Top five web/internet companies acquired in 2007 - the year of the penguin.
Thanks to private equity firms, 2007 was an active year for M&A in general. But interestingly, in the web/internet space, most of the large acquisitions were done by Stretegics, the corporate acquirers, and not the private equity firms.
The sector that saw the highest activity was the Internet advertising sector; aQuantive, 24/7, DoubleClick, Right Media and a long list of others were acquired this year.
Here are the top 5 acquisitions in the Web/internet field.
(1) aQuantive - Microsoft : $6B. aQuantive is a digital marketing and technology company. It is now part of Micorosoft’s Advertiser and Publisher Solution group.
(2) WebEx - Cisco : $3.2B. Webex is a leader in the online video concerning. Cisco’s mantra? "Unified communication". Hmm, where have I heard that before?
(3) Double Click - Google : $3.1B. The deal is not complete yet but it was approved by FTC. DoubleClick develops and provides internet ad serving service. Google + DoubleClick will rule most of the clickable space on a webpage.
(4) Club Penguin - Disney : $700M. Club penguin is a virtual world for kids. Social Web - start them when they are young.
(5) Right Media - Yahoo : $680M. Yahoo already owned 20% of Right Media and purchased the remaining 80%. Some suggest that Yahoo purchased Right Media in response to Google’s DoubleClick purchase.
Some other notable acquisitions of 2007 are:
Postini - google : $625M. Postini is an e-mail and communication security company.
24/7 real Media - WPP : $649M. 24/7 is a significant player in the online advertising marketplace.
Zimbra - Yahoo : $350M. Zimbra provides online office software.
Adult Friendfinder - Penthouse : $500M. Adult FriendFinder is an an online adult dating site.
How Stuff Works - Discovery : $250M. How Stuff works has expanded in to online video instructions.
American Greetings - Webshot : $45M. This was notable because CNET purchased Webshot for $70M not too long ago. I still remember the time when Webshot was a wallpaper site.
Business.com - Donnelly : $345M. From a directory serving Google text ads to the sale at $345M was remarkable.
Lexico - Answers.com : $100M. Lexico owns dictionary.com and thesaurus.com. This deal was notable because Answer.com paid almost $10/unique visitor - that is on the rich side for sure.
For a more detailed list, see PartnerUp and seeking Alpha and DealBook.
These are large numbers, but they dwarf compared to the attempted acquisition of Rio Tinto (international mining company) by BHP Billton (world’s largest mining company)for $140B.
Visual effects company Digital Domain Files for IPO
Digital Domain, a 14-year-old, Venice, California based visual effects and animation company, filed to raise up to $100 million in an initial public offering.
It has been a long time coming from Digital Domain - they were planning an IPO in 1999 but the IPO market dried up. It is always nice to see IPO opportunities bubble up again.
In 2006 the company was acquired by private investment firm Wyndcrest Holdings, a group led by movie director Michael Bay (Pearl Harbor) and investor John Textor.
The award-winning company has produced computed generated special effects for films and other media. They also maintain a strong position in media convergence with online branding and an impressive list of clients. Digital Domain received the Best Visual Effects Academy Award in 1997 and 1998 (for its work on Titanic and What Dreams May Come, respectively).
For the nine months ended Sept. 30, the company reported a loss of $15M on revenue of $56.6M.
The company plans to use proceeds from the IPO to prepay in full its existing secured notes. Remaining proceeds will be used to expand its technology development and licensing program and to branch into the production of animated and visual effects-driven feature films and the development and production of video games.
Digital Domain Co-chairman Michael Bay is a famed producer who recently directed “Transformers” and “Armageddon.” Mark Miller, the company’s president and CEO, is a former executive of Lucasfilm and Industrial Light and Magic.
Founders include Hollywood hotshots James Cameron, Stan Winston, and Scott Ross.
GCommerce raises $500k from Agility Capital
Agility Capital has announced that it has closed a $500,000 financing to GCommerce, Inc. The debt facility is in the form of a tiered bridge loan, according to Jeff Carmody at Agility Capital.
GCommerce provides cost-effective, web-based software solutions designed to streamline and improve supply chain operations for manufacturers, distributors, buying groups, and retailers of goods and services. The company is based in Des Moines, Iowa.
Agility Capital provides debt solutions to Venture Capital backed private companies and Small Cap public companies in the technology/communications/medical device and branded consumer products markets.
Agility’s focus is to provide short term loans to technology companies, with a quick turn around through a simplified process that provides entrepreneurs with access to debt capital when they need it. Companies can use the financing to get to the next level, such as a private equity investment, the sale of the company, or a public offering. Agility has offices in Santa Barbara and Menlo Park, California.
Technorati Tags: Agility Capital, GCommerce, debt financing, bridge loan, short term loan
Momentum Ventures: Helping start-ups start up
Momentum Ventures is a Venture fund in Los Angeles, CA, that funds early stage start ups, to get them ready for traditional VC investment. Rabinder Sekhon of Sekhon Advisers, writes about the fund, its investment strategy, and the work it does in getting start ups to the next level.
As some first time entrepreneurs may already have experienced, attempting to get through to a VC with the hopes of securing a Series A round is really tough to do right now. There is a funding void left by VC firms shifting their investments downstream. This has left many unseasoned entrepreneurs to fend for themselves to bring great ideas to fruition.
Filling this void is Los Angeles based Momentum Venture Partners, founded in 2004 by a pair of veteran start-up executives - Matt Ridenour and Andy Wilson. Momentum works closely with a company’s founders to shape their business plan, find experienced management, finalize a product and gain customers - a process that typically takes about nine months to complete. At that point, they pitch the company to VCs with hopes of securing a $4 million to $5 million Series A round.
Picture courtesy Momentum Ventures
Momentum’s distinctive model dedicates far more time than a typical angel or seed-stage investor while also assuming considerable risk. A typical assignment begins with a six weeks first phase - usually for a fee of less than $20,000 - validating a business plan, building chemistry with the founder and carrying out due diligence before committing to the start-up. Upon approval, one of four Momentum partners then takes on an interim CEO role, moving the founder to the chief technology officer role. During the process, Momentum provides a bridge loan - typically $250,000 to $500,000 from a bridge fund pooled from high net worth individuals - to keep the company operating, all for a ‘nominal’ monthly stipend.
Andy Wilson, Stuart MacFarlane, Katie Cameron, Matt Ridenour, Dan Tamkin, Scott Shapiro of Momentum Ventures
Unlike a traditional VC who might split his/her time with many companies, Momentum partners typically work with, at the most, two companies at a time spending half of their time on each, with an operating associate subbing in the other half as a project manager and director of operations. Momentum’s ultimate goal is to deliver the company to venture capitalists and secure that first round of capital, when the firm’s bridge investment converts, often at a discount, into Series A preferred stock. It’s at this point the firm gets paid for its work after having deferred the majority of its management fees during the previous nine months.
So far all seven of its start-ups have made it to the Series A level, focusing on Los Angeles-area technology companies that require less than $10 million in funding to break even on a cash-flow basis. The seven have raised a total of $30 million in Series A funding. The firm had its first exit in 2006 when Discovery Communications Inc. acquired Academy123 Inc., which had raised a $5 million Series A round the year after Momentum brought the company to venture firms Arcturus Capital and Hanseatic Group.
Momentum is especially beneficial to VCs because it’s bringing only companies with proven business models and customers. From the point of view of the entrepreneur, Momentum understands what VCs want and helps clear up legal and other issues that prove invaluable to companies who make the grade to be part of the Momentum portfolio.
WSJ also covered Momentum Ventures this morning.
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