Category Archives: Financing

SEC filing shows LinkedIn negotiating skills are worth $5bn

Microsoft To Layoff 18,000The US Securities and Exchange Committee has released its filings outlining the road to Microsoft’s acquisition of LinkedIn, during which $5 billion was added to the value of the deal, reports

Five parties were involved in the saga, which eventually led to the news breaking on June 13, with Microsoft agreeing to acquire LinkedIn in an all-cash deal worth $26.2 billion. Although it has not been confirmed by the companies themselves according to Re/code Party A, which kicked the frenzy, was Salesforce. Party B was Google, which was also interested in pursuing the acquisition.

Party C and Party D were contacted by LinkedIn CEO Jeff Weiner to register interest however both parties declined after a couple of days consideration. Party C remains unknown, though Party D is believed to be Facebook, who even if had shown interest in the deal, may have faced a tough time in passing the agreement by competition authorities.

In terms of the timeline, a business combination was first discussed by Weiner and Satya Nadella, Microsoft’s CEO during a meeting on February 16, with Party A being brought into the frame almost a month later on March 10. Salesforce CEO Marc Benioff has confirmed several times in recent weeks his team were in discussions with LinkedIn regarding the acquisition. In the following days, Party B was brought into the mix, also declaring interest. Once the interest of Party A and B were understood, Microsoft was brought back into the mix on March 15 with the report stating:

“Mr. Weiner called Mr. Nadella to inquire as to whether Microsoft was interested in discussing further a potential acquisition of LinkedIn, and explained that, although LinkedIn was not for sale, others had expressed interest in an acquisition. Mr. Nadella responded that he would discuss the matter further with Microsoft’s board of directors.”

Prior to the agreement LinkedIn was valued at roughly $130 per share, with the initial offer recorded at $160. Microsoft eventually paid $196 per share, though this was not the highest bid received. The company referred to as Party A in the document put an offer forward of $200 per share, though this would be half cash and half shares in the company. Weiner negotiating skills have seemingly added approximately 50% to the value of LinkedIn shares and bumping up the total value of the deal by $5 billion.

The exclusivity agreement was signed on May 14, though pressure had been put on LinkedIn by both Microsoft and Party A in the weeks prior. It would appear Party A had not been deterred by the agreement, as additional bids were made, once again driving up the perceived value of LinkedIn shares. Microsoft’s offer of $182 was no longer perceived high enough, and encouraged to match Party A’s offer of $200. The report states LinkedIn Executive Chairman Reid Hoffman was in favour of an all cash deal, allowing Microsoft extra negotiating room. Nadella was eventually informed on June 10 the offer had been authorized by the LinkedIn Transactions Committee.

Although Microsoft could be seen to overpaying on the price, it would be worth noting LinkedIn has been valued at higher. The company initially launched its IPO in 2011 and had a promising year in 2013 increasing the share price from $113.5 to over $200 across the 12 month period. Share prices rose to over $250 last November, following quarterly results in February, share prices dropped 44% after projected full-year revenues at $3.6 billion to $3.65 billion, versus $3.9 billion expected by analysts. Considering the fall in fortunes, it may be fair to assume shareholders would be pleased with the value of the deal approaching $200 per share.

While Microsoft has been a relatively quiet player in the social market prior to the acquisition, though this could be seen as a means to penetrate the burgeoning market segment. Although the place of social media in the workplace remains to be seen, Microsoft has essentially bought a substantial amount of data, including numerous high-net worth individuals and important decision makers throughout the world. LinkedIn currently has roughly 431 million members and is considered to be the largest professional social media worldwide.

Another explanation for the deal could be the value of Microsoft to IT decision makers. A report from JPMorgan stated Microsoft would be considered the most important vendor by CIOs to their organization due to the variety of services offered. AWS is generally considered to be the number one player in the public cloud market, though Microsoft offers a wider range of enterprise products including servers, data centres, security solutions, and cloud offerings, amongst many more. Now social can be added to the list. As Microsoft increases its offerings, it could penetrate further into a company’s fabric, making it a much more complicated decision to change vendor.

Cisco to create 200 new cloud jobs at Cisco Meraki UK

Cisco has announced plans to create 200 new UK jobs for cloud professionals with an investment of $2.5m in the UK-based Startupbootcamp accelerator.

The news came as Cisco entertained Sajid Javid the UK’s Secretary of State for Business, Innovation and Skills at its new City of London HQ in Finsbury Square. Javid met with Cisco’s UK CEO Phil Smith to discuss the digitisation of the economy and Cisco’s role in catalysing this process in the UK.

In July Cisco announced it would invest $1 billion in the UK over the next three to five years. In November in announced its intention to buy London-based conferencing company Acano for £470m ($700 million) and Portcullis for an undisclosed figure.

The 200 new UK jobs will be at Cisco Meraki, a cloud controlled wifi, routing and security specialist arm which Cisco plans to grow three-fold by early 2017. Meraki is expected to grow in response to booming demand for solutions to the problems created by the BYOD trend in enterprises.

