JPMorgan, Credit Suisse Ramp Up Startup Push for Deals

When SurveyMonkey Inc. Chief Executive Officer Dave Goldberg wanted to buy out investors from his Internet company and attract new ones who wouldn’t balk at his aim to stay private, he steered clear of traditional startup financiers in the venture-capital community.

Instead, Goldberg turned to an entirely different adviser: JPMorgan Chase & Co. (JPM)

Jimmy Lee, vice chairman of the investment bank who normally works on multibillion dollar deals, traveled from New York to SurveyMonkey’s headquarters in Palo Alto, California, to brainstorm Goldberg’s options. Goldberg later hired JPMorgan to lead a $350 million syndicated loan for the online survey provider as part of an $800 million recapitalization the closely held company completed last year.

“Considering what a small company we are, SurveyMonkey isn’t something Jimmy would usually spend time on,” Goldberg, who is married to Facebook Inc. (FB) Chief Operating Officer Sheryl Sandberg, said in an interview. The recapitalization, which also involved selling $444 million in equity to Goldberg, Tiger Global Management LLC and Google Inc. (GOOG), valued SurveyMonkey at $1.35 billion.

Wall Street investment banks -- from JPMorgan to Bank of America Corp. and Credit Suisse Group AG (CS) -- are increasingly catering to closely held technology startups, especially in Silicon Valley. While firms led by Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) have long cultivated relationships with venture capitalists and entrepreneurs to later earn fees managing initial public offerings and advising on acquisitions, many banks have expanded the roster of services in recent years.

Photographer: David Paul Morris/Bloomberg

Dave Goldberg, chief executive officer of SurveyMonkey Inc.

Big Payoff

The push includes beefing up technology teams, organizing invitation-only conferences for entrepreneurs, starting coverage areas for venture capital and using balance sheets to finance startups or extend credit.

The efforts come as more startups stay private for longer and reach a bigger scale, raising the prospect of a larger payoff down the road for banks when the hottest companies ultimately go public or get sold.

“Technology is the fastest growing and most far reaching sector in the world,” Lee said in an interview. “It’s therefore a priority for any global investment banking business.”

More Firepower

In a sign of how seriously the banks are taking startups, JPMorgan in the past four years has relocated veteran bankers Mike Millman, Kurt Simon and Rod Reed to Silicon Valley. Jeremy Geller moved in February to head the firm’s private banking in Northern California, a business where headcount has since grown 30 percent.

Credit Suisse has since 2011 moved Anthony Armstrong, its co-head of Americas M&A, and David Wah, its global co-head of technology, media and telecom group, from New York to San Francisco. The bank also hired Chris Gaertner and Imran Khan after losing star George Boutros in 2010 to boutique adviser Qatalyst Group Ltd.

Goldman Sachs earlier this month named Dan Dees co-head of its global technology group alongside Anthony Noto, who had led Twitter Inc. (TWTR)’s IPO late last year. The securities firm moved current co-head George Lee to chairman of the group and made him chief information officer for the investment banking division.

Deals Pipeline

The potential rewards are vast. Heading into 2014, the pipeline of U.S. technology IPOs contained 590 venture capital and private equity-backed startups that have raised $55.35 billion, according to a Dec. 12 study from CB Insights. More than half of the companies are based in California and 25 were valued at more than $1 billion, the study found.

Last year, there were 131 deals in the U.S. in which a technology or Internet company sold equity on the public market or in a private placement for a total of $28.8 billion, compared with 80 equity deals worth $25.42 billion in 2012, according to data compiled by Bloomberg.

Silicon Valley entrepreneurs and venture capitalists say the increased attention from investment bankers is tangible. Goldberg said that it was far easier to recapitalize in 2013 than to line up a mere $37 million in debt financing from Bank of America in 2009.

Some of the challenge five years ago was that the recession made banks unwilling to lend. It also related to another, more fundamental obstacle: many banks didn’t get the way startups work, Goldberg said.

“After the financial crisis, the credit market was very tough,” Goldberg said. “Traditional banks also had a hard time understanding our subscribers-based business model.”

Wooing Wanelo

Wall Street firms have since made a bigger effort to woo technology entrepreneurs and serve their corporate and personal financial needs.

“Banks were quiet for a while in Silicon Valley,” Geoff Yang, general partner of Redpoint Ventures, a venture-capital firm based in Menlo Park, California, said in an interview. “They are now courting venture capitalists and entrepreneurs like in the old days.”

Investment banks are even reaching out to some of the youngest Internet startups. Deena Varshavskaya founded San Francisco-based social shopping startup Wanelo Inc. in 2010 and landed $14 million in venture funding over the last two years.

Even though her company was barely two years old, Varshavskaya said she was invited to speak at Goldman Sachs’s dotCommerce conference in New York last June. Goldman Sachs later named her one of the “100 most intriguing entrepreneurs” of 2013 at the firm’s Builders and Innovators Conference in Tucson, Arizona, where Hillary Clinton and Elon Musk were among the speakers.

Many Invitations

Varshavskaya, 33, also gave a presentation at Goldman Sachs’s Internet Private Company conference in Las Vegas in November and she will speak next month at its Technology and Internet conference in San Francisco.

“They bring together high-quality innovators and community building, which is an important foundation for our future growth,” said Varshavskaya, who adds that the relationship with Goldman Sachs’s bankers “will be useful in the future.”

