Global Themes

On Globalization & Venture Capital

From “Gears of War” to “Five Frogs on a Log”

I had a busy but very stimulating three days in gloriously warm silicon valley last week.


A lot of that time was spent with various folks from Microsoft at the Microsoft VC Summit and I also managed to squeeze in an interesting panel discussion at TiE on “Meet the Acquirers

The “wow” bit at Microsoft’s Summit was Peter Moore’s session during which he showcased two super-cool 60 second slots of forthcoming games on X-Box…Peter’s enthusiasm was infectious and after watching the ads, I realised why “Gears of War” made it all the way to No. 1 as “Game of the Year”.

Ed Sim has blogged about the summit in detail (and far more articulately) here as has Paul Jozefak (ex-SAP Ventures; now running his own fund) .

At the TiE Panel Discussion focused on M&A for software start-ups, there were some great comments from Mark Feldman.

Mark has spent almost 30 years in M&A in various capacities…He was also the Sr VP of Strategy at Virsa  , a company acquired by SAP last year. Mark is also the author of “Five Frogs on a Log: A CEO’s Field Guide to Accelerating the Transition in Mergers, Acquisitions And Gut Wrenching Change”, that has been translated in 5 languages!

Some points from the discussion that I felt worth sharing:

  • Ravi Mhatre shared his rule of thumb for valuing software companies: pre-revenue – $10m~$20m; small revenues – some multiple on the revenue; typical value being between $10m ~ $30m; fast growing, significant revenues (> $10m) – typically double-digit millions or more
  • Compliance is probably the “hottest” area in terms of M&A activity by software acquirers
  • “Security” is a close #2
  • SalesForce is an oddity amongst software acquirers in the sense that it picks companies at a very early stage (ties in with their SaaS / AppXchange focus) and finally…
  • …time-worn and blindingly obvious – but still worth repeating: The fastest way to an M&A transaction always goes through the field force and/or the product groups

March 20th, 2007 Posted by | Venture Capital | no comments

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