On Deck for Wednesday: LogMeIn IPO

The Globe has this story about the pending IPO of Woburn-based LogMeIn, a company that makes remote access software for PCs (and also sells a popular iPhone app.) This would be the third venture-backed firm to go out in 2009, following OpenTable and SolarWinds.

Big winners if the company succeeds in raising $100m+ from the public market? Prism VentureWorks and Polaris Venture Partners, two Boston-area VC firms that have been out in the market trying to raise their next funds. Woody Benson represents Prism on the LogMeIn board, and Dave Barrett represents Polaris. And of course, many LogMeIn employees will do well, including CEO Michael Simon.

I mentioned LogMeIn in a Globe column last month about iPhone apps.

Seeking Alpha has this piece analyzing the offering.

Sayonara, SiCortex

I was sad to see the news this week that Maynard-based SiCortex is shutting down and selling of its assets after investors decided to turn off the tap. The ambitious maker of high-performance computers had raised $42 million, and CEO Chris Stone told me they'd shipped 60 of the machines in 2008 when we spoke late that year. (More coverage from Xconomy, GigaOm, and HPCwire.)

Some famous last words from my December 2008 chat with Stone:

"Do I worry about raising money in this environment? Sure," Stone says. "But we're generating revenue, and the customers want to buy more."

The shut-down is bad news for local VC firms Flagship Ventures, Prism VentureWorks, and Polaris Venture Partners. (Bob Metcalfe was the Polaris partner who served on SiCortex's board; another of his portfolio companies, Greenfuel, also shut down in May.)

Ex-employee Jeff Darcy has an analysis of what went wrong on his blog:

The only failure that mattered was not technical, nor in any area of customer-oriented execution: it was purely a matter of finance and timing. There is every reason to believe that our next system based on our next chip was going to be awesome, pushing our flagship system well into the Top 500 even before we talk about linking them together, and development was well along. Unfortunately, such development is not cheap and that put us in a high-burn-rate phase right when the economy turned sour and capital became very scarce. That’s like a “perfect storm” combination of circumstances. Maybe there are some things we could have done differently, but “coulda woulda shoulda” is a dangerous game. For example, some might say we should have cut costs sooner, even if it meant delaying the arrival of that next system, and tried to “weather the storm” until a better funding environment came around. Maybe. Or maybe, under other equally-likely conditions, that would have led to a far more ignominious failure as our competitors took the same extra time to adopt our approaches and use superior resources to leave us behind technologically. No thanks. I’m not in any mood to second-guess the people who made those decisions. I’d rather believe, and I think I’m justified in believing, that we played a good game and can walk off the field with our heads held high even though the score wasn’t in our favor.

Here's some video I shot at SiCortex's HQ in December 2008:

Prism: One More Local VC Firm Hits Fundraising Brick Wall

Dan Primack at PEHub reported yesterday that Prism VentureWorks of Needham has put fundraising for its sixth fund on hold. Primack wrote:

“We plan to spend the next year focusing on our portfolio companies, and evolving the firm,” says Woody Benson, a general partner with Prism since 2004. “I don’t know exactly what that evolution will mean for us, but the venture world is obviously beginning to change, in terms of things like new models.”

Benson added that the aforementioned “evolution” is not expected to include layoffs of investment staff.

Benson joined what used to be Prism Venture Partners in 2004. The company was still led by co-founder Bob Fleming in 2005, when it raised its fifth fund ($250 million.) Fleming is still listed on the Prism Web site, but he effectively left in 2006 along with Duane Mason, another founder of the firm. Benson then took the reins, and started focusing more on what he dubbed "digital living" investments.

There have been a few successes in Fund V, PEInsider observed last year, including selling "Softricity to Microsoft in 2006 for an undisclosed amount and video-hosting company Maven Networks to Yahoo this year for $160 million - both of which yielded more than three times its investments."

If Prism isn't eventually able to raise a sixth fund, the Boston VC scene gets a little bit smaller.

All eyes right now are on Highland Capital and Polaris Ventures' fund-raising efforts...Primack at PEHub reported last month that Highland is trying to raise a smaller $400 million fund; the firm's last fund, raised in 2006, was $800 million.

The Thursday Night Party Report

Went out last night to two events: the opening of Prism VentureWorks' new office in Needham, and PopSignal (formerly TechCocktail) on Landsdowne Street. Prism's new space is across the hall from the US offices of Microsoft's FAST search division, and it looks like it was designed by Ari Gold of Entourage -- very sleek, very white, very LA.

I ran into blogger and Celtics fan Michael Feinstein of Sempre Management. John Landry was also there, sheepishly acknowledging that he'd been caught doing the Funky Chicken on the Jumbotron at Wednesday night's Celtics game. I-banker Paul Deninger was there... and just so's you realize how powerful he is, he pulls people aside every five minutes to whisper something in their ear.

Neil Creighton, CEO of Prism portfolio company RatePoint was there, and he explained why consumers might want to post ratings on a vendor's Web site (it gives the vendor a chance to address any complaints .... very different from posting a negative comment on Yelp or Epinions.) There was also a big contingent from LogMeIn, another Prism portfolio company that filed to go public back in January.

Out in the parking lot, Roy Hirshland mentioned that his firm, T3 Advisors, had been involved in Adobe's deal to buy a 108,000 square foot building in Waltham for its East Coast outpost. That suggests a long-term commitment on the part of the San Jose company, which had been leasing in Newton ever since it bought Macromedia (which bought Allaire Corp., oh so long ago).

