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Archive for the ‘Venture Capital’ Category

Khosla’s investment perhaps isn’t so surprising

Posted in Board Of Intellectual Capital, boic, Marketing, Strategy, Venture Capital, tagged , , , , on July 22, 2010| Leave a Comment »

Here is an article from SF Gate.

“Vinod Khosla has been called a “green kingpin,” a fitting honorific given that the Silicon Valley venture capitalist controls $1.3 billion worth of funds targeted at all manner of clean tech enterprises.

Which makes his latest investment seemingly counterintuitive.

Last week, Khosla‘s firm, Khosla Ventures, partnering with Bill Gates, put $23.5 million into a suburban Detroit company looking to manufacture oil-dependent internal combustion engines.

Ah, but not just any oil-driven internal combustion engines. The 2-year-old EcoMotors International says its “opoc” (opposed pistons, opposed cylinders) engines are 50 percent more efficient and emission-reducing than conventional engines, are half their weight and size, with substantially fewer parts, and therefore much cheaper to produce.

Announcing the investment, Khosla called the company’s technology the kind of “game-changing innovation that can provide not only payback in months but also economic and carbon benefits to large segments of the world’s population without the need for subsidies or massive infrastructure investments.”

Gates sees the engine as “an important step in providing affordable, low-emission transportation for the developing world.” One of EcoMotors’ investors is Zhongding Holding (Group) Co. Ltd., a Chinese auto parts company.

“Maintech” solutions: Elaborating in an e-mail he sent me this week, Khosla said he believes EcoMotors’ engines “will prove to be the least expensive way to increase mpg – or decrease grams of carbon/mile driven – at zero cost compared with current engines. Basically, efficiency could be 2x what you get with a hybrid like the Prius.”

The Troy, Mich., company fits with Khosla’s oft-stated preference for “maintech” solutions, like more efficient engines, that don’t require the “massive investments” needed for the current flavor of the month, electric vehicles – which Khosla has said “are probably not material climate change solutions with technology developments that are visible today.”

It should be noted, however, that EcoMotors ( www.ecomotors.com) has also applied for a $200 million U.S. Department of Energy loan, which the company said it would use to build its engines at an old GM plant in nearby Livonia.

Based on testing so far, EcoMotors says its engine, designed by the former head of Volkswagen‘s powertrain division, will certainly exceed the federally mandated 35.5 mpg mandated standard for light vehicles by 2016. By that time – the company is aiming for 2012 – they should be in commercial production. The real goal: A five-passenger car getting 100 mpg, running on gasoline, diesel or ethanol.

Mainstream revolution?: Whether EcoMotors succeeds, Khosla’s investment illustrates a growing interest in what the company’s CEO, former GM senior executive Donald Runkle, has called “a revolution going on right now in propulsion systems.”

“It shows that Silicon Valley’s interest in the auto industry can’t just be married to the electric vehicle,” said Thilo Koslowski, chief auto industry analyst at research and consulting firm Gartner Inc. in San Jose.”

Read more here.

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Google Secretly Invested $100+ Million In Zynga, Preparing To Launch Google Games

Posted in Board Of Intellectual Capital, Economy, FaceBook, google, internet, Investments, Market research, Social Networks, Strategy, Technology, Venture Capital, Web 2.0, tagged , , , , , , , , , , , , , , , , on July 13, 2010| Leave a Comment »

Here is some news from Techcrunch.

“Google has quietly (secretly, one might say) invested somewhere between $100 million and $200 million in social gaming behemoth Zynga, we’ve confirmed from multiple sources. The company has raised somewhere around half a billion dollars in venture capital in the last year alone, including $150 million from Softbank Capital last month and $180 million late last year from Digital Sky Technologies, Tiger Global, Institutional Venture Partners and Andreessen Horowitz. The Softbank announcement was never officially confirmed by the company, however, and the Google investment was likely part of that deal as well.

The investment part of the deal closed a month ago or so. A larger strategic partnership is still in process.

The investment was made by Google itself, not Google Ventures, say our sources, and it’s a highly strategic deal. Zynga will be the cornerstone of a new Google Games to launch later this year, say multiple sources. Not only will Zynga’s games give Google Games a solid base of social games to build on, but it will also give Google the beginning of a true social graph as users log into Google to play the games. And I wouldn’t be surprised to see PayPal being replaced with Google Checkout as the primary payment option. Zynga is supposedly PayPal’s biggest single customer, and Google is always looking for ways to make Google Checkout relevant.

