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Posts Tagged ‘ipo’

VC funding dips, and seed investments nosedive

Posted in Board Of Intellectual Capital, Business models, Distressed Intellectual Property, Economy, Gerbsman Partners, Intellectual capital, Investments, IPO news, Market research, National Venture Capital Association, NVCA, PricewaterhouseCoopers, PWC, Strategy, Technology, Venture Capital, tagged , , , , , , , , , , on October 20, 2011| Leave a Comment »

Article from GigaOm.

It’s no secret that the larger economy has hit a rough patch in recent months. Although Silicon Valley has — in general – fared better than many other parts of the world, the venture capital industry is not immune to the negative effects of the macro-economic slowdown.

In the third quarter of 2011, venture capital investment activity fell 12 percent in terms of dollars and 14 percent in terms of deals compared to the previous quarter, according to the latest edition of the MoneyTree Report assembled by accounting giant Pricewaterhouse Coopers (PwC) and the National Venture Capital Association (NVCA).VCs invested $6.9 billion in 876 deals during the July through September timeframe in 2011, the MoneyTree report says, a notable decline from the $7.9 billion invested in 1,015 deals during the second quarter of 2011.


To be fair, the industry is still up compared to last year. For the first three quarters of 2011, VCs invested $21.2 billion, which is 20 percent more than VCs invested in the first three quarters of 2010. And 2010 saw an even bigger drop between the second and third quarters of the year. But VC funding is not exactly predictable according to the time of year — in 2009, for instance, the third quarter of the year was stronger than the second.

The VC industry is not as predictably cyclical as others because it generally takes its cues from a fluctuating variety of places: the worldwide economy, the entrepreneurial environment, the stock market’s appetite for IPOs, and larger companies’ appetite for acquisitions. It’s a complicated mix, but at the moment, it seems venture capitalists may be nervous about the larger environment of financial unrest, and the IPO window that opened earlier this year seems to be closing.

Seed funding takes a hit

Seed funding — which has recently been the hotshot of the industry as more angel and individual investors have become active in funding the startup scene — took a major hit in the third quarter of 2011. Seed stage investments fell a whopping 56 percent in terms of dollars quarter-over-quarter, and 41 percent year-over-year, to $179 million. It’s not just the total amount of seed investment that’s fallen, it’s also the amount of money per deal: The average seed deal in the third quarter was worth $2 million, a 43 percent drop from the average seed deal in the second quarter of 2011, which was $3.3 million.

And late stage deals have started to see major declines as well. Later stage startup investments decreased 20 percent in dollars and 30 percent in deals in the third quarter compared to the second, MoneyTree reported. Middle, or expansion, stage deals were relatively robust: Expansion stage dollars increased two percent quarter-over-quarter and 43 percent year-over-year, with $2.5 billion going into 260 deals.

Software is still strong

It’s not all doom and gloom, though. The software space has held up fairly well, receiving the highest level of funding for all industries during the third quarter with $2 billion invested from venture capitalists. That’s a 23-percent increase in dollars from the second quarter, and according to MoneyTree, the highest quarterly investment in the sector in nearly a decade, since the fourth quarter of 2001.

The web industry had a relatively soft quarter, as investments in Internet-specific companies fell 33 percent quarter-over-quarter during the third quarter to $1.6 billion. But it’s not exactly time to cry for Internet startups; the third quarter had a very tough act to follow, because Internet-specific VC deals hit a 10-year high in the second quarter of 2011.

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What bear market? Groupon pressing on with IPO plans

Posted in Board Of Intellectual Capital, Business models, Economy, internet, Investments, IPO news, Marketing, tagged , , , , , , on October 9, 2011| Leave a Comment »

Article from GigaOM.

“Reports of the death of Groupon’s IPOplans have apparently been greatly exaggerated. The online daily deals pioneer filed an updated version of its S-1 document with the Securities and Exchange Commission on Friday, as part of its preparation for a planned initial public offering of its stock.

Since the company first filed its S-1 in June, Groupon has been roundly criticized for its seemingly shady accounting practices and that its early founders and investors have already cashed out billions of dollars worth of the company’s stock. CEO Andrew Mason was so irked by the negative press that he sent a long email to Groupon’s employees filled with talking points they could use to defend the company. Ironically, when that email was inevitably leaked to the press, it only attracted more criticism; the missive was seen as a violation of the SEC’s quiet period rules.