Morgan Stanley and Goldman Sachs have long been the go-to investment banks in Silicon Valley. To be more competitive, Goldman Sachs started the private company conference in Las Vegas three years ago and its Builders and Innovators conference two years ago. It also ramped up direct investments in Web startups including Dropbox Inc. and Uber Technologies Inc.

Morgan, Goldman

Last year, Morgan Stanley topped the league table of underwriters of technology and Internet IPOs measured by dollar value, according to data compiled by Bloomberg. Goldman Sachs was first by number of technology and Internet IPOs underwritten and earned fees, according to the data.

Morgan Stanley’s technology team, led by Michael Grimes, Paul Chamberlain and Colin Stewart, the firm’s vice chairman of global capital markets, has had one of the longest-lasting footprints in Silicon Valley, opening an office in 1994 and staying through the aftermath of the dot-com bust last decade when numerous Internet startups flopped. To build relationships with startups, the firm has organized conferences, including a chief technology officer summit where it gathers hundreds of potential clients.

Other Wall Street firms have also beefed up their Silicon Valley presence. Bank of America organizes a Tech & OPS conference for venture capitalists in November and a Private Company conference in May. Last year, it hired Buz Walters from Goldman Sachs to head the bank’s venture-capital group.

“Many technology companies that go public tend to become well-known global brand names,” Walters said in an interview. “That’s why banks make an effort to work on their deals.”

Qatalyst, Allen

Smaller banks are also making a play for startups. Qatalyst, which former Credit Suisse bankerFrank Quattrone started in San Francisco in 2008, has become the go-to bank for technology companies seeking to sell themselves to large acquirers like Hewlett-Packard Co. It competes with Allen & Co., the New York-based boutique bank famous for its invitation-only Sun Valley, Idaho conference every July that attracts technology and media moguls including Goldberg and his wife.

At JPMorgan, the bank has gone beyond boosting its technology team by starting a digital growth fund in 2011 that invested in Twitter and wearable device maker Jawbone.

The efforts have resulted in deals, including JPMorgan leading Facebook’s secondary offering of $3.85 billion of shares last month. JPMorgan ranked third in the league table of technology IPO underwriters last year, according to data compiled by Bloomberg.

“We put leadership out here to connect the West Coast to the firm to serve clients’ corporate and personal financial needs,” said Noah Wintroub, head of JPMorgan’s Internet and digital media group in San Francisco. “The word spread.”

Source : Bloomberg

Death and startups: Most startups croak 20 months after their last funding round

Sam Howzit/Flickr

For most startups, death is not a question of if, but when.

While that conclusion may seem obvious, the data to support it is pretty hard to come by. Which makes sense: After all, no one — not founders, not venture capital firms — is going to go out of their way to tell the world when they’ve failed. But they will trumpet their victories. It’s the survivorship bias in full effect.

Still, research firm CBI Insights has managed to get some good data on startup death, which happens a lot more than all the funding news would lead you to believe. Here are some of the most interesting findings:

Most die young. Considering how vulnerable most early-stage companies are, it’s not surprising to learn that over half of them die before they raise $1 million, and 70 percent die before raising $5 million. Most dead companies raised $11.3 million on average, with a median of $1.3 million.

Cash doesn’t (always) buy longevity: But even raising cash won’t save most startups from death. CBI Insights says that, on average, startups will last 20 months after their last founding round (though many will keep lumbering on long after).

Most dead companies are Internet companies. By sector, most dead tech companies were focused on the Internet, which makes sense considering that that’s where all the money has been over the past few years. More Internet companies chasing VC cash means more dead Internet companies. That much is inevitable.

Social is bad news. If you’re trying to launch your own tech company, do yourself a favor and stay out of social, which most of the dead startups focused on. Same goes for marketplace companies (i.e., eBay wannabes) and those dabbling in advertising, sales, and marketing.

What’s especially funny about these numbers is that CB Insights is using them to sell its list of “dying tech companies,” which it’s selling for nearly $7,000. That list, the company says, would be valuable for anyone looking for potential employees or even just products or IP.

Maybe Yahoo will be interested?

Source : venturebeat.com

Passion Capital Cracks Open Data On Investments, Deal-Flow, Founder Salaries, And More

It’s not every VC that publishes annual stats on things like deal-flow, average size of investment, average founder salary, number of exits and startups dead-pooled. But openness — within no doubt carefully crafted limits — is part of London-based Passion Capital‘s brand after it set the bar with its inaugural report last year. And while “openness” is probably the headline takeaway again with this year’s report, it does provide some interesting insight into the workings of an early-stage VC in Europe and what, if anything, has changed for the firm over the last 12 months.

To set some context and give you an idea of its size and how active Passion Capital is, let’s begin by drilling into the first two year’s numbers. Spanning April 2011 to June 2013, the venture capital firm founded by Stefan Glaenzer, Eileen Burbidge and Robert Dighero, and backed by a mixture of UK government funding and private investment, has invested in 34 portfolio companies, two of which have exited and three wound down.

The second-screen football betting app Picklive was sold to Sports Millions for an undisclosed amount, and academic research platform Mendeley was acquired by publisher Elsevier for an amount that TechCrunch pegged between $69-100 million.

The three startups shuttered were Twitter real-time chat service Bonfire, travel site Tripbirds, and wine portfolio app Vinetrade.

