During his remarks (which I will blog when I have a bit more time), Steve Ballmer made it clear that Microsoft will continue being acquisitive, at an accelerated pace, with a price sweet spot between $30M and $200M. Of particular note was the fact that 1/3 of acquired startups are not VC-backed, just bootstrapped or angel-backed.

I found Don Dodge’s very useful post in my trackback log, in which he lists Microsoft’s most recent startup acquisitions and provides some background on the strategy:

VCs are always interested in Microsoft’s acquisition activity and direction. Over the past 12 months Microsoft has made 22 acquisitions totaling nearly $1B. This compares to just 9 acquisitions the previous year. […] Acquisitions are typically made for three reasons;

People – acquiring great engineering teams and operating managers Technology – adding a technology to an existing product set Time to market – sometimes the market moves faster than Microsoft can release a product. Security is an example. Sometimes … Read more »

I already blogged about the IT scaling challenges of McDonald’s at the Microsoft VC Summit. Here are a few additional  tidbits of information I gleaned during the discussion between senior IT executives from Motorola, Morgan Stanley and Credit Suisse:

BPM/BAM are finally seeing enterprise deployments, with true mobile integration. Likewise SOA has now been adopted by most large enterprises. About 17% of Motorola’s IT infrastructure is now relying on Open Source software, growing at 64% per annum. On security, a point was made that there is often a total disconnect between the buzz generated by a security risk or threat, the actual impact of that problem, and the budgets allocated to solving/protecting from it. The risk to enterprises is both operational (disruption to their business) and brand impact (lose 100K credit card numbers of your customers and you’ll be very popular).

For those of you who were expecting me in London to speak at Blogs and Social Media (and emailed to try and meet there), my sincere apologies. I had to cancel at the last minute to be in New-York for a series of meetings.

If I have time, I will swing by Syndicate, which seems to have a very interesting program over the next couple of days. Please keep me updated on the social gatherings of the conference at jeff [dot] clavier [at] gmail [dot] com .

Microsoft organized yesterday its yearly VC Summit, which is always a great occasion to catch up on Microsoft’s product plans and most importantly meet with about 100 of their senior executives representing their different business lines. Venture capitalists from the US and Europe gather for a full day of briefing, discussions and networking.

One of the panels of the day involved a number of senior IT executives discussing the challenges of their respective organization (Motorola, Morgan Stanley, Mc Donald’s,…). I actually thought that McDonald’s IT and organizational challenges were really complex:

They have 31,000 locations over the world, sometimes in places where Internet or IP connectivity is barely available Their distribution is such that it is challenging to find IT providers who will scale to their size They have 1.6M employees, who have an average turnover of 100% per year across the workforce (i.e some people only stay a few weeks or a few month while others stay longer)

The few requirements … Read more »

Reading this story by the Deal about the gloomy outlook of Friendster, I came across a chart showing the unique visitors of US social networking sites (provided by Comscore, as of March 2006).

Quite stunning to see that 23% of US Internet users are visiting MySpace (1 in 4).

It would also be very interesting to see the percentage of overlap among visitors of these services.

David Hornik (sitting in fronf on me) tells that combining visitors to Six Apart’s LiveJounal and TypePad would make them rank pretty high on that chart (granted these are blogging platform more than social networking sites).

I came across this New-York Times article about MySpace, its economics and challenges: For MySpace, Making Friends Was Easy. Big Profit Is Tougher (sub req’d). It is full of interesting data points, and is especially interesting in the light of the growing importance MySpace has in the Web 2.0 ecosystem. Not only is MySpace the second largest Internet web site in page served, it has also become a common launchpad for new startups that offer widgets that can be integrated in users’ home pages. Bambi Francisco had a good piece on this “trick” two weeks ago: MySpacenomics (sub req’d).

Interesting snippets:

MySpace now has over 70 million signed users (but the article does not mention how many users are actually active – logging at least once in the last 90 days). As mentioned, only Yahoo serves more pages than MySpace which is getting close to one billion pages per day. The yearly … Read more »

And Tali Aben is her name.

I was very happy to see that my good friend Tali just joined the ranks of the VC bloggers, and be the first VC blogher in a long time – which is great. Tali is a General Partner at Gemini Israel Funds – a Tier 1 Isreali firm, and is based in Silicon Valley. You will no doubt find her experience of helping Israeli portfolio companies interesting, and her wit and frank style enjoyable.