These issues coupled with the larger environment of economic unrest have fueled rumors that Groupon had put its stock market plans on ice. But Friday’s S-1 update — the third revision since June — shows that the company is still keen to go public. Despite Groupon’s swaggering reputation and Mason’s grumbling about haters, the company’s management is showing that underneath it all, it’s actually willing to make changes and respond to criticism. Specifically, the latest filing has a few notable tweaks: Groupon said it plans to scale back its marketing budget, reported that its revenue bookings were slightly higher in the second quarter of the year, and reprinted the full text of Mason’s leaked email.

More than anything, though, updating the S-1 shows that Groupon is still serious about making its stock market debut at some point soon. But ultimately, that will only happen if investors show that they have an appetite for the company’s shares.”

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Ubiquiti Networks IPO shows infrastructure market heating up

Posted in Board Of Intellectual Capital, tagged , , , , , , , , , on June 23, 2011| Leave a Comment »

Article from GigaOm.

“Wireless technology provider Ubiquiti Networks Inc recently became the latest infrastructure company to file for an initial public offering. Boingo Wireless went public in May and Fusion i-o followed this month.

On Wednesday, Sequoia Capital’s Michael Goguen noted the renewed interest in this space during a panel at GigaOM’s Structure conference: “To me, being a guy investing in infrastructure for 15 years, it’s an exciting time for the first time in a while,” he said. “There was a period where there wasn’t a whole lot going on. Architecture was stable, and big vendors dominated.” But now, the emergence of the cloud has caught big vendors “rather flat-footed,” he said. “There are a whole lot of holes to fill and room for startups.”

Ubiquiti, based in San Jose, hopes to fill some of those holes. The company filed paperwork last week with the U.S. Securities and Exchange Commission for an initial public offering and is looking to raise up to $200 million. Details are scant. The company hasn’t revealed information on stock price or timing, saying only in its  S-1 filing that the funds would be used to bulk up working capital and “general corporate purposes.”

Ubiquiti is focused on providing wireless-networking solutions in under-served areas, such as emerging markets. Its products include radios, antennas and management tools that have been designed to deliver carrier class performance for wireless networking.

The news of the filing comes the same week the National Venture Capital Association and Deloitte & Touche LLP put out a global survey showing VC’s the world over believe the level of IPO’s is too low to support the industry. But perception and reality can be two different things, Goguen said.

“In the last six months, there have been 33 technology companies going public for a total of more than $16 billion in exists,” he said. “Things are clearly picking up.” It’s still too soon to tell how things will pan out, especially considering that the results of the two most recent IPOs are mixed. While Fusion is exceeding expectations on the open market, Boingo’s stock price has dropped 40 percent since its opening.”

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Small Group Rode LinkedIn to Big Payday

Posted in Board Of Intellectual Capital, boic, Business models, Economy, Gerbsman Partners, Investments, IPO news, LinkedIn, tagged , , , , , , , , , , , , , on June 20, 2011| Leave a Comment »

Article from NYTimes.

“For Reid Hoffman, the chairman of LinkedIn, it took less than 30 minutes to earn himself an extra $200 million.

With the hours ticking down to his company’s stock market debut, Mr. Hoffman dialed into a conference call from San Francisco’s Ritz-Carlton hotel as his chief executive, Jeff Weiner, and a team of bankers raced up from Silicon Valley in a black S.U.V. to meet with potential investors.

Demand for shares was intense, and they decided to raise the offering price by $10, to around $45.

When trading began on May 19, LinkedIn did not open at $45. Or $55. Or $65. Instead, the first shares were snapped up for $83 each and soon soared past $100, showering a string of players with riches and signaling a gold rush that has not been seen since the giddy days of the tech frenzy a decade ago.

Now there are signs that a new technology bubble is inflating, this time centered on the narrow niche of social networking. Other tech offerings, like that of the Internet radio service Pandora last week, have struggled, and analysts have warned that overly optimistic investors could once again suffer huge losses.

That enthusiasm was on full display in the blockbuster debut of LinkedIn, which provides a window into how a small group — bankers and lawyers, employees who get in on the ground floor, early investors — is taking a hefty cut at each twist in the road from Silicon Valley start-up to Wall Street success story.