Digging deeper, noteworthy is that Passion has only added 13 new startups to its investment portfolio this year — OpenSignal, Memoto, Birdback, ShowMyHomework, CarThrottle, Thread, Future Ad Labs, Hasty, Toothpick, Duego, laZook, and Tray.io — though this doesn’t mean it has been any less active in terms of number of investments, but instead reflects that the fund is maturing when you factor in follow-on and bridge funding as well as Passion’s participation in 3 Series A rounds. In fact, in terms of total transactions (investments, follow-ons, exits, bridges, etc), 30 were made in year two compared to 31 in year one, so not much change there.

Passion has made a total of £5,695,000 in Seed investments, which in turn has gone on to attract a further £35,896,000 from more than 25 different VC funds, though this includes Passion’s own follow-on funding. Looking at the first year’s cohort only, 11 out of a possible 21 have gone on to raise follow-on financing at increased valuations, it says, while 6 are still operating from their seed round financing, and 2 of those are said to be profitable.

That’s perhaps telling, suggesting that Passion got its runway trajectory on the money, but I suspect the real story for many of the startups in its portfolio won’t come until year three. It is still early days after all — can we say Series A crunch?

Furthermore, in year two, its average seed round investment size was £183,717. That’s slightly down from £189,936 in year one. Meanwhile, the average equity stake its taken at the Seed stage is 15%.
In addition, Passion has bundled some interesting operational data mainly related to the way the VC firm attracts deal-flow, but also the average salary of the founders of its portfolio companies (£36,149 per annum), some of which I’ve included below.

Deal flow:
Year 2: 1,932 (up 26% from Year 1 number of 1,532)
533 from referrals (up 22% from Year 1)
779 from the website (up 19% from Year 1)
620 from events (up 40% from Year 1)

Sources of the investments made:
9 from referrals from our existing Passion founders
7 from within our network (founders were already known to us)
6 from other referrals (not from our founders directly)
3 we proactively sought out (after tracking for some time)
2 from our open office hours
1 from a team which was renting desks at White Bear Yard

Passion says that the average number of days between a prospective investment first meeting one of its 3 partners to a term sheet/investment offer is 6.41 business days — early-stage VCs are won’t to boast the speed at which they make any offer. It doesn’t say, however, how long it takes to get that first meeting.

It’s also — rightfully — highlighting the fact that it hasn’t charged any of its portfolio companies for legal expenses, closing fees, directors fees, or monitoring fees etc., noting in particular that it’s always paid for its own legal counsel, with little or no fuss (unlike others).

Of note, Passion says it doesn’t employ a PR firm to act on its behalf, which says something about the PR industry considering they do alright on the publicity front. Actually, Passion does more than alright and other European VCs could probably learn a thing or two from their openness, in every sense of the word.

And in a final boast, the VC firm says that the number of founder CEOs it’s replaced with “someone we’ve brought in” has been zero. That’s likely great news for the starry-eyed entrepreneurs it’s backed. However, like the difficult third album, Passion is now into the difficult year three for some of its portfolio companies, so let’s hope it’s not a case of famous last words.
All in all, though, good stuff.

Keep the openness comin’ — we look forward to next year’s update.

(For more data, see Passion Capital’s own blog post, which includes a rather nice infographic if you’re into those sort of things.)

Source : Techcrunch

London’s tech startup scene is hot — just don’t compare it to Silicon Valley

London’s tech scene has been growing for years — is it finally on the cusp of breaking out and delivering billion-dollar startups?

 

Down a flight of stairs, past a photo of British mod icon Paul Weller, and into the basement of Google’s campus in the ultra hip area of East London, sit Britain’s home-grown budding Kevin Systroms and David Karps (well, at least wannabes). On a weekday afternoon, almost every seat, desk, couch and stool in the free co-working café in Google’s basement is filled with young web and mobile entrepreneurs, hunched over their laptops, building decks, and chatting excitedly about their next big idea.

Google London Campus, image courtesy of Google.

Every major city it seems these days has its techie hubs, but London’s tech scene has been steadily growing over the past several years. That growth is being driven by a combination of increased government support, attention from international internet giants, a handful of early startup successes, a growing venture capital ecosystem, an adjacent London financial sector that’s starting to take notice of tech, and an early adopter city that’s not unlike the one in San Francisco, which enables the Valley’s startups to access some of the world’s most engaged beta testers.
It’s way too easy to make the comparison between Silicon Valley of a few years back and the East London of today. Many of the London entrepreneurs I’ve met with since I moved to the Shoreditch area of London for the summer to grow GigaOM’s coverage of the London tech scene warn me away from that simplistic “the Valley of Europe” discussion. Please don’t write one of those X is the new Silicon Valley stories, one founder practically pleaded with me. Needless to say, X could be anywhere these days, from New York, to Sao Paulo to Berlin, to New Delhi.

The growth of London tech

But something’s clearly been brewing for a couple years now. To Simon Thethi, the founder of the news site that launched in January of this year to cover London tech, Tech City News, it was clear even back in 2010 that London was starting to develop into a buzzing tech hub. But now it’s really got an energy that makes it stand out, says Thethi, while we sit and drink coffee on the rooftop terrace of one of London’s many membership clubs that the tech community seem to often use as meeting space.