And there’s more. These same sources are saying that Zynga’s revenues for the first half of 2010 will be a stunning $350 million, half of which is operating profit. Zynga is projecting at least $1.0 billion in revenue in 2011, say our sources. This blows previous estimates out of the water.

Zynga continues to work on high level strategic business development deals. The reason these deals are so attractive to companies like Yahoo and now Google is this – Zynga allows them to rebuild the massive social graph, currently controlled by Facebook. For whatever reason people love to play these games and get passionately addicted to them, coming back day after day. That’s helped Facebook become what it is today. Google, Yahoo and others want some of that magic to rub off on them, too.”

Read the full post here.

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Andreessen Horowitz To Win The Foursquare Investor Badge

Posted in Board Of Intellectual Capital, boic, Business models, Economy, FaceBook, google, Investments, Market research, Microsoft, mobile 2.0, Social Networks, Strategy, Technology, Venture Capital, Web 2.0, Wireless 2.0, tagged , , , , , , , , , , , , , , , , on June 27, 2010| Leave a Comment »

Here is a good Techcrunch article about Foursquare.

“A months long fundraising process for Foursquare is in its last stages, we’ve heard from multiple sources, and Andreessen Horowitz looks to be preparing to check-in to Foursquare to take an investor badge.

The company has delayed committing to new venture capital as they considered buyout offers – negotiations went deep with both Yahoo and Facebook, and possibly Microsoft. The Yahoo discussions ended weeks ago, and Facebook passed on an acquisition earlier this week, we’ve heard.

That means the company is raising that big new round of financing. And a slew of venture capitalists, including Accel Partners, Andreessen Horowitz, Khosla Ventures, Redpoint Ventures, Spark Capital and First Round Capital were all rumored to competing heavily for inclusion despite the $80 million or so valuation, say our sources.

Andreessen Horowitz, despite rumors that they were pulling out of discussions with the company weeks ago over concerns that too much information was leaking to the press, is the last venture capitalist standing. The fact that founding partner Marc Andreessen is on the board of directors of Facebook, a key partner or competitor of Foursquare, may be the factor that put them over the top.

Existing investors OATV and Union Square Ventures will also participate heavily in the new round, we’ve heard. In the meantime they’ve likely already loaned additional capital to the company.”

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The New Blueprint for Successful VC Funding

Posted in Board Of Intellectual Capital, Economy, Gerbsman Partners, internet, Investments, Market research, Strategy, Technology, Venture Capital, tagged , , , , , , , , , , , , , , , , on June 11, 2010| Leave a Comment »

Here is a good read from Yahoo.

“Jeffrey Bussgang likes crazy entrepreneurs. Twitter’s Jack Dorsey, LinkedIn’s Reid Hoffman and Sitrris Pharmaceuticals’ Dr. Christoph Westphal all share what Bussgang, a partner with Boston-based Flybridge Capital Partners, calls paranoid optimism. He defines it as an almost-arrogant belief in a world-changing idea mixed with a healthy fear of competitors. “You rarely see those two words together, which is why I like them,” Bussgang says. “They really distill the essence of the great entrepreneurs.”

He should know. Before he was a venture capitalist, Bussgang co-founded Upromise, now part of Sallie Mae and the nation’s largest private source of college funding contributions. In his new book, Mastering the VC Game, Bussgang offers a blueprint for entrepreneurs hoping to get funded: Be a paranoid optimist.

But even that may not be enough, given the state of today’s venture capital market. Total VC dollars invested fell 39 percent between the first quarter of 2008, before the recession began, and the first three months of 2010, according to data supplied by PricewaterhouseCoopers and the National Venture Capital Association.

VC firms have gone tight-fisted, and limited partners–the investors who supply capital to private equity funds–are skittish, afraid of being burned again after suffering a decade of negative returns. Mix in a contentious debate over the taxability of profits derived from successful venture capital investments, otherwise known as carried interest, and entrepreneurs are being forced to clear hurdles not seen since the 1980s, says Roger Novak, a partner with Novak Biddle Venture Partners in Bethesda, Md. “I think we’re going back to the old days, and better companies are going to be born.”

