Tag: Capital

07
Oct
2020
Posted in technology

Why the CEO of a $1 billion startup chose debt capital over VC funding

  • In February, Quantum Metric CEO Mario Ciabarra was fielding calls from investors at a rapid clip and getting unsolicited term sheet offers that valued the company at $1 billion. 
  • The term sheets offers slowed once the coronavirus hit but his company kept booming, growing annual recurring revenue at 70%, he told Business Insider.
  • By June, VCs were calling again, but the valuations were lower, even though revenue-under-contract had grown, said Ciabarra. 
  • So he decided not to take on a new round of funding yet. Instead, he opted for a $25 million loan from Silicon Valley Bank until he could secure a venture funding round at the terms he wants.
  • Visit Business Insider’s homepage for more stories.

In February, Quantum Metric CEO Mario Ciabarra was fielding calls left-and-right from venture capitalists eager to pour funding into the company.

“We weren’t actually trying to raise any specific amount of money,” he told Business Insider. “Of course, we entertain conversations cause it’s great to get to know folks. And we started getting term sheets that were unsolicited.”

Investors were also valuing the young startup at roughly $1 billion, he said. That’s an eye-popping valuation for a company that launched in 2011, especially considering that Quantum Metric’s last funding round was a $25 million Series A just two years ago that pegged the firm’s worth at $125 million, according to an estimate from Pitchbook. 

In March, once the pandemic brought much of the globe to a grinding halt, those offers began to stop trickling in at the same pace. But then in June, when Quantum Metrics got a new round of solicitations, Ciabarra said the valuations weren’t as high.

This was particularly baffling to Ciabarra because he says business is booming in 2020. Quantum Metric is experiencing 70% growth in annual recurring revenue, an

04
Oct
2020
Posted in software

Small software companies find a home with ESW Capital

ESW, short for enterprise software, is controlled by Texas billionaire Joseph Liemandt. Over the past couple of decades, the firm has bought more than 100 companies in deal sizes ranging from less than a million dollars to at least $460 million. ESW aims for at least 30 more acquisitions next year as the big companies that are its target customers rely ever more heavily on technology to get through the coronavirus pandemic.

Austin, Texas-based ESW has the infrastructure—managers, lawyers, recruiters, developers and sales professionals—that small companies struggle to afford. It also has the cash to allow early investors and founders to move to the next creative challenge.

Source: Court documents

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Source: Court documents

Andrew Einhorn co-founded media-intelligence company Synoptos in 2014 and sold the Virginia-based provider of real-time reputation-management software to ESW last year for an undisclosed sum. Synoptos had been growing steadily but its founders wanted it to expand faster, either by raising venture capital in exchange for partial ownership or by selling the company outright to a large company like ESW, he said.

ESW, Mr. Einhorn said, offered “founder-friendly” terms and, important for him, allowed Synoptos customers to tap into other software products as part of the subscription service. He is now chief executive of LevelFields Inc., a financial-technology startup that hasn’t come to market yet, and says he has no regrets about selling to ESW.

Instead of buying and selling companies the way private-equity firms do, ESW operates the software businesses it buys, increasingly through its Aurea Inc. unit.

Source: Court documents

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Source: Court documents

Technology created by the small businesses ESW has bought is often collected in a library of software tools for sales and marketing, collaboration and integration, and other business essentials. ESW sells access to the collected offerings under a subscription model.

The deal

01
Oct
2020
Posted in technology

These are the top bankers, lawyers, and capital providers driving the $40 billion SPAC craze

One of Wall Street’s most talked-about trends is the wave of special-purpose acquisition companies, or SPACs, that have launched IPOs at such a torrid pace that they’re on track to raise more than triple last year’s totals.



a group of people walking in front of a building: One-hundred and twelve SPACs, aka "blank-check firms," have raised more than $40 billion so far this year. REUTERS/Lucas Jackson


© REUTERS/Lucas Jackson
One-hundred and twelve SPACs, aka “blank-check firms,” have raised more than $40 billion so far this year. REUTERS/Lucas Jackson

One-hundred and twelve SPACs, aka “blank-check firms,” have raised more than $40 billion so far this year, according to the website SPAC Research. There are now 183 shell companies with $57 billion to spend on bringing other companies public, the data provider said.