The Shoreditch Grind espresso bar in East London

“Tech City” is a name for London’s tech scene that’s emerged – like most city trends do — both organically and through a little inorganic help. The U.K. government is investing 50 million pounds ($70 million) into building out Tech City and attracting tech companies to the region from Microsoft to Amazon to Qualcomm. According to London Partners, a group that promotes Tech City, there’s 3,000 tech companies in the condensed area of East London, which they say makes it Europe’s fastest-growing tech cluster. London and Berlin have a healthy rivalry going on over which city’s tech sector is bigger and growing more rapidly.

Internet giants, too, are investing in London. In addition to Google’s London campus, which opened a year ago, the giant search engine has its British headquarters in the Victoria and Holborn districts, and is building out a billion-pound campus in Kings Cross. Facebook has one of its largest offices in London, boasting 29 open positions. Jobs are one of the key reasons that the British government is aggressively promoting the tech sector, in the wake of Europe’s recession.
But London’s got its own unique slant to the startup wave. Given that London boasts a huge financial industry, a thriving media sector and some of the world’s largest advertising and design firms, it’s natural that London startups would gravitate to these areas. It’s more New York than Silicon Valley (oops, I did it again). At an event thrown earlier this week by the BBC’s commercial division, BBC World, the media company announced its next class of six digital media startups that would join its accelerator program, BBC Labs.

An emerging sector

Still, London’s tech scene is decidedly still emerging. The biggest homegrown startups, like game company Mind Candy, on-demand ride startup Hailo, social chat platform Badoo, and music recognition company Shazam, aren’t blockbuster global brands yet and more importantly haven’t created a wave of millionaire VPs like Valley internet firms Facebook, Google and PayPal. The creation of wealth through these Valley web exits delivered (and are delivering) the next wave of founders (see the PayPal mafia).
London has yet to kick off that wave. And it is still waiting for its first billion-dollar tech company. Mind Candy has been eyeing an IPO, which could be “Tech City’s” first flotation. But the worst thing that could happen for the East London tech crowd is if a homegrown company like Mind Candy went public in New York and even moved operations there. The message would be: Once a startup gets big enough it outgrows London.

The official Silicon Roundabout, a name that was originally coined as a joke.

There are also a couple of cultural disconnects that seem to be holding back some of the growth of London’s startup scene. One of those is what entrepreneurs describe as a lack of aggressiveness in scaling companies for the big exit – selling at the first offer instead of building startups into billion-dollar businesses. Several entrepreneurs I’ve spoken with this week say this is a key hurdle that is holding back London web startups from reaching that billion-dollar threshold.
Another is the omnipresent — and very natural — fear of failure, which is prevalent in most early startup scenes, but has somehow been shaken out of the pivot-loving, failure-embracing crazy founders of the Valley. Fear of failure can harm a startup ecosystem because entrepreneurs and investors are less willing to take big risks, which leads to less disruptive ideas.
As more successes emerge from London’s tech hub, many of these hurdles will likely be cleared. But for now, Tech City has a whole lot of potential that’s still waiting for some big payoffs.
We think the city has enough tech potential that we’re holding our second annual Structure:Europe conference in London in September, and we’re looking for cloud-enabled and cloud-focused startups to join our Startup Zone.

Source : GigaOm

Telecom Industry Could See Biggest Merger Spree Since ’06

Global telecommunications companies are chasing deals from Kansas to Munich in a quest for revenue growth that could lead to the biggest year for mergers in the industry since at least 2006.
More than $80 billion in telecommunications and cable transactions have been announced or completed this year as companies from Dish Network Corp. (DISH) to Japan’s SoftBank Corp. (9984) to the U.K.’s Vodafone Group Plc (VOD) prowl for acquisitions. If Verizon Communications Inc. (VZ) forges ahead with a bid for Vodafone’s stake in Verizon Wireless, deal volume would more than double, approaching the level of seven years ago, data compiled by Bloomberg show.

 

More than $80 billion in telecommunications and cable transactions have been announced or completed this year as companies from Dish Network Corp. to Japan’s SoftBank Corp. to the U.K.’s Vodafone Group Plc prowl for acquisitions.

 

Companies are looking to grow through acquisition as demand slows for wireless and Internet services, and they’re seeking scale so they can afford to build the high-speed networks necessary for the latest mobile and video offerings. Bidders are clashing with each other around the globe as they compete for a shrinking pool of potential partners.

“Growth prospects are scarce and money is cheap,” said Todd Lowenstein, portfolio manager with Highmark Capital Management in Los Angeles. Acquirers are going after “valuable assets that are likely to be put to better use in a combined company.”

Europe Squeeze

Being squeezed are some European telecommunications companies, which postponed investments during the debt crisis and have seen revenue plateau even as small competitors have stoked price wars. AT&T Inc. (T) is scouting for possible acquisitions in Europe, deemed to have the highest mobile penetration in the world by industry group GSMA.
“We have some giant Internet companies in the U.S., we only have a few equipment makers left -- in order to counter that, there will have to be large mergers in Europe,” Deutsche Telekom Chief Financial Officer Timotheus Hoettges, who is set to take over as chief executive officer next year, was reported as saying in an interview by the Rheinische Post newspaper today. “Since our market capitalization is developing much better than that of our peers, we are well positioned.”
The biggest bidding war so far this year, meanwhile, is in the U.S., where Overland Park, Kansas-based Sprint Nextel Corp. (S), the third-largest U.S. wireless carrier, is up for grabs. Sprint shareholders are scheduled to vote June 25 on a $21.6 billion offer from SoftBank. Dish, the second-biggest U.S. satellite-TV carrier, is weighing its options after Sprint’s board said its $25.5 billion takeover proposal lacked specifics. If the Sprint plan falls through, SoftBank has said it will go after the next-largest U.S. mobile company, T-Mobile US Inc.

