Tioga Venture Blog

Red Herring: Private Equity Eyes Dell, EMC, Yahoo

Private Equity Eyes Dell, EMC, Yahoo
Huge technology buyouts of the past few years may be just the start.
By Scott Morrison

November 27, 2006 — Private equity investors have been kicking the tires of some big companies in the technology sector lately, including Dell, EMC, and perhaps even Yahoo, according to a source familiar with the situation. Private equity’s appetite for some of the industry’s most well-known names suggests that few—if any—deals seem too large amid the buying spree that has seen Carlyle Group and Kohlberg Kravis Roberts spearhead $45 billion in technology buyouts in the past two years.
 
“Size is not an issue. If the public markets are not going to value these companies, then private equity will,” said the source, who spoke on the condition of anonymity. Private equity investors are increasingly attracted to maturing tech companies because they have stable earnings, strong cash flow, and little or no debt—meaning they can afford to take on debt in a buyout.

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~ Thierry Aubert

New York Times: For Start-Ups, Web Success on the Cheap

For Start-Ups, Web Success on the Cheap
by Miguel Helft
November 8, 2006

SAN FRANCISCO, Nov. 8 — When Seth J. Sternberg and two colleagues started Meebo, a Web-based instant-messaging service, they didn’t go looking for venture capitalists. Using their credit cards, they financed the company themselves to the tune of $2,000 apiece. It was enough to cover their biggest expense — leasing a few computer servers at $120 a month each.

Within a month of its introduction in September 2005, Meebo was getting as many as 50,000 log-ins a day, and it needed more servers. It decided to take a modest $100,000 from three angel investors, wealthy individuals who typically contribute small amounts but do not get involved in management decisions.

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~ Laura Pauli

Enterprise Software 2.0

Last month at Tioga Venture’s 4th Annual International Software Summit, Phill Robinson, COO of salesforce.com (NYSE: CRM), keynoted the event, presenting the strategy of the leading Software as a Service company with a focus on its latest big announcement: Appexchange. It is easy to underestimate the changes that Appexchange can bring to the enterprise software market.

The Software as a Service (SaaS) trend started in the late 90’s as the potential of the web to deliver enterprise applications became obvious. However, the take-off was slower than expected in spite of the ease of use for end-users. Among the reasons was the fact that each SaaS vendor was actually an island of proprietary software. Solutions were difficult to merge at customers’ sites. The cost of starting one was very high with most of the financing going into infrastructure investments and channel building. SaaS companies were also very difficulot to merge, each coming with its own proprietary infrastructure, technology and channels.

Appexchange has the power to change all these elements. For the first time, it is possible to start a software vendor relying on an existing platform for production, integration and distribution. This allows budget and bandwidth to be spent on value-creating activities rather than building the foundation of a SaaS. We should expect to see many small but creative vendors emerging in this new ecosystem. Today there are limited alternatives to Appexchange. The questions that remain are whether other SaaS ecosystems will emerge or will salesforce.com will be able to extend its reach beyond CRM.

~ Frédéric Halley

Tioga in the News ~ 4th Annual International Software Summit

Tioga Venture's 4th Annual Software Summit held in October in Bordeaux garnered much press attention due in large part to the high quality of executive speakers representing global industry leaders including salesforce.com (NYSE: CRM), SAP (NYSE: SAP), Swisscom, and Carrefour.

PR Newswire
Yahoo! Finance
Sys-Con France
Boursica
Tout-Savoir.net
LeFigaro

~ Laura Pauli