Here’s this week’s roundup of M&A news in the world of tech:
Concert giant Ticketfly has acquired last-minute ticket app WillCall.
GoDaddy acquires Mad Mimi to improve its email marketing service.
Chinese construction company Zhongji Holding has acquired “Family Farm” maker DianDian Interactive for $960 million.
VMware buys CloudVolumes for real-time desktop app delivery.
Coinbase has acquired blockchain explorer Block.io.
Wells Fargo bank has launched its own accelerator.
SpaceX said to be raising a new funding round at a $10 billion valuation.
Security firm vArmour grabs $36 million in funding … all while still in stealth.
Stitch Labs raises $3.5 million to help reach more retailers and wholesalers.
Product Hunt raises $1 million and debuts its iOS app for hunting on the go.
Felicis, Horizons Ventures invest $3 million into the Vessyl smart cup.
DoubleDutch raises $19 million for its Series D.
LinkedIn product head Deep Nishar is leaving the professional social networking company on October 3 to reportedly pursue a CEO job.
Y Combinator president Sam Altman talks about his inaugural batch of companies.
Lyft’s Chief Operating Officer Travis VanderZanden departs following tensions with the company founders.
Other News of Note
Did you miss out on the companies that were a part of Y Combinator’s summer 2014 class? The complete list is here, here, here, and here.
Zillabyte relaunches as a “cloud platform for data analysis”, moving away from its original mission of helping manage sales leads.
photo by Doug Wheller
Time for another roundup of news from the world of tech M&A:
In a possible acquihire, Yahoo picked up Zofari, the “Pandora for Places.”
Australian telco Telstra has acquired 98% ownership in streaming video platform Ooyala, via an additional $270 million investment.
Beanstock Media acquired startup OnSwipe and their mobile-publishing platform.
Japan’s Rakuten has acquired e-commerce app Slice. (Terms weren’t disclosed, but Slice had raised $32 million.)
Adecco subsidiary Beeline picked up OnForce, makers of SaaS-enabled workforce solutions, for an undisclosed amount. (OnForce had raised over $20 million.)
Samsung snapped up SmartThings, which makes smart-home controllers, for a reported $200 million.
Twitter reveals it paid $134 million for messaging service Gnip back in April, 2014.
VC & Funding News
Must read for entrepreneurs: Fenwick & West’s exhaustive study of Silicon Valley VC funding in Q2, 2014.
If you haven’t heard, BuzzFeed raised $50 million from Andreessen Horowitz, and the $850 million valuation is getting a lot of…buzz.
For the Entrepreneurs in the House
Amazon takes direct aim at PayPal and Square.
In talent news, engineer-recruiting SaaS Greenhouse just raised $7.5 million.
Peter Diamandis has a great take on drones and their disruptive potential.
Tien Anh Nguyen presents the ultimate SaaS pricing guide.
An impassioned plea for startups to ditch the ad-based revenue model, and a way to do it.
Ten years’ worth of data shows the most active VC firms over time.
Fortune profiles how Ajay Banga made MasterCard a tech company.
Just for fun
Trust me, you’ll want to watch this video: Disney uses a 3D printer to make spinning tops.
Thoughts on the tidal wave of secret-sharing apps, from the man who started it all.
Google invests $300 million in Faster, a super fast, trans-Pacific fiber optics cable.
Exitround is talking M&A at South By Southwest 2015. Here’s more information on the panel proposal:
The tech startup world has changed dramatically in recent years with the rise of crowdfunding, a changing venture capital industry, and changes in the M&A market. Venture capital has seen the growth of many angels and smaller funds, new corporate venture firms, as well as the concentration of a small number of large funds.
We’ll talk about how entrepreneurs can best build their companies, raise funding and prepare (optimize) for a massive exit in this new environment. To build successful companies, entrepreneurs need to think about these larger strategic issues and how they affect each other. We’ll also talk about the mechanics of how to develop relationships with potential acquirers and how to negotiate with acquirers.
The panel includes experts in startups, venture capital, corporate development and M&A. They are at the forefront of new ways of investing in startups and conducting M&A transactions.