In other words, venture capitalists are being more discerning about where and with whom they invest. Here are three ways to make sure your business passes the sniff test.

  1. Create the Market
    Much of that time was spent planning and talking with prospects; the founders didn’t want to build a solution before defining the problem, which they believed was big. Advertising affiliate networks were losing revenue each time a customer clicked on a digital ad but completed the transaction by phone. RingRevenue would fill the gap with technology, but only if affiliates could agree on the concept they had in mind.

    “Before we were going to commit all of our time, career, dollars and resources to it, it was important to [know] enough about the customers and their needs that we could feel good that we were getting it right the first time,” Spievak says.

    Each meeting brought changes to the design. But by asking prospective customers for feedback and then building to spec, RingRevenue created its own market. “We wanted to make sure that we understood the formula for growth, that we had satisfied customers and a scalable model,” Spievak says. Investors were impressed. RingRevenue closed a $3.5 million initial round of venture capital funding in June of 2009.

  2. Get a Big Idea
    If there’s a model for the sort of crazy entrepreneurs Bussgang admires, it might be the team at PhoneHalo. The company’s wireless technology plugs into a smartphone, making it a hub for preventing computers, iPads and other networked equipment from getting lost or left behind. But the vision for what it could be is much bigger.

    “Imagine that everything that’s valuable to you in your life is always connected to the network. And imagine down the road if every item in your refrigerator was somehow talking to the network so when you were low on milk, if it goes through PhoneHalo’s infrastructure, it can update a to-do list right as you’re in the grocery store, all on the fly,” says CEO Jacques Habra. Crazy? Sure, but according to Bussgang, the ability to press forth in the face of naysayers is what makes a great entrepreneur.

    PhoneHalo was still shopping for venture capital funding as of this writing. And yet Habra and co-founders Christian Smith and Chris Herbert are confident they’ll eventually find the right VC partner.

    “Since this is our baby, it’s easy to feel rejected and bruised by a no,” Habra says. “In reality, that time with an investor is hugely valuable: If you ask the right questions and apply the feedback to your business unemotionally, you make the company that much more investable and likely to succeed.”

  3. Work Your Network
    Finally, the venture capitalist who doesn’t know you isn’t likely to partner with you. “They see so many referred-in deals that it just doesn’t make sense for them to spend much time on the ones that come in over the transom,” says Spievak.

    He and his team were approached by potential venture capital investors in late 2008, during the height of a global financial meltdown, in part because backers of his earlier venture, publicly traded CallWave, earned back 30 times their investment following a 2004 public offering.”

Read more here.

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Date Certain M&A of Teranode Corporation – its Assets and Intellectual Property

Posted in Board Of Intellectual Capital, Distressed Intellectual Property, Distressed IP, Gerbsman Partners, Investments, Technology, Venture Capital, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , on June 1, 2010| Leave a Comment »

Sale of Teranode Corporation

Gerbsman Partners has been retained by Teranode Corporation to solicit interest for the acquisition of all, or substantially all, of Teranode’s assets, including its Intellectual Property (“IP”), in whole or in part (collectively, the “Teranode Assets”).

The sale is being conducted with cooperation of Teranode. Teranode and its employees will be available to assist the purchasers with due diligence and assist with a prompt and efficient transition.

IMPORTANT LEGAL NOTICE

The information in this memorandum does not constitute the whole or any part of an offer or a contract.

The information contained in this memorandum relating to Teranode’s Assets has been supplied by Teranode Corporation. It has not been independently investigated or verified by Gerbsman Partners or their respective agents.

Potential purchasers should not rely on any information contained in this memorandum or provided by Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of Teranode Corporation’s or Gerbsman Partners’ negligence or otherwise.

Any sale of the Teranode Corporation’s Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on or behalf of Teranode Corporation and Gerbsman Partners. Without limiting the generality of the foregoing, Teranode Corporation and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the Teranode Corporation Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

This memorandum contains confidential information and is not to be supplied to any person without Gerbsman Partners’ prior consent. This memorandum and the information contained herein are subject to the non disclosure agreement attached hereto as Exhibit A.