As she puts it in her first post:

I suppose, there’s a first time for everything…. and it’s high time to get this blog started. I’ll start by saying what it is I’ll be blogging about:

* Issues facing Israeli startups * Raising 3 boys (ages 2,8 and 12) * Professional women * Digital Photography

I suppose that will keep me busy for awhile….. stay tuned.

Welcome Tali. … Read more »

Buddy Will Price has the Venture Investment Statistics for 2005, from VentureSource, a division of Dow Jones and Ernst & Young.

Commitments to VC Funds, $22.2 bn. Up 18.7% from 2004 VC Financings, $22.1bn. Up 2.8% from 2004 IT Financings, $12 bn. Down 4% form 2004 Software Financings, $5.11bn, Down 6% from 2004 Number of Active Firms, 1,417 Down 49% from 2000, 61% if you define active as > 4 deals per year. Number of exits, 397. IPOs: 41, down 38% from 2004, with $2.24bn raised via IPO M&A: 356, down 12% from 2004, with $27bn in total exit value Number of private companies funded since 2000 net of 2005 exits: 5,406 with $132bn invested in them Average of $24.4m invested in companies At current exit rate, will take 13.6 years to get through backlog (amount available to VC firms for investments / total investments per year) Median M&A exit $47.5m Median Pre-moneys (across sectors) Seed … Read more »

I mentioned two days ago the continued decrease of the volume IPOs of VC-backed companies. Discussing it with a VC friend, we sort of joked about the efficiency of the Sarbanes Oxley regulation that is essentially scaring away from the public markets a generation of companies – hence reducing in a round about way the potential for fraud and abuse from these new companies.

This morning, Benchmark Capital’s Bill Gurley is pointing to a Wall Street Journal piece (that I could not read b/c you need to be a subscriber) from the CEO of the Nasdaq market warning of the potential demise of US Markets due to Sarbanes Oxley:

He is properly concerned that the overly bureaucratic Sarbanes-Oxley (SOX) processes could lead to the end of global domination by the U.S. capital markets. Ironically, the two gentlemen that created SOX did it with the intention of “preserving” U.S. capital market leadership. Their fear was that people … Read more »

Quite a bit of discussion took place in the comments and offline following my post on accredited investors, especially as it relates to friends and family financing. These investors will typically be “easier” to convince to support and finance your idea, but at the same time they might not qualify for the accreditation as defined by the law.

So what can you do as a young entrepreneur/team needing some cash? First order: can your savings and credit cards get you anywhere meaningful? Second: in order to avoid being stuck between a rock and a hard place, a loan that will be re-imbursed as opposed to converting into the next round of equity financing might be a temporary solution. Unfortunately for the unaccredited lender, he/she will not be able to benefit from that early support through the perks angels typically get: discount to Series A, warrant coverage, etc. because only accredited investors can acquire equity. And once … Read more »

Seed stage investing is getting very busy these days, and over the past few months I have started hearing about companies taking money in small amounts from a large number of friends and family investors. Easy money ? Maybe, but…

Whilst it is great to get that kind of support from your close circle, it often involves investors who are not accredited. The accreditation has nothing to do with the sophistication of the investor, nor having gone through a formal exam but a set of criteria clearly defined by the SEC (Rule 501(a) under the Securities Act of 1933) – which are related to a minimum level of yearly income or a minimum NAV (net asset value).

Not complying with this rule, which means – yes – turning money down, will come back and haunt you down the road when it is time to further finance or sell your company. Just as an example: unaccredited investors can rescind their investment at … Read more »

Startup companies sometimes need to re-incorporate in Delaware if they did their incorporation in a state where corporate law is deemed less friendly to business operations or investments. Other times, it is the legal structure which has to be changed (say from an LLC to a C Corp).

Brad Feld has started a useful set of posts on the topic a while back, and just mentioned that both changes got easier in Delaware:

The first innovation (Section 265 of DCGL – Delaware Corporate General Law) creates a simpler process for the reincorporation of non-Delaware corporations in Delaware (through a one-step “conversion” rather than through the traditional but cumbersome reverse merger of the non-Delaware corporation into a wholly-owned Delaware sub.) In English – if you are incorporated in a state other than Delaware and want to reincorporate in Delaware – it’s now a lot easier.

The second innovation allows for the one-step conversion of non-Delaware limited liability companies into Delaware corporations.  These conversions/reincorporations have historically required 2 steps – for … Read more »