In a separate initiative Cisco is investing in Startupbootcamp, a startup accelerator that aims to nurture new digital talent. Cisco runs different technology themes in programmes across eight sites in Amsterdam, Barcelona, Berlin, Copenhagen, Eindhoven, Israel, Istanbul and London. Startupbootcamp claims that 80% of its alumni are still trading and have attracted an average investment of £400,000 each.

Cisco already runs an incubator, IDEALondon, in association with University College London (UCL) and DC Thomson. Last week as IDEALondon celebrated its second anniversary it announced it has secured £10 million in external funding and earned £2 million in revenue, creating 100 jobs. Cisco customers now have 50 pilot projects using technology from IDEALondon startups. The pilot projects help refine the systems and give Cisco customers access to new options that otherwise wouldn’t be available, it claims.

“There are still huge opportunities to improve productivity with digital technology,” said Cisco’s UK CEO Phil Smith.

“Two hundred new high value jobs is fantastic news,” said Javid. “Britain is the place to do business.”

Cloudyn gets $11 million to take cloud monitoring global

Cloud monitoring service Cloudyn has raised $11 million to fund global expansion, brand raising and service integration from a Series B round of financing.

The latest cash injection comes 15 months after it was awarded for $4 million as investors noted how it had grown to monitor 8% of all Amazon Web Services. With cloud computing operators now generating $321billion a year, according to 451 Research, the monitoring of both infrastructure and platform services (IaaS and PaaS) is becoming increasingly critical.

The popularity of hybrid clouds, which straddle both public and private premises, has added complexity to the management task, creating a need for specialist monitors such as Isreal-based start up Cloudyn. A study conducted by 451 Research predicts that many companies plan to spend up to 50% of their cloud budget on these services.

Since 2014, when Cloudyn received $4 million in funding, the company says it has focused on winning clients among Fortune 1000 enterprises and managed service providers. Cloudyn has tripled its revenue for three consecutive years while doubling its head count. It currently monitors 200,000 virtual machines and 12,000 concurrent applications.

The new round of venture funding was led by Carmel Ventures and included contributions from previous investors Titanium Investments and RDSeed. Ronen Nir, General Partner at Carmel, will join Cloudyn’s board of directors.

There’s growing need for enterprises to perfect their resource allocation, boost performance and cut reducing cloud spend, according to Ronen Nir, the cloud specialist at Carmel Ventures. “Cloudyn’s technology provides meaningful and actionable data which has both operational and financial metrics,” said Nir.

“The funding will allow us to build on this momentum and increase our market share in North America and global markets,” said Sharon Wagner, CEO of Cloudyn.

SnapLogic raises $37.5m in venture capital for cloud integration innovation

Dollar SignsOne of the first cloud computing start ups has re-launched with a completely new offering, after industry evolution jinxed its first ground breaking invention.

SnapLogic has announced the receipt of $37.5 million in venture funding for a second major launch. The money was released from a Series E round of funding from backers including Microsoft and Silver Lake Waterman. The new incarnation of SnapLogic will concentrate on making technology that simplifies the process of shifting data between major platforms. It creates software that acts as a control plane which runs in the cloud and another set of software which acts as a data plane which can run anywhere.

This, according to SnapLogic, makes it easier for customers to shift data from, say, Salesforce’s customer relationship management apps into Workday. Another application would be in the emerging Internet of Things sector, where SnapLogic software makes it easier for data gathered from industrial sensors to be flowed into Hadoop data lakes. SnapLogic can be accessed on the cloud via a browser and can support hundreds of simultaneous users at a site.

SnapLogic is one of the few start ups to survive having the rug pulled from it by a major shift in demand, according to CEO Gaurav Dhillon, who launched the company on its search for capital. When it received its first round of investment, led by venture capitalist Andreessen Horowitz in 2009, it offered customers “snaps” to connect cloud applications with on-premise applications, allowing them to shift data between the two. However, a combination of the increasing popularity of hybrid cloud alternatives, and SnapLogic’s proprietary nature, gradually undermined the popularity of this solution.

SnapLogic didn’t work in “pure cloud fashion,” Dhillon told the The Wall Street Journal, since every customer needed to create its own SnapLogic software, running on its own premises, to connect to its cloud apps.

Despite being abandoned by some of the original backers, SnapDragon has made a transition to create a new set of cloud system integration problems. Other contributors to the new round of funding include Andreessen Horowitz, Ignition Partners and Triangle Peak Partners. SnapLogic has now raised nearly $90 million in five rounds of funding.

ItsOn gets $12.5 million funding to take Smart Services into LatAm and EMEA

Itson awardCloud based mobile service provider ItsOn has raised $12.5 million in a Series D funding round led by Delta Partners Capital Limited with follow-on investments from Verizon Ventures, Andreessen Horowitz and Tenaya Capital.

ItsOn’s technology aims to make mobile commerce a more enjoyable and secure experience through a range of services, content and apps. It currently runs its Smart Services primarily from North America data centres but the cash injection will help it fund regional data centres as it launches into markets in South America, Middle East, Africa and Europe.