Smaller Rivals

With Verizon Wireless, the nation’s largest wireless carrier, and AT&T, the second-largest, holding a combined two-thirds of the lucrative U.S. contract-customer market, smaller rivals face a number of challenges. Sprint and T-Mobile don’t have the revenue of their rivals to spend on network technology to create faster connections for customers to watch video and stream music.
To address the issues of scale, small companies have started to consolidate. Deutsche Telekom AG acquired MetroPCS Communications Inc. in April to merge with T-Mobile, its U.S. unit.
“Regulators want a four-player market, but what make sense is three strong competitors in the U.S.,” said Roger Entner, with Recon Analytics LLC in Dedham, Massachusetts.

Premium Prices

Telecommunications companies have commanded an average takeover premium of 27 percent in the past 12 months, according to data compiled by Bloomberg on 27 acquisitions valued at more than $1 billion.
Deals announced this year come to more than $80 billion, according to the data. That compares with about $157 billion in all of 2012 and $124 billion the year before.
“Phone companies’ margins have come under increasing pressure,” said Friedrich Diel, a fund manager at Frankfurt-Trust Investment who oversees more than 2 billion euros ($2.68 billion) in investments. “Most markets are very mature and don’t offer a lot of potential growth, which means growth has to come from buying others.”
An offer by Verizon to buy Vodafone’s 45 percent stake in Verizon Wireless, if completed at $120 billion or more, would push the year’s total to the biggest since 2006, when $281.8 billion in telecommunications deals were announced.
The potential offer by Verizon is the biggest under discussion and would give Verizon Communications (VZ) full control of a business with strong cash flow. The parent company would have more flexibility and find it easier to pay dividends to investors.

Holding Out

Verizon has told analysts that it would be willing to offer $100 billion for the 45 percent holding, people familiar with the discussions have said. Citigroup Inc. said this month that Vodafone would hold out for $120 billion to $135 billion. Bank of America Merrill Lynch analysts said Verizon may need to pay as much as $140 billion to entice Vodafone to sell in a note after meeting with Vodafone CEO Vittorio Colao.
Vodafone holds one of the earlier deal records. Its previous incarnation, Vodafone Airtouch Plc, spent more than 150 billion euros in 2000 to acquire German company Mannesmann AG. Time Warner Inc.’s combination with AOL brought in $124 billion in cash and stock when the two combined near the end of the tech bubble in 2001.

Liberty Offer

Vodafone and John Malone’s Liberty Global Plc both want Kabel Deutschland Holding AG (KD8) to expand their empires in Europe. Phone companies across the continent are bulking up their networks and adding services as they work to increase customer bills and loyalty. Bundles of TV, Internet and phone service are becoming increasingly popular, stoking deals and partnerships between carriers.
Liberty offered about 85 euros a share in cash and stock for Kabel Deutschland, Germany’s largest cable operator, a person familiar with the talks said, valuing the company at 7.5 billion euros. Vodafone responded, raising its own offer to 85 euros a share, people familiar with the bid said this week.
Liberty invaded Vodafone’s home turf in February, spending $16 billion in cash and stock to take over British cable-television provider Virgin Media Inc. in the largest media deal since 2007.
Malone, the billionaire chairman of Liberty Media Corp. and Liberty Global, said earlier this month that higher programming costs, a declining video customer base and surging demand for high-speed Internet have sparked excitement about acquisitions.

Broadband Solution

Liberty Media’s purchase of a 27 percent stake in Charter Communications Inc., based in Stamford, Connecticut, is intended to turn the fourth-largest U.S. cable operator into a “horizontal acquisition machine,” Malone said. Liberty and Charter management have met with Time Warner Cable CEO Glenn Britt to discuss a future merger, although Britt isn’t interested, according to a person familiar with the discussions.
“A lot of what you’re seeing are companies that don’t have a broadband solution trying to find one, or companies that do have a broadband solution trying to get more of it to increase their competitive advantage,” said Garrett Baker, president of Waller Capital Partners LLC, a boutique investment bank and advisory firm focused on the telecommunications, media and technology industries.
Regulators have blocked a number of deals recently, leading phone companies to lobby the European Commission, the European Union’s executive arm, for a more lenient regulatory environment.
Kabel Deutschland was blocked by the German antitrust regulator from buying Berlin-based cable operator Tele Columbus Group in February.

Regulatory Concessions

Liberty Global, which entered the German market with the acquisition of Unitymedia in 2010, was forced to take steps like removing encryptions and opening up contracts with housing associations to rivals when it added operator KabelBW the next year to form the country’s second-largest cable operator.
Lowenstein of Highmark Capital said he expects to see a more accommodating stance over time. “Regulators are likely more open to deals as new technologies are redefining the competitive landscape and concerns over past market concentrations issues,” he said.
Neelie Kroes, the EU commissioner in charge of the digital agenda, has promised to move toward a single telecommunications market in Europe. To be sure, that’s meant promises to get rid of roaming charges rather than breaking down barriers for deals so far.
“European telecommunications companies can’t wait; they need to boost investment in the coming years in order to offer faster services, while they are faced with declining profitability,” Andres Bolumburu, a Madrid-based analyst at Banco de Sabadell SA, said in an interview. “Regulators need to understand that the current situation and whopping number of operators is just unsustainable.”