At Tequila Rain on Landsdowne, I miraculously scored a parking space right out front... inside, I ran into Matt Lauzon of Paragon Lake, a Highland Capital-incubated company (they participated in the summer program last year) that's out raising its first round. Sounds like the money will likely come from a mix of East Coast and West Coast investors. Lauzon,a recent Babson grad, said he'd listed himself in the PowerPoint presentation as "Acting CEO." On the East Coast, he found, that made investors comfortable: we can bring in some adult supervision. But on the West Coast, people said, "Why just acting?"

Aaron White from the animation site DoInk.com was in the back room ... Michael Kreppein and Dave Dupre from Inquisix were there ... as were PR mavens Maura Fitzgerald and Jean Serra from Version 2.0 communications. Eric Hellweg was in attendance with a posse from Harvard Business School Publishing, and he mentioned that his band Andromeda Taxi has some big gigs this summer, opening up for Phil Lesh and the Allman Brothers. On the way out, I ran into a pair of venture capital PR folks, Matthew Burke and Karen Bonmart, both of whom were toting freebie t-shirts from TripAdvisor, which now proclaims itself the biggest Web 2.0 company in the East.

Behind Yahoo's $160M Acquisition of Maven: Maven CEO and Board Member Discuss

What do you ask for in February 2008, when you sell a company to Yahoo?

Cash, baby.

Yahoo paid $160 million for Cambridge-based Maven Networks -- almost all of it in greenbacks, not Yahoo stock. (Here's the AP story...and the official press release.)

"There's no way to arbitrage Yahoo's stock price when Microsoft may be buying them, or may not be buying them," says Woody Benson, managing general partner at Prism VentureWorks, which invested in Maven's most recent round of financing. (Yahoo rebuffed Microsoft's $44 billion purchase attempt on Saturday.)

Benson told me this morning that there was more than one company interested in owning Maven, but acknowledged that he was a bit anxious about whether the deal would go ahead once Microsoft started to make a run at Yahoo: "Anxious would be one word for it," he said.

Benson said that Maven and Yahoo signed a letter of intent around Thanksgiving, and that due diligence proceeded until Microsoft made its unsolicited offer to acquire Yahoo on February 1st. Benson says that the Microsoft offer didn't necessarily cause Yahoo execs to slow down or speed up the final negotiations in the Maven deal; I'd earlier speculated that it could hang in the air for a while. The final papers were signed on Sunday.

"There's a reason why they're buying us," Maven CEO Hilmi Ozquc said, when I suggested that Yahoo (and Microsoft) had missed the boat on the online video explosion. "The tech innovation has been happening at start-ups to date. But as the giants jump in, the fastest way to get there is through acquisition."

Ozguc and Benson both say that Yahoo's big advertising salesforce will help Maven vault ahead of other video players, like Brightcove (and perhaps even put it on an even footing with YouTube, which has been slow to integrate ads with videos.)

My last question for Ozguc was whether he'd be surprised if Microsoft now bought Brightcove: "I would not be surprised," he said. "But if they're going to buy Yahoo and get Maven for free, why?"

Update: Will Richmond has a longer Q&A with Ozguc on his site, Videonuze.

The NY Times Bits blog offers a critical take on the purchase...and here's the Globe coverage of the deal.

Will Yahoo buy Maven?

(This is in danger of turning into the all-General-Catalyst-all-the-time blog...)

But the buzz yesterday was that Yahoo was on the verge of a deal to buy Cambridge's Maven Networks for about $150 million.

Wonder how that deal will be affected by Microsoft's unsolicited offer to buy Yahoo for $44 billion?

I suspect if the ink isn't yet dry on the Maven acquisition, CEO Hilmi Ozguc and his investors (which include GC, Prism VentureWorks, and Accel) may be biting their nails for a little while...

(A few months back, I wrote about the rivalry between Maven and Brightcove, Cambridge's two video delivery start-ups.)

Feinstein & Fleming: Dynamic Small-Cap Duo?

I've been curious about what blogger and former VC Michael Feinstein has been up to, ever since I bumped into him over the summer at one of the OpenCoffee Club gatherings in Central Square. Feinstein, formerly at Atlas Venture and Venrock, is also a regular presence at the Web Innovators Group.

At the last Web Innovators Group, Feinstein was wearing a stick-on name tag that linked him to Clear Stream Ventures, and when I asked him if that was the name of a new VC firm he was starting, he told me it was a placeholder.

Things got more interesting last week, when I ran into a VC who told me that Feinstein had been to a Deloitte-sponsored lunch, and talked a bit about what he was up to.

After trying for a time to put together an early-stage fund using the Clear Stream name, Michael has now linked up with Bob Fleming, founder of Prism Venture Partners. (Fleming left Prism as part of Woody Benson's extreme make-over of that Needham firm, now known as Prism VentureWorks.) Feinstein and Fleming are apparently now working together to raise a fund to invest in small-cap public companies, using some space at the Waltham office of Foley Hoag, a law firm.

"I will confirm that we are doing something oriented around small-cap public companies," Feinstein writes via e-mail, adding that he and Fleming won't have anything to announce officially until 2008.

Feinstein did acknowledge that he'd been working earlier to try to set up a seed-stage VC firm, but that he may have missed the right moment for that: "I was probably too late compared to some of the new funds in Boston -- .406, DACE, Kepha, etc."

This will be an interesting project to watch ... and I'm eager to find out more...