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Archive for the ‘Venture Capital’ Category

Successful termination and restructuring of “Prohibitive Executory Real Estate Contract”

Posted in Board Of Intellectual Capital, Distressed Intellectual Property, Economy, Gerbsman Partners, Intellectual capital, Investments, Marketing, Startups, Strategy, Venture Capital, tagged , , , , , , , , , , on April 10, 2012| Leave a Comment »

Steven R. Gerbsman, Principal of Gerbsman Partners, announced today that Gerbsman Partners successfully terminated and restructured the executory real estate contracts for a technology based company. The venture capital backed company, executed leases for space in New York City.

Due to market conditions, the company made a strategic decision to terminate its real estate lease obligation and restructure its existing corporate space allocation. Faced with potential contingent liabilities in excess of $ 12.0 million, the company retained Gerbsman Partners to assist them in the termination and restructuring of their prohibitive executory real estate contract.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 70 Technology, Life Science and Medical Device companies and their Intellectual Property and has restructured/terminated over $805 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Orange County, Europe and Israel. For additional information please visit www.gerbsmanpartners.com

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Reclaiming Your Online Privacy Posted – try Spotflux

Posted in Board Of Intellectual Capital, boic, Gerbsman Partners, Inetellectual Property, Investments, Market research, New Atlantic Ventures, SpotFlux, Strategy, Technology, Venture Capital, tagged , , , , , , , , , , , , , , , , on March 23, 2012| Leave a Comment »

HuffPost Social Reading  by John Backus Managing Partner, New Atlantic Ventures 

Reclaiming Your Online Privacy Posted

Face it. Everything you do online is visible to someone and can be used without your approval or agreement. You leave details of your online activity in your browser, on your desktop, in your smartphone. All the while, companies, your employer, advertisers and the government are picking up those traces, and piecing them together to make a more perfect profile of – you!

If you aren’t scared now about what organizations know about you, you should be.

Companies have a voracious appetite for your information. The more they know about you, the more they can charge advertisers to micro-target you. The most recent and worrisome real world example is happening as you read this — Google! They just changed their privacy policy, under the faux auspices of “simplicity across sites” to be able to track the content of the emails you write and receive in Gmail, what you search for on Google, what you watch on YouTube, and where you are looking to go on Google Maps. And that goldmine of data wasn’t enough for them. In addition, they specifically and intentionally bypassed Safari’s private browsing mode on your iPhone and iPad to learn more about you.

And, Apple let application developers exploit a flaw in iOS to see all of the contacts in your address book.

Facebook settled with the FTC last fall over its own questionable privacy policies and is now rumored (though they deny it) to be tracking the contents of your text messages from their smart phone app. “Like” something on a website? Facebook knows exactly what you were looking at. Think of every “Like” button on a web page as a Facebook cookie. And remind your friends that “Like” is simply a sneaky way for you to give more personal, valuable information to Facebook.

Your employer knows everything you do at work. They archive your emails – and the court has ruled that company emails are company property — not personal property — and that employees should not have an expectation of privacy when using company resources. Employers also know every website you visit, what pages you see, and how long you spend on each site. You have no privacy when you are working in the office, out of the office but online on your company’s VPN, or doing anything on your company-provided smartphone, tablet or laptop. What you say and where you go belongs to your employer.

Advertisers have an insatiable appetite for user-specific information. Let me share my personal story (and you can try this yourself) Using Firefox, I went to preferences, privacy, and clicked on the underlined text that says “remove individual cookies.” I was taken to a box that showed all of the cookies on my machine. I had over 1000 cookies, most advertiser-related. AND, I use Adblockplus, Betterprivacy, and had checked the privacy box titled “Tell websites I do not want to be tracked.” The same thing happens with Internet Explorer, Chrome, and Safari. Scary. With much fanfare last month, the Government announced the “Do Not Track” browser button, which 400 companies have agreed to honor. Don’t be fooled. This provides limited privacy at best — and only from specific types of advertising, and only certain advertisers have agreed to use it.

Governments want to know more about you as well. The Electronic Frontier Foundation released a report entitled Patterns of Misconduct, which outlined the FBI’s ongoing violation of our Fourth Amendment rights. If not for an aggressive, last-minute online campaign by an unofficial coalition of Internet freedom fighters, Congress was about to pass the SOPA legislation (Stop Online Privacy Act), which would have allowed (and perhaps in some cases required) the government and ISPs to inspect the contents of every packet of information sent across their networks. And Europe isn’t far behind with SOPA’s ugly cousin, ACTA, (Anti-Counterfeiting Trade Agreement) which entrepreneurs in the EU have just started fighting against.