Background

Teranode Corporation (“Teranode” or the “Company”) is an innovative provider of business intelligence and lab automation solutions for the Life Science markets. Founded in 2002, the Company evolved from a team of scientists and professors from the University of Washington. Teranode has produced two award winning software platforms, Fuel and XDA. The Teranode proprietary technology can also be applied to any R&D business intelligence market, including agribusiness, healthcare research, legal research, market research, etc.

Teranode is a privately held, venture capital backed company. Over $12 million has been invested to date from Ignition Partners, Trident Capital, Black-River Asset Management and WRF Capital.

Teranode presently employs 10 full-time employees and its product development is based in Seattle, WA with field consultants in the Boston, MA area.

Teranode’s Fuel platform supports next-generation, distributed business intelligence optimized for life sciences R&D pipeline management.

Teranode’s XDA platform has automated chemistry and biology labs at some of the world’s largest research companies and institutes.

Teranode Corporation’s assets are attractive for a number of reasons:

• Teranode has over $12M invested in product and business development, from major venture investors Ignition Partners, Trident Capital, Black-River Asset Management, and WRF Capital.

• Teranode revenue

Year Revenue
2007 $1.7M
2008 $1.8M
2009 $1.9M
2010 (est) $2.3M

• 20-year, transferrable technology copyright agreement with University of Washington, from 2003-2023

• US patent 7,010,760 awarded in 2006: Batch-based method and tool for graphical manipulation of workflows; Trademarks for XDA, Fuel, Teranode.

• Teranode XDA includes a blue-chip customer base of leading pharmaceutical, biotechnology, research, and academic organizations, including Pfizer, GSK, AstraZeneca, MIT, St. Jude, Fred Hutchinson CRC, Calibrant, Tethys, Nastech, Novartis, CSBI

• Teranode’s new Fuel platform has a growing customer base as opportunities are mined within the pharmaceutical and biotechnology industry in partnership with Oracle, Spotfire and Microsoft, along with a pipeline of additional opportunities :

Business Area Engagement
Target Validation – Monsanto, Genstruct
Biologics Development – Boehringer Ingelhiem, Biogen-Idec
Small Molecule Development – Boehringer Ingelhiem, Novartis
Pipeline Decision Support – Monsanto, Pfizer
Clinical Trials Management – BMS
Adverse Event Reporting & Surveillance- Pfizer

• Together Fuel and XDA provide a complete R&D automation and business intelligence platform, optimized for easy customer installation onsite, or hosted as a SaaS offering by a major vendor seeking to expand and accelerate its solutions and solutions-building capabilities in the life sciences and related R&D markets

• The Company is a leading innovator in the emerging semantic technology field: – “Teranode is at the forefront of bringing semantics-based business intelligence solutions to R&D organizations.” – VP, Biotherapeutics Division, Large Multinational Pharmaceutical

Teranode Software and Intellectual Property Assets

Teranode has developed a portfolio of assets critical to Product and Process Development, including:

· Patents
· Platform and Application Software Products
· Product and solution designs and prototypes
· Software and control algorithms
· Automated software configuration & testing process & framework
· A closed loop development, documentation, QA process management system for global software development
· Intellectual capital and expertise
· Trademarks
· Domain names

A summary of the Fuel and XDA product technology development to date is as follows

· >1500 business requirements and automated test cases
· >1 Million lines of Java, C#, Javascript, and PL/SQL code, SOA Architecture
· >75 person-years of development (currently 5 person team)
· 3 full releases of XDA, 3 full releases of Fuel Platform and Applications Modules
· 5 Complete XDA Application Modules (XDA Protocol Modeler, Protocol Player, Biological Modeler, TMS Server, SDK)
· 7 Complete Fuel Application Modules (Ontology Browser, Document Autotagger, Dataset Definition tool, View Definition tool, Fuel Application Server, Fuel Sharepoint Template Library, Fuel SDK)
· 4 XDA and 2 Fuel Application Suites Configured – XDA Chemistry Synthesis, Chemistry Purification, High-Content Screening, RNAi Automation; Fuel Antibody Biologics Research, Genetics Trait Analysis
· > 50 Integrations (including MS Sharepoint, Oracle 10 and 11G, MS SQLServer, Spotfire tools and analytic wofklow server, various laboratory instrument and robotic platforms, chemistry structure visualization, chemistry and biologics registries, ontologies including NCI, GO, MeSH, SNOMED; pathway model formats including SBML, KEGG, MATLAB; etc.)
· Thousands of tasks completed in the development project plans
· Completely traceable documented development methodology