- How should entrepreneurs evaluate fundraising options in this new venture capital and angel funding environment?
- How does receiving investment from crowdfunding, angel and/or venture capital sources affect the exit options available for entrepreneurs?
- How can entrepreneurs get to know potential strategic acquirers while building their businesses? And when is the right time?
- How should entrepreneurs assess their options when considering selling their companies?
- What should entrepreneurs know in negotiations for M&A in terms of deal structures and optimal “fit” with a potential buyer?
- Hunter Walk, cofounder, Homebrew: Before Homebrew, I led consumer product management at YouTube, starting when it was acquired by Google. I originally joined Google in 2003, managing product and sales efforts for AdSense, Google‘s contextual advertising business. My first job in Silicon Valley was as the founding product and marketing guy at Linden Lab. Before graduate school, I was a management consultant and also spent a year at Late Night with Conan O‘ Brien.
- Jessica Verrilli – director of corporate development and strategy, Twitter: Jessica works on Corporate Development, New Business Development, and Special Projects at Twitter. She has played an influential role in the company’s search partnerships, Series E financing, and acquisitions. She is currently working on new commercial programs and ongoing M&A. Jessica joined Twitter from Venrock, a venture capital firm, where she focused on technology and healthcare investment opportunities.
- MG Siegler, general partner, Google Ventures: MG Siegler is a general partner at Google Ventures, where he primarily focuses on seed and early-stage investments. He has been deeply involved in the startup space since 2005, first as a web developer, then as a writer, and most recently as an investor and advisor. Before joining Google Ventures, MG was a founding partner of CrunchFund, an early-stage investment fund. Prior to that, he reported on the startup world as a writer for both TechCrunch and VentureBeat. MG still writes a weekly column for TechCrunch on top of writing on his own sites and from time-to-time doing movie reviews in haiku.
- Jacob Mullins – CEO/cofounder, Exitround: Jacob is an entrepreneur and a former venture capital investor. Previously, at Shasta Ventures, he spent his time looking at consumer and mobile businesses. Prior to that, he built a dietary supplement company out of South Africa, was the first business guy at VentureBeat.com, and launched the Microsoft BizSpark program.
– You can vote for the panel here: http://panelpicker.sxsw.com/vote/40604#sthash.oyh1RSMc.dpuf
Another busy week has just wrapped up, so here’s a round up of the latest happenings in the world of tech M&A —
Facebook acquires encryption startup PrivateCore to better protect its servers against malicious attacks.
Practice Fusion picks up Ringadoc, an after-hours patient-physician consultation service.
Google acquires Emu, an IM client with Siri-like intelligence, along with picking up Directr, an app for shooting short films on your phone.
comScore acquires MdotLabs to help boost efforts to curb ad fraud.
Rhapsody acqui-hires Ex.fm and Soundtracking.
Square officially acquires food delivery startup Caviar for a reported $90 million in stock.
Big data analytics firm Adatao raised $13 million in funding from Andreessen Horowitz, Lightspeed Venture Partners, and Bloomberg Beta.
Kiwi raises $15 million in an effort to make better console-quality games for mobile devices.
Doctor on Demand raises a $21 million Series A funding round and adds Comcast as a customer.
Container management startup Docker said to be closing in on funding round of $40 million with a valuation of $400 million.
Sherpa Ventures publishes its inaugural On-Demand Economy report, which coincided with Re/code’s Instant Gratification series.
Google’s Android global market share stands at 85 percent, but forked devices increase to 20 percent.
Los Angeles tech funding up 163 percent in 2013 vs 2009, with deals up 180 percent.
PricewaterhouseCoopers: Tech deals, IPO activity achieving levels “not seen in years”.
Venture funding soars for cybersecurity startups — $900 million invested in US companies in first half of 2014.
Yahoo hires former Netflix executive Mike Kail as its Chief Information Officer.
MongoDB’s CEO Max Schireson resigns to spend more time with his family.