What can you do to reclaim your privacy? There is only one thing to do:

Go invisible. That’s why our venture firm invested in Spotflux. Started by two Internet freedom fighters that have more than a decade of experience solving large-scale security challenges, Spotflux is a free privacy application for consumers, which works by encrypting your Web connection. It downloads in less than a minute on any Windows or Mac computer, anywhere in the world. Spotflux ran a beta test and in less than a year, attracted 100,000 users in 121 countries. It launches globally today.

Spotflux encrypts everything that leaves your desktop, pushes the data through their privacy-scrubbing service, and sends it along. To a website, you are not you — you are Spotflux. And you are invisible unless you choose to login to a website, like your bank, Google, Twitter or Facebook. Even then, companies only know what you do on their site. When you log out, they don’t see where you are on other sites. Better yet, Spotflux’s HTTPS security means no one can eavesdrop on your conversation over a public Wi-Fi connection. And you can surf just as freely overseas as you do in the U.S. Want more? Spotflux also strips out annoying ads and injects real-time malware detection into your browser. Consumers, policy makers and activists are fighting the privacy issue hard but they often face a daunting and cumbersome process. It shouldn’t have to be this way, which is why we think Spotflux is on to something.

Weigh in here with your own privacy horror stories and what you think can be done to reclaim our lost privacy online. Follow John Backus on Twitter:

http://www.twitter.com/jcbackus

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Spotflux Brings Privacy Back to the Web

Posted in Inetellectual Property, internet, Investments, New Atlantic Ventures, Technology, Uncategorized, Venture Capital, Web Access and Privacy on March 8, 2012| Leave a Comment »

Spotflux Brings Privacy Back to the Web with $1 Million in New Funding from New Atlantic Ventures, Kima and Angels

 

NEW YORK, Mar 07, 2012 (BUSINESS WIRE) — Spotflux officially opens its doors today, introducing a free application that allows consumers worldwide to freely connect to the Internet with unprecedented privacy protection. Since its inception less than a year ago, adoption of Spotflux has grown exponentially, with more than 100,000 users across the globe depending on Spotflux to provide a more private, secure, and less restricted Internet experience. As part of its formal debut on Windows and Mac computers, Spotflux also announced today that it closed its first round of funding, led by New Atlantic Ventures and joined by a group of angel investors, including Paris-based Kima Ventures. The $1 million in new venture capital will be used to meet global user demand by advancing Spotflux’s technology, enhancing the consumer application and for worldwide brand building.

“Everyone online today has lost control of their privacy. Big companies like Facebook, advertisers, employers and governments look at everything you do online, and before Spotflux, no one was looking out for you,” said John Backus, founding managing partner, New Atlantic Ventures. “We invested in Spotflux because of these emerging privacy concerns and its universal appeal to the 1.2 billion people using the Web. Consumers, policy makers and activists are fighting the privacy issue hard but they often face a daunting and cumbersome process. Spotflux has removed the burden for more than 100,000 customers across 121 countries — before its formal launch — demonstrating that consumers are actively seeking a more secure, more private, more open Internet.” With the initial round of funding, Mr. Backus joined the board of directors.

Spotflux is a free application and allows you to connect to the Internet with unprecedented privacy protection from any computer, anywhere in the world. Spotflux gives you the freedom to use the Web like you always have, from shopping to social media, without unwittingly giving away private information like your location and where you spend your time online. Expensive off-the-shelf Internet protection tools protect you from traditional online threats but fall short by failing to understand that most threats to privacy can come from common websites or applications. Spotflux bridges this gap by providing an all-encompassing free, cloud-based solution to your online security and privacy. Spotflux gives you an easy to use, secure, limitless connection to the Internet by protecting your identity and fully encrypting your Web connection.

“We created Spotflux to give consumers the opportunity to take back control of their privacy online,” said Dean Mekkawy, co-founder, Spotflux. “There is a large gap between what consumers are willing to share online, and what’s actually being shared without their consent. Spotflux is bringing security, access, and privacy back to the web for everyone.”

Founders Dean Mekkawy and Chris Naegelin are technology entrepreneurs who have spent more than a decade solving large-scale information security challenges in the financial and public sectors. Mr. Naegelin is an award-winning technologist recognized for his enterprise-level contributions to the open-source community and as a contributing author to a widely adopted risk management framework. Both Mr. Naegelin and Mr. Mekkawy, were named two of the top 30 Entrepreneurs Under 40 by Bisnow in 2011.