ItsOn says it gives mobile customers better ways to buy wireless services and interact with their service providers. Its service is described as a ‘digital transformation platform for wireless operators’ that includes an integrated cloud service, on-device software and a mobile operator interface, the Service Design Center. These three components connect to IT and business systems, so operators can provide better experiences with a faster time to market for services, offers and mobile commerce growth.

Mobile operators desperately need to improve their social skills with end users and that requires a digital transformation according to Kristoff Puelinckx, co-founder at one of ItsOn’s investors, Delta Partners. Puelinckx said ItsOn’s mobile commerce platform is ‘at least five years ahead’ of every other player in this space, thanks to its engagement skills and contextual marketing for new products, services and incentives.

The ‘great digital experience’ is generally lacking among mobile operators, who rely on time-consuming and inconvenient store visits and call centre based cold callers in order to sell new services. Operators have suddenly woken up to the fact that they need to show greater transparency and more compelling service, according to Puelinckx.

Verizon Ventures started investing in ItsOn when it invented a virtual end-to-end carrier IT system, and it poured even more money in when it then created a cloud solution for OSS, BSS and user engagement, said Verizon Ventures director Ed Ruth. “It moved the mobile service market forward and we are pleased to continue investing in ItsOn,” said Ruth. The new system, he says, will help operators sell a lot more services to consumers, SMBs and IoT companies.

“There’s a rapidly growing demand for our technology as wireless service providers face increasing end-user expectations, new opportunities and new competition,” said ItsOn CEO Dr Greg Raleigh.

EMC Dell in rush to go public with Pivotal in early 2016

Dell office logoSoftware company Pivotal could be subject to an initial public offering (IPO) in early 2016, according to web site Recode, which claims to quote sources at parent company EMC involved in planning the launch. The IPO is being pushed forward to take place before the Dell acquisition of EMC goes ahead next year, with the anticipated billions raised to be used to service debt.

Big data analysis specialist Pivotal made $227 million in revenue in 2014 but posted a $106 million operating loss on revenue of $118 million for the first half of 2015, according EMC’s filed reports.

Pivotal’s joint owners, EMC and GE, are to offer a minority stake in the software company to public shareholders, says the report. This would be a repeat of a tactic previously used by EMC when it sold 19% of its shares in VMware in an IPO on the New York Stock Exchange in 2007. Sources expect EMC is planning to sell around 20% of its Pivotal shares but retain the rest.

The plan involves Pivotal filing for its IPO confidentially under the auspices of the US Jumpstart Our Business Startups Act, with the IPO concluded before the proposed $67 billion acquisition of EMC by computing giant Dell.

Both EMC CEO Joe Tucci and Dell CEO Michael Dell have supported the idea for a Pivotal IPO in the past. Speculators say the IPO may have been expedited because it would help to pay off some of the estimated $50 billion debt that Dell will have once the EMC takeover closes. A successful Pivotal IPO could potentially raise billions in new capital.

Meanwhile new capital from the Pivotal IPO would supplement some of the funding lost by the decline in VMware shares since the Dell-EMC deal was announced. In August, VMware shares were around $90 each but since the Dell-EMC deal was announced, their price has fallen by a third to $60.15.

Spokespeople for Dell, EMC and Silver Lake, the private equity firm that co-owns Dell, declined to comment.

Investor confidence is highest in cloud computing say venture capitalists

Money cloudCloud computing has been hailed as the strongest technology investment sector for the third time in a row in a survey that gauges confidence among capital, private and growth equity speculators.

The cloud sector came out strongest in the 2015 Global Venture Capital Confidence Survey compiled by Deloitte and the National Venture Capital Association (NVCA). The study quizzes 200 speculators on the general venture capital environment as well as other market factors such as conditions in industries and across regions.

While biopharmaceuticals and robotics reported the highest levels of confidence growth, and the Internet of Things (IoT) was recognised for the first time by the study, cloud computing was the top tech trend for the third year in a row. When the survey group was asked to gauge their levels of confidence in a technology, cloud was the most convincing quantity in which investors would put their faith, with a confidence rating of 4.18 out of 5. Mobile came in second place with a rating of 4.05, while new category the IoT came third with a score of 3.95. Software was a close fourth with a rating of 3.82 on the confidence range.

Investors are most confident in companies based in Silicon Valley and San Francisco with $15.2bn being invested in these regions. Next in the investment league came New York with $4.5bn and Boston, which received $3.2bn from speculators. Confidence in investing in UK-based companies varies, with four of the eight countries questioned saying they have increased confidence in the UK’s tech startup economy and four saying their confidence has fallen.

Interest in investing in Israel was rated highly (a 3.9 out of 5) while Canada (3.60) continued to rise from previous years’ survey results. Confidence in emerging markets has declined among global investors, with rating Brazil at 2.70, down 43 basis points from 2014.

In the cloud computing industry there is much for venture investors to feel excited about, according to Bobby Franklin, president and CEO of NVCA. “The fundraising environment continues to improve, the IPO market is gaining strength and there is no shortage of innovative, game-changing start up companies to take to the next level,” said Franklin.