Source: Bloomberg

The Falling Cost Of Solar Energy Is Surprising Everyone

Everyone's talking about all the new oil and gas being produced thanks to new drilling methods.

But there's another narrative nipping at the shale boom's heels: solar energy.  And it's expanding just as fast.

It's just that the scale is not quite the same. But that's changing.

Citi has just named solar photovoltaics, which convert solar radiation into electric currents via semiconductors, to its list of 10 world-disrupting technologies.

In a note this week in advance of the disruption report, Citi's Jason Channell said that in many cases, renewables are already at cost parity with established forms of electricity sources. 

The biggest surprise in recent years has been the speed at which the price of solar panels has reduced, resulting in cost parity being achieved in certain areas much more quickly than was ever expected; the key point about the future is that these fast ‘learning rates’ are likely to continue, meaning that the technology just keeps getting cheaper.

Below is a chart showing where "socket" or grid parity has already been achieved. (Grid parity is when a source of power becomes cost competitive with other sources.) The lines represent the pattern of expanding solar power in a given year — so at peak solar exposure, parts of the southwest U.S. are now already capable of meeting their electricity needs via solar panels. 

Citi

He also adds this cool chart showing that the Age of Renewables has only just begun. 

Citi

Channell writes:

The rapidly expanding parity provides enormous scope for growth in the solar industry, driven by standalone economics as opposed to subsidies, which are becoming ever scarcer in an austerity-driven world.

As a previous Saudi oil minister once noted, “The stone age didn’t end for a lack of stones...”, and this substitutional process can be well demonstrated looking at the US energy mix over the longer term.

Gas isn't going away, but renewables are coming on strong.

Read more: http://www.businessinsider.com/citi-the-solar-age-is-dawning-2013-5#ixzz2SK0CfxNi

Source : businessinsider, Rob Wile , May 2, 2013, 11:03

Microsoft raising north of $2.6B across four different offerings, longest expires in 2043

Through four offerings, Microsoft is offering corporate debt – senior, unsecured – denominated in both Euro and Dollar denomination notes worth north of $2.6 billion.

Even companies of great wealth in cash and assets keep debt on their books. Simply having cash isn’t always enough. Where it is located, for example, matters. If your company is based in the United States, but has a large percentage of its total cash overseas, it isn’t quite as useful; repatriation of those funds will incur stiff taxes.

Also, depending on the circumstance, it can be a net-positive ROI move to reserve cash and other short term investments and vehicles and raise new monies through debt, provided that the coupon rate on the new notes is lower than the EV on the extant funds. In short, raising debt in select circumstances can be economical.

Now, to the figures! Here’s, via Microsoft’s announcement, are what the company is selling:

• €550 million of 2.625 percent notes due May 2, 2033
• $450 million of 1.000 percent notes due May 1, 2018
• $1 billion of 2.375 percent notes due May 1, 2023
• $500 million of 3.750 percent notes due May 1, 2043

It’s nice to raise debt when you are a wealthy, profitable company. You try and get an unsecured mortgage for more than $2.6 billion and pay as little as 1 percent on it. Try.

What will Microsoft do with the funds? It isn’t saying much, releasing a vague statement to the following effect:

Microsoft intends to use the net proceeds from the offerings for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions and repayment of existing debt. The offerings are expected to close on May 2, 2013.

If you have some cash to park, you have only about a week to buy in.

Source : Alex Wilhelm, http://thenextweb.com/, 26 April 2013

Le gouvernement Américain encourage les start-ups à commercialiser des découvertes scientifiques

Le Small Business Innovation Research (SBIR) program encourage les petites entreprises à commercialiser des projets de R&D.

L’un des problèmes de la recherche aujourd’hui est le faible taux de transformation des découvertes ou projets qui y sont dévelopés en véritables commercialisations et donc leur extension au grand public. Dans certains écosystèmes spécifiques comme la Silicon Valley, la cohabitation de grandes universités comme Stanford et d’un écosystème de start-ups permet une transformation plus facile. Ce cercle vertueux entre les deux mondes n’est malheureusement pas le cas partout. Ainsi de nombreux projets restent en jachère. C’est pour ces raisons que le gouvernement américain a mis en place le programme fédéral SBIR qui encourage de petites entreprises à transformer des projets de R&D en produits ou services commercialisables.

Trois stades de développement
Ce programme financé au niveau fédéral est développé dans chaque état et les périodes de dépôt de dossiers correspondent à des calendriers différents. Les critères pour être éligible à un financement du SBIR sont les suivants : les entreprises doivent être indépendantes et possédées par des Américains, être à but lucratif, employer le principal chercheur de la technologie qui est développée dans le projet et avoir au maximum 500 employés. La sélection s’opère en trois étapes: tout d’abord, l’argent fédéral est alloué à une entreprise pour rechercher comment commercialiser cette technologie. Puis, un montant additionnel est alloué au développement de celle-ci. Enfin, la troisième étape consiste en la commercialisation de cette technologie, que l’entreprise doit financer sans aide fédérale.