About Spotflux

Spotflux is a free application that allows consumers worldwide to freely connect to the Internet with unprecedented privacy protection. Spotflux shields you from spyware, cookies, adware and other malicious software that stick to your computer and simultaneously gives you secure, unrestricted access to the Web anywhere in the world. Founded in 2011, Spotflux is based in Brooklyn, New York and funded by New Atlantic Ventures, Kima Ventures and a group of angel investors. To sign up or for more information, go to Spotflux.com.

SOURCE: Spotflux

        Press Inquiries:
        Spotflux
        Chris Naegelin
        646-820-1337
        press@spotflux.com

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Posted in Investments, Venture Capital on February 22, 2012| Leave a Comment »

2011 marked another strong year for venture capital, but will it continue?

By Peter Delevett

pdelevett@mercurynews.com

For the venture capital industry, 2011 was a year of superlatives — the highest level of investment in Internet companies since the dot-com bust and the highest level in cleantech ever. But it also was a year that ended on a worrisome downward swing.

Venture capitalists pumped $28.4 billion into nearly 3,700 deals, according to new numbers from the National Venture Capital Association and PricewaterhouseCoopers. Both numbers were an uptick over 2010, which itself had marked something of a turnaround for the industry after two years of declines.

But the fourth-quarter numbers limped across the finish line, showing a drop both in dollars and deals compared to the third quarter. And that third quarter represented a decline in activity compared to the second quarter, when investor enthusiasm soared after LinkedIn’s initial public offering of stock. During the second quarter of 2011, venture firms poured $7.5 billion into 966 deals. In the most recent quarter, those figures were $6.6 billion and 844.

Experts disagree on whether the declining numbers mean trouble for Silicon Valley’s startup economy.

Mark Cannice, a professor at the University of San Francisco who conducts a quarterly poll of venture capitalist confidence, reports that venture capitalists grew increasingly pessimistic as 2011 wore on. If venture firms continue to back fewer startups, he asked, “What great firms aren’t going to launch that we don’t even know about?”

Please click on link for rest of story.       http://www.mercurynews.com/business/ci_19990431?source=pkg

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The Advantages of a “Date-Certain” Mergers and Acquisition Process Over a “Standard Mergers and Acquisitions Process”

Posted in Board Of Intellectual Capital, Business models, Distressed Intellectual Property, Distressed IP, Gerbsman Partners, Inetellectual Property, Intellectual capital, National Venture Capital Association, NVCA, Venture Capital on February 14, 2012| Leave a Comment »

The Advantages of a “Date-Certain” Mergers and Acquisition Process Over a “Standard Mergers and Acquisitions Process”
Every venture capital investor hopes that all of his investments will succeed. The reality is that a large percentage of all venture investments must be shut down. In extreme cases, such a shut down will take the form of a formal bankruptcy or an assignment for the benefit of creditors. In most cases, however, the investment falls into the category of “living dead”, i.e. companies that are not complete failures but that are not self-sustaining and whose prospects do not justify continued investment. Almost never do investors shut down such a “living dead” company quickly.

Most hope against hope that things will change. Once reality sets in, most investors hire an investment banker to sell such a company through a standard mergers and acquisition process – seldom with good results. Often, such a process requires some four to six months, burns up all the remaining cash in the company and leads to a formal bankruptcy or assignment for the benefit of creditors. In many instances, there are a complete lack of bidders, despite the existence of real value in the company being sold.

The first reason for this sad result is a fundamental misunderstanding of buyer psychology. In general, buyers act quickly and pay the highest price only when forced to by competitive pressure. The highest probability buyers are those who are already familiar with the company being sold, i.e. competitors, existing investors, customers and vendors. Such buyers either already know of the company’s weakness or quickly understand it as soon as they see the seller¥s financials. Once the sales process starts, the seller is very much a wasting asset both financially and organizationally. Potential buyers quickly divide the company’s burn rate into its existing cash balance to see how much time it has left. Employees, customers and vendors grow nervous and begin to disengage. Unless compelled to act, potential buyers simply draw out the process and either submit a low-ball offer when the company is out of cash or try to pick up key employees and customers at no cost when the company shuts down.

The second reason for this sad result is a misunderstanding of the psychology and methods of investment bankers. Most investment bankers do best at selling “hot” companies, i.e. where the company’s value is perceived by buyers to be increasing quickly over time and where there are multiple bidders. They tend to be most motivated and work hardest in such situations because the transaction sizes (i.e. commissions) tend to be large, because the publicity brings in more assignments and because such situations are more simply more fun. They also tend to be most effective in maximizing value in such situations, as they are good at using time to their advantage, pitting multiple buyers against each other and setting very high expectations. In a situation where “time is not your friend”, the actions of a standard investment banker frequently make a bad situation far worse. First, since transaction sizes tend to be much smaller, an investment banker will assign his “B” team to the deal and will only have such team spend enough time on the deal to see if it can be closed easily. Second, playing out the process works against the seller. Third, trying to pit multiple buyers against each other and setting unrealistically high valuation expectations tends to drive away potential buyers, who often know far more about the real situation of the seller than does the investment banker.