Former Etsy COO Adam Freed named CEO of Teachers Pay Teachers, an online marketplace for teachers to sell materials to their peers.
Facebook hires ex-BlackBerry Messenger head to run its Internet.org mobile app.
Other News of Note
Venture capitalists are going to great lengths to convince founders to take their money.
Sam Altman on stupid apps and changing the world.
Get to know designer Yves Behar in this great profile on The Verge.
Livestreaming service Justin.tv makes its final sign-off as Twitch shuts it down, fans rumors that Google will be acquiring it soon.
LinkedIn settles with the US Labor Department in overtime lawsuit case that will see the professional social network pay $6 million.
CrunchBase wants to control “The Business Graph”, the business world’s answer to the Social Graph.
Apparently when Facebook goes down, it really impacts site traffic.
Apple iPhone 6 coming on September 9?
Check out this take on native advertising by John Oliver, host of HBO’s Last Week Tonight.
photo by articproductions
Time for another roundup from the world of tech M&A—
In 800-pound gorilla news, online real-estate giant Zillow has acquired online real-estate giant Trulia, for $3.5 billion.
Apple acquired the “Pandora for Books,” BookLamp, for between $10- and $15 million, and talk radio streaming app Swell for a reported $30 million.
In brick-and-mortar-meets-tech-news, Nordstrom picked up online men’s clothing company Trunk Club, for $350 million.
In not-quite-yet-acquisition news, a flash sale site is seeking an exit in the $400 million range.
Tutor.com acquired online test prep site Princeton Review for an undisclosed amount. Tutor.com is under the IAC umbrella, acquired just last year for $40 million.
In an apparent acquihire, Walmart Labs picked up social shopping app Luvocracy for an undisclosed amount.
In a busy week, Palantir picked up Poptip, which helps companies conduct social surveys and conversation analysis, and Propeller. Terms weren’t disclosed.
Twitter picked up deep learning startup Madbits for an undisclosed amount and password security outfit Mitro.
Payments heavy First Data acquired virtual gift card provider Gyft.
And finally, in an apparent acquihire, Pinterest picked up Icebergs, the “Pinterest for Creatives.”
Mobileye, an Israeli software company, priced its IPO at $25 per share and soared this morning 58% to $39.40 in early trading on the NYSE, giving it a value of $8.4 billion.
For the Entrepreneurs in the House
Fred Wilson has a great parable of the dentist software.
Brad Feld on VCs and bullshit, or the lack thereof.
Airbnb partners with expense-software Concur to enter the business travel market.
Lyft’s John Zimmer on regulations and the challenges of disrupting the taxi industry.
SF Tech Beat on the “tech metropolis” from Seattle to San Francisco.
The SaaS founder blame game, and how to break the cycle.
Ron Johnson, architect of Apple’s retail stores, offers advice to startup on doing retail right.
The mobile app market has always been tough. But just how tough is the subject of a must-read study. (Summary by TechCrunch. Full text here.)
More than Silicon Valley: European startups raised $2.8 billion in Q2, 2014.
Meanwhile late stage funding is hot–as in, dot-com hot.
Moshe Hogeg (founder of Yo and Mobli) just launched photo-sharing app Mirage.
Just for fun
In a funny analogy, Christoph Janz at Point Nine Capital compares A/B testing to sex at high school.
An Indian inventor has made a totally open-source Glass clone.
photo credit: t-mizo
By Ken Yeung
Here’s the latest from the week in tech M&A.
Samsung is reportedly in talks to acquire SmartThings for around $200 million.
Yahoo nabs RayV in an effort to improve its video streaming experience.
LinkedIn acquires Newsle to provide users more daily insights about their connections.
Comcast buys PowerCloud Systems to inch towards its goal of helping its customers create a smart home.
Care.com acquires subscription kids’ goods startup Citrus Lane in $48.6 million deal with a mixture of cash and stock.
Twitter will soon add in-Tweet commerce thanks to its acquisition of CardSpring.
IAC consolidates the romance-based social networks through its acquisition of HowAboutWe.
Zillow acquires Retsly.
