The PE Data Center Buzz

Private Company Valuations: Software

Posted by Justin Byers, Lead Business Intelligence Analyst on June 05, 2008

Software has been one of the top industries to invest in for several quarters now. Q4 2007 was no different. Below are the findings that our staff uncovered from some of the Software deals of Q4 2007.

• Endeca Technologies, Inc. (formerly known as Optigrab) out of Cambridge, Massachusetts, raised approximately $25MM in a Series F round. The round included investors such as Intel Capital, Bessemer Venture Partners, and Lehman Brothers, Inc. among several others. The conventional convertible shares included Full Ratchet anti-dilution protection and a Pay-to-Play penalty that would convert the shares to a shadow preferred. The round left the company with a post-money valuation of $405,314,735.

  
  

• Another software company receiving new capital was Dataupia Corporation. This company received a total of approximately $16MM from several firms including Polaris Venture Partners and Valhalla Partners. The conventional convertible series B shares included a Weighted Average anti-dilution protection and a Pari Passu liquidation preference with the series A shares. This gave the post-money valuation of $55,784,665.

  
  

• SugarCRM, Inc. received approximately $14.5MM in additional funding from Draper Fisher Jurvetson, Walden International, and New Enterprise Associates. The series D shares were conventional convertible and there were non-cumulative dividends of 8%. The post-money valuation came out to be $134,223,468.

  
  

After inputting the data into our Cost of Capital Benchmark tool, we see that Dataupia Corporation and SugarCRM, Inc. both came out with more "company-friendly" capital than Endeca Technologies.

Keep in mind, the lower you are on the chart, the more company-friendly the money, the higher you go on the chart, the more investor-friendly the money. If you are a company raising money, you want be lower on the chart. This is a time when it is not best to be on top if you are the company raising money.

Cost of Capital Benchmark (What's This?)

Permalink  |  Send to Colleague  |  Comments  |