“Date Certain” M&A Process

The solution in a situation where “time is not your friend” is a “date-certain” mergers and acquisitions process. With a date-certain M&A 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 maximize value of the IP and tangible assets. The advisor works with the board and corporate management to:

1. Focus on the control, preservation and forecasting of CASH;
2. Develop a strategy/action plan and presentation to maximize value of the assets. Including drafting sales materials, preparing information due diligence war-room, assembling a list of all possible interested buyers for the IP and assets of the company and identifying and retaining key employees on a go-forward basis;
3. Stabilize and provide leadership, motivation and morale to all employees;
4. Communicate with the Board of Directors, senior management, senior lender, creditors, vendors and all stakeholders in interest.

 
The company’s attorney prepares very simple “as is, where is” asset-sale documents. (“as is, where is- no reps or warranties” agreements is very important as the board of directors, officers and investors typically do not want any additional exposure on the deal). The advisor then contacts and follows-up systematically with all potentially interested parties (to include customers, competitors, strategic partners, vendors and a proprietary distribution list of equity investors) and coordinates their interactions with company personnel, including arranging on-site visits. Typical terms for a date certain M&A asset sale include no representations and warranties, a sales date typically two to four weeks from the point that sale materials are ready for distribution (based on available CASH), a significant cash deposit in the $100,000 range to bid and a strong preference for cash consideration and the ability to close the deal in 7 business days.

Date certain M&A terms can be varied to suit needs unique to a given situation or corporation. For example, the board of directors may choose not to accept any bid or to allow parties to re-bid if there are multiple competitive bids and/or to accept an early bid. The typical workflow timeline, from hiring an advisor to transaction close and receipt of consideration is four to six weeks, although such timing may be extended if circumstances warrant. Once the consideration is received, the restructuring/insolvency attorney then distributes the consideration to creditors and shareholders (if there is sufficient consideration to satisfy creditors) and takes all necessary steps to wind down the remaining corporate shell, typically with the CFO, including issuing W-2 and 1099 forms, filing final tax returns, shutting down a 401K program and dissolving the corporation etc.

The advantages of this approach include the following:

Speed – The entire process for a date certain M&A process can be concluded in 3 to 6 weeks. Creditors and investors receive their money quickly. The negative public relations impact on investors and board members of a drawn-out process is eliminated. If circumstances require, this timeline can be reduced to as little as two weeks, although a highly abbreviated response time will often impact the final value received during the asset auction.

Reduced Cash Requirements – Given the date certain M&A process compressed turnaround time, there is a significantly reduced requirement for investors to provide cash to support the company during such a process.

Value Maximized – A company in wind-down mode is a rapidly depreciating asset, with management, technical team, customer and creditor relations increasingly strained by fear, uncertainty and doubt. A quick process minimizes this strain and preserves enterprise value. In addition, the fact that an auction will occur on a specified date usually brings all truly interested and qualified parties to the table and quickly flushes out the tire-kickers. In our experience, this process tends to maximize the final value received.

Cost – Advisor fees consist of a retainer plus 10% or an agreed percentage of the sale proceeds. Legal fees are also minimized by the extremely simple deal terms. Fees, therefore, do not consume the entire value received for corporate assets.

Control – At all times, the board of directors retains complete control over the process. For example, the board of directors can modify the auction terms or even discontinue the auction at any point, thus preserving all options for as long as possible.

Public Relations – As the sale process is private, there is no public disclosure. Once closed, the transaction can be portrayed as a sale of the company with all sales terms kept confidential. Thus, for investors, the company can be listed in their portfolio as sold, not as having gone out of business.

Clean Exit – Once the auction is closed and the consideration is received and distributed, the advisor takes all remaining steps to effect an orderly shut-down of the remaining corporate entity. To this end the insolvency counsel then takes the lead on all orderly shutdown items.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 69 Technology, Life Science and Medical Device companies and their Intellectual Property, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $800 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Orange County, Europe and Israel. For additional information please visit http://www.gerbsmanpartners.com or Gerbsman Partners blog.

GERBSMAN PARTNERS
Email: steve@gerbsmanpartners.com
Web: http://www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com
Skype: thegerbs

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