Transformer l'excellence scientifique en business profitables
Le programme affiche quatre objectifs principaux. Tout d’abord, stimuler l’innovation technologique. Ensuite, faire se rencontrer la recherche fédérale et ses besoins en terme de développement. D’autre part, favoriser et encourager la participation de personnes socialement et économiquement moins favorisées à des projets innovants et d’entreprneuriat. Enfin, améliorer la commercialisation par le secteur privé d’innovations issues de la recherche fédérale par le biais de son financement. Parmi les projets récemment financés, on compte par exemple CytoSorbents qui a mis en place un appareil permettant de purifier le sang afin de soigner certaines maladies. De multiples agences fédérales participent au programme, touchant ainsi de nombreux domaines, de la défense à l’énergie en passant par la santé.

Source: L'Atelier

The Five Key Dynamics of the Seed Market in 2013

Last night I spoke at the Enterprise Tech VC Panel. We discussed five trends in the seed market and the outlook for 2013. These are the five most important trends for 2013, in my view.

MicroVC Funds Have Doubled Their Assets

Call it micro-VC or mega-seed fund, there's a new investor class which raises funds between $50 and $100M to invest in seed-stage companies. Felicis manages a $70M fund, Jeff Clavier at Softech invests from a $55M fund and Steve Anderson of Baseline has raised at two funds totaling $100M. These seed investors invest larger amounts than before (both initially and during follow-on rounds) and invest in more startups.

Seed Round Sizes Have Ballooned

In 2008, when I first started in venture, a$500k seed was sizable. A $1M seed turned heads. Today, those amounts are routine, if small. In the past year, micro-VCs have doubled the capital they invest each year to $1.6B. In addition, traditional VCs also have continued to participate actively in the seed market. As a result of these two pools of capital entering the market, seed rounds are approaching Series A sizes. Lacking accurate census data to illustrate the trend, I'll use an extreme case to prove the point: Virool raised $6.6M last week in a “party” seed round.

CrowdFunding and MarketPlaces Bring New Viable Forms Of Seed Capital

No one can argue with the success of fund raising campaigns on KickStarter and Indiegogo. Ouya effectively raised a $8.6M Series A in the form of early orders on Kickstarter. In addition to crowdsourcing sites, Angelist (in partnership with SecondMarket) and FundersClub attract $1k+ investment sizes from non-traditional angels looking for exposure to startups. As a friend pointed out to me, it all feels a bit like the 1999 bubble, when everyone can and wants to invest in a dot-com. Instead of using the public markets to buy shares, private markets have blossomed to meet this demand.

Mezzanine Seed Funds Have Entered The Market

You don't often hear the word mezzanine in the valley. It's much more common in private equity conversations. But with the boom in seed investments, driven by the capital flooding the asset class, mezzanine seed funds have taken root. Mezz seed funds target startups who have raised a seed round, but haven't been able to achieve the milestones to attract a Series A investment. So they seek a second seed round, a mezzanine seed round, for a bit more runway and a second chance to raise an A.

Rising Labor Costs Increase Burn But Fuel The Acquihire Trend

As infrastructure costs plummet, labor costs are soaring because of a talent supply/demand imbalance. These labor costs require larger seed rounds to achieve the same runway. In fact, for most of Redpoint's portfolio companies, labor is the single biggest line item on the P&L.
On the other side of the coin, the overwhelming demand for top talent drives the acquihire market. Every major technology company has a talent acquisition strategy based on M&A. Acquisitions by FB, GOOG, YHOO, EBAY and others provide a landing place for struggling seed companies looking for strategic options and a non-zero return for investors.

The New Bull Market

The seed market feels like a bull market: lots of capital rushing in, new asset classes being created, and a ton of opportunity for entrepreneurs looking for some early capital to change the world.
NB: Thanks to Sundeep Peechu and Chris Gottschalk who inspired this post. And thanks to Mike and Victor for inviting me to the panel discussion.

Source: Tontumguz.com

Google, No. 3 most active venture-capital firm

Google is close to becoming the top dog in yet another business sector: venture capital.
The search giant’s 4-year-old financing arm, Google Ventures, has quietly become the country’s No. 3 most active venture-capital firm, according to a recent report.
Google Ventures, which has $300 million a year to invest, participated in 71 funding rounds in 2012, according to data from CB Insights.
“Google has become a favored destination for entrepreneurs,” said Anand Sanwal, CB Insights’ CEO.
The allure of Google Ventures is obvious: worldwide brand recognition and access to some of the brightest bulbs in Silicon Valley.

Splash News

Google—headed by Larry Page (above) — in addition to dominating search and online advertising, has becomeamajor force in venture-capital investing.

“Google is doing stuff to help the companies recruit, making its technology and talent available to portfolio companies, and trying to plug the companies into the Google ecosystem, value another investor can’t add,” Sanwal said.

Most activity is seed investments, partners at the firm have said. It would appear the unit has rung up gobs of profits — although there’s no way to know exactly how much.

So far the financial arm, whose lone investor is Google, has raised $1.5 billion, according to a Google Ventures spokeswoman. Last year only New Enterprise Associates or Kleiner Perkins Caufield & Byers did more tech deals.
Not content with merely cutting checks, Google Ventures is also finding exits for some investments.
In 2012, Google Ventures saw eight exits for startups it backed, a number that put the company in the top ranks of VC firms, according to research firm PrivCo.
“Google is a big VC firm, no question about it, and it is seeing exits,” said PrivCo chief Sam Hamadeh.

In 2013, the VC arm has made seven investments, according to PrivCo data, a pace that’s on par with Silicon Valley’s biggest investment firms.
The parent company has always been active acquiring companies and was among the top buyers of startups last year. However, its venture investment and acquisition philosophies differ.
“Google acts like a traditional VC,” Sanwal said. “There could be no strategic benefit to the mothership. It is looking for returns.”