Lexalytics snaps up Semantria to bring sentiment analysis to the masses.
ScribbleLive acquires its competitor CoveritLive and will keep both services open to all.
Funding Circle gets $65 million more for its small business lending marketplace.
Singular raises $5 million for its cross-platform mobile marketing dashboard.
PredictionIO raises $2.5 million for its open source machine learning server.
Shyp raises $10 million from SherpaVentures to help it expand to New York City.
Pond5 raises $61 million Series A led by Accel Partners, Stripes Group.
FullStory gets $1.2 million to help improve customer service.
HandsUp raises $850,000 for a platform that lets donors lend a hand to the homeless.
Seed funds are bulking up due to the growth of seed rounds, according to WSJ.
VC dollars invested into startups jumped 21% in the second quarter of 2014 while valuations doubled. Meanwhile, venture-backed M&A slowed slightly, dropping 26% by dollars from the from a strong first quarter.
Investors are becoming weary about paying out for payment companies. CrunchBase data shows the number of VC-backed payments companies has declined, tumbling from 59 startups in Q3 2013 to 41 in Q2 2014.
Y Combinator has published statistics about its portfolio. It has funded 716 companies with a total market cap of more than $30 billion. These startups have collectively raised more than $3 billion.
TubeMogul priced its IPO below its expected range amidst a tough market for ad tech companies, but shares jumped in early morning trading.
New York’s luster may be enough to lure Japan messaging app Line’s IPO away from Japan.
Alibaba said to plan IPO for September.
Fred Wilson on platform monopolies.
Roy Bahat on trust.
Ben Horowitz on leadership and pressure.
FundersClub debuts “Partnerships”, a new way to let you start a venture capital fund or invest in one.
Valuations jump in Q2 2014, according to Dow Jones VentureSource
Venture capital investing in startups spiked in the second quarter of 2014 as frenzied investors sought to buy into the hottest deals. VC investing hit its highest level since the first quarter of 2001, according to Dow Jones VentureSource.
Investors poured $13.8 billion into 917 deals in Q2, up 21% in dollars from the prior quarter and up 4% by number of deals. The amount investment increased 60.2% from the year-ago quarter, although number of deals dropped by 2.2%. Consumer startups and business and financial startups were the big winners in the quarter.
Showing the high demand for startups, median pre-money valuations jumped to $58.3 million, more than double the $28.4 million in the prior quarter and $24.2 million in the year-ago quarter. Is that just the function of several massive deals like Uber and Airbnb? We shall see in coming quarters.
The largest VC investments in the second quarter were Uber ($1.2 billion), Airbnb ($450 million), Pure Storage ($225 million), Pinterest ($200 million) and Automattic ($160 million).
Meanwhile, fundraising by U.S. venture capital funds in the second quarter of 2014 dropped from the prior quarter.
M&A and IPOs
VC-backed M&A Trends from Dow Jones VentureSource
Mergers and acquisitions of venture-backed companies slowed slightly, dropping 26% by dollars from the hot first quarter of 2014. Data showed 108 deals totaling $12.6 billion, which is down 16% and 26%, respectively from 128 deals worth $17 billion in the first quarter of 2014. As usual, the numbers are slightly different from NVCA’s numbers (NVCA showed 97 deals compared to Dow Jones’ 108), but they are directionally the same.
The largest deals of the quarter were Oculus VR, which was acquired by Facebook for $2 billion, Ability Network, which was acquired by Summit Partners for $550 million, and Maker Studios, which was acquired by Disney for $500 million.
IPOs showed 25 VC-backed companies raising $2.2 billion in the second quarter of 2014. That’s down 34% by number of deals and 26% by dollars from the hot first quarter of 2014. But it’s still an increase from the year-ago period.
Greetings everyone. Time for another recap of the week in tech M&A—
Salesforce.com has acquired RelateIQ, a hot data-focused CRM startup, for $390 million, of which $350 million is in stock.
Google continued its active 2014, picking up music streaming service Songza.
Qualcomm acquired wireless chipsets maker Wilocity for a rumored $300 million.