“The LinkedIn I.P.O. will be used very powerfully over the next year as these companies go public and bankers deal with Silicon Valley,” said Peter Thiel, the president of Clarium Capital in San Francisco and an early investor in PayPal, LinkedIn and Facebook. “It sets things up for the other big deals.”

The sharp run-up after the initial public offering set off a fierce debate among observers about whether the bankers had mispriced it and left billions on the table for their clients to pocket. But the pent-up demand for what was perceived as a hot technology stock set the stage for easy money to be made almost regardless of the offering price.

Naturally, Wall Street is enjoying a windfall. Technology I.P.O.’s have generated nearly $330 million this year in fees for the biggest banks and brokerages, nearly 10 times the haul for the same period last year, and the most since 2000.

Besides the $28.4 million in fees for LinkedIn’s underwriting team, which was led by Morgan Stanley, Bank of America and JPMorgan Chase, there were also a few slices reserved for specialists like lawyers and accountants. Wilson Sonsini, the most powerful law firm in Silicon Valley, collected $1.5 million, while the accounting firm Deloitte & Touche earned $1.35 million.

Mr. Hoffman founded LinkedIn in March 2003 after making a fortune as an executive at PayPal, the online payments service, but even as LinkedIn grew and other employees and private backers got stakes, Mr. Hoffman retained 21.2 percent, giving him more than 19 million shares when it went public. He has kept nearly of all them, so for now his $858 million fortune — it was $667 million before the last-minute price hike — remains mostly on paper.

Mr. Weiner arrived more recently, in late 2008, after working at Yahoo and as an adviser to venture capital firms, but his welcome package included the right to buy 3.5 million shares at just $2.32. And they are not the only big winners who secured shares at levels far below the I.P.O. price.

For example, when LinkedIn raised cash in mid-2008, venture capital firms including Bessemer Venture Partners and Sequoia Capital, scooped up 6.6 million shares at $11.47 each in return for early financing. They have held on to the stock, but Goldman Sachs, which got 871,840 shares at $11.47, sold all of it for a one-day gain of nearly $30 million.

Scores of fortunate individuals also managed to profit.

Stephen Beitzel, a software engineer, worked at LinkedIn from its founding until March 2004, but kept his stock when he left. His shares are now worth $17 million, and he sold $1.3 million worth in the offering.”

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CafePress files for IPO, looks to raise up to $80M

Posted in Board Of Intellectual Capital, boic, Business models, Economy, Gerbsman Partners, Investments, IPO news, tagged , , , , , , , , , , , , on June 12, 2011| Leave a Comment »

Article from GigaOm.

“The tech industry’s initial public offering waveis showing no signs of slowing.

CafePress filed its S-1 with the Securities and Exchange Commission on Friday. The San Mateo, Calif.-based company is looking to raise up to $80 million in an IPO to be underwritten by J.P. Morgan, Cowen and Company, and Jefferies, according to the filing.

CafePress was founded in 1999 and sells user-customized products such as clothing, accessories, posters, stickers, and housewares through its flagship website CafePress.com. The company also owns a portfolio of other sites, such as CanvasOnDemand, which turns photographs into canvas artwork, and Imagekind.com, which sells artwork from independent artists.

CafePress is profitable and apparently growing. According to the filing, the company made $2.7 million in net income on $128 million in revenues in 2010. In the first three months of 2011, CafePress made $32 million in revenues, about 45 percent more than the $22 million it made in the first quarter of 2010. Last year, the company posted adjusted earnings before interest, taxes, debt and amortization (EBITDA) of $14.5 million.

But while the company’s financials are certainly solid, one could argue they’re not exactly spectacular. CafePress’ average order size has hovered around $47 for the past three years. The company’s top-line annual revenues have see-sawed recently, from $120 million in 2008, down to $103 million in 2009, and back up to $128 million in 2010. In the filing, CafePress blamed the 2009 dip on “macro-economic conditions in our primary markets that reduced discretionary spending by our customers coupled with the absence of election year sales.”

CafePress is just the latest in a recent series of Internet companies making moves toward the public markets. In the past month, LinkedIn, Yandex and Fusion-io have gone public, Groupon filed an S-1, and Kayak and Pandora have issued optimistic S-1 updates. Whether the activity represents another tech bubble or just a healthy and growing economy, it’s certainly shaping up to be a very busy summer for Silicon Valley.”

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