That’s not to say Google doesn’t use its investments to survey the tech landscape and use it as a farm league for eventual acquisitions. There was one instance last year, and two overall, where the parent bought a company in which Google Ventures invested.
Google Ventures said yesterday it wasn’t surprised to hear the firm is now among Silicon Valley’s most active. Since its inception in 2009, it has invested in 200 startups, said Jodi Olson, the spokeswoman.
 “The idea isn’t to funnel up company ideas to Google; it’s financial returns,” she said.

gsloane@nypost.com
Source: NewYork Post 

Renaissance Factoy, spécialiste de la relance de sites marchands en difficultés

Françoise Govare, dirigeante de Renaissance Factory© S. de P. Renaissance Factory

Après avoir levé 270 000 euros auprès de Kima Ventures, OTC et Angyal, le spécialiste de la relance de sites marchands en difficultés dévoile son business model. 

JDN. Renaissance Factory se positionne comme un "accélérateur de business". De quoi s'agit-il ?
Françoise Govare. Nous sommes un accélérateur de business pour des sites marchands dans le sens où notre structure leur permet de mutualiser coûts et compétences afin de les relancer et de leur donner un second souffle. Notre modèle se base sur des acquisitions de sites positionnés sur des niches, dans l'univers de la maison, du textile, de la mode voire des services d'e-commerce par abonnement. Dès la première année, nous souhaitons les amener au million d'euros de volume d'affaires. Notre démarche n'est cependant pas agressive dans le sens où nous sommes bien accueillis par les dirigeants de sites marchands. Ils savent que nous sommes là pour les aider.
  Comment sélectionnez-vous les sites que vous comptez racheter ?
Nous faisons une due-diligence au préalable, au cours de laquelle nous étudions leur concept, les leviers de croissance et les synergies que nous pouvons trouver avec les entrepreneurs. Nous essayons avec eux de développer un business plan le plus détaillé possible. En ce qui concerne la taille des structures, nous ne regardons que ceux qui ont eu une réelle expérience sur leur marché, c'est-à-dire des sociétés qui ont une activité opérationnelle d'une durée de six mois à un an et demi.

Quelle est votre stratégie pour relancer un site marchand ?
Nous nous interrogeons dans un premier temps sur la viabilité deson positionnement afin de lui trouver les meilleurs leviers de croissance. Puis nous réévaluons et ajustons ses besoins marketing et déployons ses campagnes en faisant fonctionner tous les leviers d'acquisitions client traditionnels, qu'il s'agisse du SEO, SEM, d'affiliation et des comparateurs de prix. Enfin nous avons accès à une plateforme et un ERP souple fait-maison qui nous permet de gérer du Magento, du Prestashop et même du RBS.

Vous parlez d'un modèle de développement low-cost...

"Notre objectif est de miser sur d'importantes économies d'échelle"

Notre objectif est de miser sur d'importantes économies d'échelle, par exemple grâce à une base de données que nous allons mutualiser et segmenter pour optimiser nos performances en matière d'emailing. La valeur ajoutée est également permise grâce aux compétences de notre équipe et de sa capacité d'exécution. Ainsi, nous allons pouvoir racheter deux à quatre sites marchands par an pour les relancer.

Qu'en est-il de votre prise de participation ? Quels sont vos objectifs de cession ?

"Nous visons une valorisation de 1 à 3 millions d'euros pour les sites après 3 à 5 ans"

On ne prend pas forcément 100% du capital des sociétés mais nous montons au moins à 51% pour conserver une marge de manœuvre. A ce moment leur valorisation n'est pas importante et notre rôle sera de leur permettre d'atteindre une valorisation de 1 à 3 millions d'euros après 3 à 5 ans. Nous avons un projet de cession du même ordre de durée pour chaque site. Les futurs acquéreurs peuvent être autant des e-commerçants déjà installés sur le marché que des industriels intéressés par la perspective de diversifier leur activité grâce à des verticaux de niche pertinents.

Que se passera-t-il pour les équipes en cas de cession ?
La situation ne s'est pas encore présentée. Nous avons jusque-là uniquement racheté un spécialiste du linge de maison baptisé Cosyforyou et sa fondatrice Aurélia Denoual nous a rejoints pour participer à l'aventure Renaissance Factory. Le jour où nous revendrons une activité, nous étudierons les offres au cas par cas et s'il faut accompagner les acquéreurs, un moment, nous pourrons le faire. Si, en interne, le repreneur est intéressé par certaines de nos ressources, tout est envisageable.

Diplômée de l'ESCP Europe en marketing international, Françoise Govare débute sa carrière dans la grande consommation en 1980 où elle passe chez Jacques Vabre, Danone et L'Oréal. En 1995, elle rejoint Prisunic puis Sephora avant de se spécialiser dans le luxe chez Baume et Mercier. Elle devient consultante indépendance en grande distribution en 2004 où elle se spécialise dans le mode et les cosmétiques. En 2010, elle devient directrice marketing du groupe marocain Aksal. Elle fonde Renaissance Factory en 2012 avec Aurélia Denoual (directrice marketing) Jean-Sébastien Grainzevelles (directeur des opérations) et Phetdavanh Sisombath (directeur technique). La structure a été fondée avec le soutien de Martin Génot (AchatVIP, Network Finance).

Source : Journal du Net