – At all time during the process, the board of directors retains complete control. For instance, it can modify the auction terms, or discontinue the auction at any point, thereby preserving all options for as long as possible.

Public Relations:  – As the entire sales process is private, there is no public disclosure. Once closed, the transaction can be portrayed as a sale of the company with all terms kept confidential. Accordingly investors can list the company in their portfolios as sold vs. having gone out of business.

A Clean Exit:  – Upon closing of the auction, considerations received are distributed and the advisor, under the leadership of the insolvency counsel, then takes all remaining steps to effect an orderly shut-down of the remaining corporate entity.

 

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in underperforming, undercapitalized and undervalued companies and their intellectual properties. Since 2001, Gerbsman Partners has successfully maximized the values of 103 companies in a wide and diverse spectrum of industries, ranging from technology, life science, medical device, digital marketing, consumer to cyber security, to name only a few.

Since inception in 1980, Gerbsman Partners has successfully restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations, and has been involved in over $2.3 billion of financings, restructuring and M&A transactions.

 

Gerbsman Partners has offices and strategic alliances  in San Francisco, Orange County CA, Boston, New York, Washington  DC, Mc Lean VA,  Europe and Israel.

 

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