Expedia announced it was buying Australian online travel outfit Wotif Group for $658 million.
Techne Corporation picked up Novus Biologicals, a life-science research antibody supplier, for $60 million.
ServiceNow acquired Neebula Systems, makers of a suite of B2B virtualization and IT cloud tools, for $100 million in cash.
InvenSense has acquired Movea, a French company working in ultra-low power location, activity tracking, and context sensing.
And finally, Oculus acquired RakNet, the company behind a game-networking engine. Oculus, you’ll recall, was recently picked up by Facebook. Definitely not resting on their laurels since the acquisition, Oculus also recently acquired Carbon Design Group.
For the Entrepreneurs in the House
Rory Carroll investigates the dark side of Silicon Valley’s “fail fast, fail often” mantra.
Upside Partnership, formed by former First Round Capital investor Kent Goldman, announced a new $30M fund, and a new way for founders in its portfolio to share in the carry.
Google officially sets up a $100M venture fund in Europe.
In Internet of Things news, Altierre, maker of ultra-low power long range wireless tech, raised more than $21M in funding.
Consumer tech dominates VC’s largest recent exits.
Tomasz Tunguz presents an interesting analysis of the hardware startup world, and a short study on the strength of the IPO market driving the acquisition market.
Just for fun
MindRDR can control Google Glass…by reading your thoughts.
Sergey and Larry give a rare interview, fireside-chat style, with Vinod Khosla.
How Google Map hackers can destroy a business at will.
It’s good to be an intern in Silicon Valley. No, seriously.
And Brandon Gadoci imagines a CNBC for startups.
The IPO window for VC-backed companies continued to stay open in the second quarter of 2014, while the M&A market slowed slightly after a busy first quarter.
There were 97 VC-backed M&A deals in the quarter, down 12.6% from 111 in the first quarter of 2014 and essentially flat with the year-ago quarter, according to the NVCA and Thomson Reuters.
Of those 97 deals, just 33 disclosed deal value–with an aggregate deal value of $3.3 billion. That’s down 56% from $7.6 billion in the prior quarter. Average deal size (again, disclosed deals only) was $98.6 million, which is the lowest since the first quarter of 2013.
Information technology was the strongest sector with 79 of the 96 deals with a disclosed total value of $1.7 billion.
The largest VC-backed M&A deal was Intuit’s $360 million acquisition of personal finance app Check, formerly known as PageOnce, which had raised $47 million in funding. The second largest was Cardinal Health’s $320 million purchase of Access Closure Inc.
Interestingly, deals that returned more than 4x the capital raised made up 45% of deals with disclosed values. However, only 33 of 97 disclosed prices so that number is likely much lower once undisclosed prices are included. For more on actual accurate deal prices in data we have, see more in our Exitround Exit Report here and here.
Meanwhile, VC-backed IPOs shot up 45% to $4.9 billion in capital raised during the second quarter of 2014 and more than doubled the year-ago period’s figure. The number of IPOs, however, was actually down from the wild first quarter. The second quarter was the fifth quarter in a row to have 20 or more VC-backed IPOs. Life sciences led in terms of sectors, with 16 of the 28 IPOs in the quarter.
Buoyed in part by the strong exit market, the venture investing market is still quite hot. VC investing valuations in the second quarter of 2014 jumped 28% from Q1 2014, according to PitchBook. Median pre-money valuation was $24.6 million, the fifth straight quarter of increasing valuations.
Burton M. Goldfield, CEO of TriNet
Recently public company TriNet may not be the most well known tech acquirer in Silicon Valley. But the San Leandro, Calif. company has acquired 10 companies since 2006.
The acquisitions include Gevity, ExpenseCloud, AccordHR, SOI, and Ambrose Employer Group. The acquisitions have spanned the spectrum of talent, product and technology deals.
TriNet, founded in 1988, provides HR outsourcing services, including payroll, health benefits and compliance for the SMB market–and went public in March 2014 (NYSE: TNET). The company has ridden a wave of growth in enterprise software-as-a-service and works with more than 9,000 companies.