Patent

• United States Patent 7,010,760 – Arnstein , et al. March 7, 2006
Batch-based method and tool for graphical manipulation of workflows: An autofill algorithm provides tools for defining and automatically executing batch based procedures in an adaptive hierarchical workflow environment, and may be suitable for a large variety of applications including laboratory procedure planning, execution, documentation, as wells ad driving robotic apparatus.

Key Personnel

Joseph Duncan, Chairman and CEO
Mr. Duncan is a co-founder of Teranode. Prior to Teranode, he was CIO and VP Technology at Critical Path, a SaaS email provider to corporations and internet services companies. In 1999, Critical Path was voted the fastest growing, best managed technology company in the world by Forbes.com, a year in which Critical Path grew from 700,000 to over 33,000,000 active hosted email accounts. From 1993-1997, Joseph Duncan was Sr. Vice President at Oracle Corporation, where he was instrumental in engineering a turnaround of Oracle’s enterprise developer tools, and introduced the JDeveloper Suite to Oracle, which has become its primary database tools offering. Before Oracle, he ran the Paradox product development organization at Borland International. In 1993, Paradox for Windows achieved 40% share of the global PC database market, and won 20 product-of-the-year awards from industry publications. Prior to that, Mr. Duncan was a Director in the Advanced Products Division of Lotus Corporation, when Lotus was the world’s largest software company.

Neil Fanger, Ph.D., Chief Business Officer
As a Teranode co-founder, Dr. Fanger brings valuable leadership, management and partnering experience. Dr. Fanger has over 15 years experience in the life science industry, both in R&D and business development. He was most recently Professional Staff at the University of Washington, where he bridged biological research with computer science and mathematics. His previous industry experience includes developing new technologies, identifying drug targets, and designing therapeutics for clinical trial evaluation at Corixa and Immunex.

Chris McClure, Vice President – Professional Services
Mr. McClure works directly with customers to ensure Teranode products are aligned with the needs of the life sciences industry. He is responsible for managing a team of engineers and project managers to expand business and drive successful projects to completion. His previous experience includes Consulting Services Manager for IDBS leading the New England Region, and Drug Discovery as a Biochemist at AstraZeneca, Enanta and Mitotix. Mr. McClure has been a member of the Teranode team for more than 5 years.
Michael Kellen, Ph.D., Director of Product Development
Mr. Kellen is responsible for directing Teranode’s enterprise software development team. He has over 10 years experience developing software for both corporate and academic organizations in the life sciences. Mr. Kellen has been with Teranode since its inception in 2002 and played a vital role in building Teranode’s award winning Protocol and Biological Modeler applications. He holds a doctorate in computational biology from the University of Washington.

The Bidding Process for Interested Buyers

The Bidding Process for interested buyers 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 Teranode Corporation’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 Teranode Corporation’s Assets. A sealed bid must be submitted so that it is actually received by Gerbsman Partners no later than Wednesday June 23, 2010 at 3 p.m. Pacific Daylight Time (the “Bid Deadline”) at Teranode Corporation’s office, located at 411 First Avenue S, Suite 700, Seattle WA 98104 . Please also send an email to steve@gerbsmanpartner.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 Teranode Corporation.

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 Teranode Corporation). The deposit should be wired to Teranode’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 . Teranode Corporation 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.

Teranode Corporation will require the successful bidder to close within a 7 day period. Any or all of the assets of Teranode Corporation 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 Teranode Corporation’s Assets shall be the sole responsibility of the successful bidder and shall be paid to Teranode Corporation at the closing of each transaction.

For additional information, please do not contact the company directly, please contact:

Steven R. Gerbsman
415 456-0628
steve@gerbsmanpartners.com

Kenneth Hardesty
408 591-7528
ken@gerbsmanpartners.com

Merle McCreery
303 929-7628
mmgolf100@msn.com

Dennis Sholl
415 457-9596
dennis@gerbsmanpartners.com

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