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There’s an entire ecosystem of advisers, salespeople, and lawyers increasingly pitching blank-check companies to investment platforms and wealthy people. Asset managers like Fidelity, T. Rowe Price, and Capital Research are also increasingly participating in the market, lending an additional aura of respectability to what had once been considered a back corner of the financial markets.

Historically, SPACs have been used as an alternate way into the public markets for companies that didn’t have the governance threshold to attract investors in a traditional IPO, or a last-ditch effort for investors to exit their stake. The traditional process requires filing a prospectus, engaging with the SEC and facing scrutiny from discerning investors.

Video: Despite AOC call for probe, Peter Thiel-backed tech firm goes public, hits $22B valuation (Fox Business)

Despite AOC call for probe, Peter Thiel-backed tech firm goes public, hits $22B valuation

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Inevitably, that meant the deals didn’t always work out well and the market had a history of failures and occasional cases of fraud. In 2005, for example, the SEC removed some protections afforded other entities after some of the shell companies were implicated in fraud, according to a Harvard Law

01
Oct
2020
Posted in technology

Bullpen Capital raises $130 million more to fund the far afield and misunderstood

Bullpen Capital, a now 10-year-old, venture fund in Menlo Park that focuses on what it calls post-seed investing — it backs startups that have already raised up to $5 million and “aren’t quite ready for a $10 million check but another $5 million would make them dangerous,” says firm cofounder Paul Martino — just closed its fifth fund with $130 million in capital commitments.

The firm also brought aboard a new general partner: Ann Lai, formerly of Binary Capital, a firm that has since closed its doors but where Lai, who has a PhD in engineering sciences from Harvard, developed a thesis  around bringing in more diverse startups from both a startup and geographic perspective — work that, it turns out, is also a prime focus for Bullpen.

In a call with both Martino and Lai earlier this week, they pointed to the startup Hemster to illustrate how both Bullpen and Lai respectively think about startups, and why, soon after Lai brought the deal to Bullpen roughly a year ago, it knew it had found its newest GP.

Hemster was founded by a solo founder, who happens to be a woman (Allison Lee), who happens to be a first-time entrepreneur. In the traditional world of venture capital, that’s three knocks against the company.

What the company does — on-demand tailoring — doesn’t necessarily sound on its face like a venture-like bet, either. Martino admitted that his first reaction to Lai’s pitch was: Why would we fund this?

Yet what Lai saw, and Bullpen eventually did, too, is a company positioned well to seize on the continuing shift from offline to online shopping, where all manner of technologies have tried to map body types in order to guarantee a better fit for customers. But Hemster, by constructing data about customers and

30
Sep
2020
Posted in technology

Edtech Startup Sunstone Eduversity Raises INR 24 Cr In Series A Funding Led by Saama Capital

The Series A funding round was led by early-stage investor Saama Capital along with participation from Ashish Gupta of Helion Advisors, Pankaj Bansal of PeopleStrong and existing investors Prime Venture Partners, Rajul Garg and Purvi Capital

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Edtech startup Sunstone Eduversity has raised INR 24 crore in Series A funding round led by early-stage investor Saama Capital.

The round also saw participation from Ashish Gupta, managing director of Helion Advisors, Pankaj Bansal, co-founder and chief executive officer of PeopleStrong along with existing investors Prime Venture Partners, Rajul Garg and Purvi Capital.

Founded in 2014 by IMT alumni Ashish Munjal and Piyush Nangru, Sunstone Eduversity offers Pay after Placement—program fees paid only upon successful placement with a company—higher education programs in partnership with several colleges and private universities. The company claims to work closely with corporates to develop industry ready specializations, such as BFSI, logistics, sales management and digital marketing.

“Sunstone Eduversity is fixing the problem of large scale skill gaps in students by adopting one simple principle, accountability. By collecting fees only after our students get jobs, we make sure that all the cogs in our system are working towards the success of our students,” said Ashish Munjal, co-founder, Sunstone Eduversity.

The company has so far partnered with eight institutions in six cities and claims to have secured 100 per cent placements for its 2018-20 batch, with some of the prominent recruiters being Axis Bank, HDFC, WNS, Genpact, Amazon, TCS, Karvy, Byjus, Reliance Retail, PolicyBazaar and Swiggy. Further, it generated over 450 internship offers for the batch of 2019-21 even during the pandemic.