The key to any acquisition is relationships, says Burton Goldfield, TriNet’s CEO. Developing close relationships with executives and companies is key to knowing whether an acquisition will work and having the trust to push through what can be difficult negotiations and integration processes. TriNet tends to avoid bankers to do acquisitions and instead focuses on buying companies where TriNet has a long-term relationship.
Goldfield and TriNet had known Ambrose Employer Group for six years before TriNet acquired the company. “We did (the deal) over dinner with a handshake. It was quite a large acquisition,” Goldfield says. “I believe you acquire companies to get great people first and foremost. By having relationships and understanding the people dynamics you have a much better chance of success.”
TriNet’s largest acquisition, Gevity HR, Inc., was a public company at the time in 2009. That was a more complicated process with bankers and lawyers involved. Goldfield did not know the team personally, which made it critical to build relationships with key Gevity management after the acquisition.
TriNet’s corporate development team works closely with other parts of the company to analyze the different needs. Then it determines the best way to create that product or technology—through acquiring technology or people or by building it internally. “They do a lot of product work. It doesn’t have to be just M&A. It’s buy or build. The focus is on enhancing our product – ultimately keeping the customer at the center.”
The team is constantly on the lookout for companies. “We’re always looking at acquisition opportunities. It’s not something you stop and start.”
Valuations and Transparency
While some major acquisitions have gotten headlines, due to eye-popping valuations, TriNet tends to keep its acquisitions within its own analysis of valuations. “We try to stay focused on what we’re looking for and building our own models of valuations. You can’t want something bad enough to pay too much,” Goldfield says.
Some venture-backed startup valuations have shot up to outsized levels–at companies such as Uber, Dropbox and Pinterest. While TriNet looks for top technology and talent, it is careful with acquisitions outside its price range. “We stay focused on the principles that made our ten acquisitions successful over the last six years. We try not to stray too far from our principles. That may mean we don’t participate in certain things.”
While corporate development teams in general sometimes get criticized for lack of transparency, TriNet tries to be straightforward with companies it talks to, Goldfield says. Of TriNet’s ten acquisitions, the company has never done serious due diligence and not closed a deal. “We don’t want to waste anyone’s time,” he says. “If the sell side feels like they’re getting jerked around, at that point the seller has to realize they have more control than they believe. You can’t be afraid to walk away just like you can’t be afraid to walk away from a job offer.”
Advice for Founders
For founders considering a sale, Goldfield says it’s great to shoot for the massive exits. But he suggests staying grounded about what they can get for their companies and also consider the other benefits of an acquisition.
“The biggest thing is to really understand what you want. I find a lot of people get caught up with the Whatsapps of the world being sold for phenomenal amounts,” Goldfield says. “I try to advise younger people that money is less important than they ever believe. Not everybody and their brother makes $19 billion.”
Goldfield is not a fan of milestone earnouts in acquisitions. It’s often difficult to tease out the line between who is responsible for success between the acquiree and the acquirer, he says. “I’m not a big fan of long term payouts. That’s counterintuitive to some people who do a lot of acquisitions. I believe you bring people in who can impact the bigger pie, not just their own project.”
He has seen this from the other side of the table, having worked as SVP of the Americas at Rational Software, which was acquired by IBM in 2003 for $2.1 billion. He then became vice president of worldwide sales for the Rational division at IBM after the acquisition. “Rational software was acquired by IBM and in the first year Rational generated significant additional revenue,” Goldfield says. “I’m not foolhardy enough to think it was just because I’m so great. IBM had a lot to do with it. You have to be realistic about what you can impact and compensate them for that.”
Ultimately, integrating acquired companies is key and TriNet puts resources to making sure new teams are happy. “What’s really important is the best ideas win whether you were acquired yesterday or you’ve been here since the founders started the company. When a 2,000 person company reaches out to a 100 person company they can smother them. It is delicate balance. They need to feel welcome and listened to and if they have a good idea they can act on it. If not people shut down and we don’t get anything back.”