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Roundup: Option scandal spreads, Vonage's success, and more

option scandal
Valley stock option scandal spreading -- More and more Silicon Valley companies seem to be coming under fire, as this story in the Mercury News summarizes. And here's the latest take on Brocade's woes.

Some Web 2.0 companies are quietly beginning to... -- fold. Fold was one of several players in the ajax home page area, and it has put itself up for sale.

Vonage most successful IPO in years -- Don't believe what they tell you about this being a bad-performing IPO. The stock of Internet telephony company Vonage is back up above $12 a share, so now is only down a mere four dollars and change from its IPO price of $17. Why is it successful? Motley Fool sums it up:

I'll bet they are high-fivin' all around in the executive suites in Holmdel. After all, they took a company that has lost nearly half a billion dollars from its inception (with more than 25% coming in the last three months alone), $250 million in debt, and no clear plan to profitability, and they turned it into a mid-cap.

And take a look at Dan Primack's analysis of how the insiders have made out. The stock price will have to go under $5.87 before the most vulnerable insiders start losing money, and it will have to go all the way down to 40 cents before the earliest investors lose money. High-fivin, indeed.

Sightspeed's video-calling rocks -- The Berkeley-based Sightspeed's free video-calling service has been getting kudos lately (see PC Mag), and has been swinging distribution deals with CreativeLabs and Logitech, helping in its pickup, according to AlarmClock.

From PC Mag:

I've long been a fan of the many services offered by Skype, but its video doesn't hold a candle to this. No other services, not even those from the big guys (AOL, Microsoft, Skype, and Yahoo!, among others), have developed their video codecs to the degree that SightSpeed has. The company is pretty tight-lipped about the specifics of its secret sauce, but the results speak for themselves.

AllofMP3.com on a roll, but probably illegal -- If it sounds too good to be true, it's because it is: AllofMP3.com's songs are sold by the megabyte instead of individually, and an album of 10 songs or so on AllofMP3 can cost the equivalent of less than $1, compared with 99 cents a song on iTunes, according to this piece in the NYT. And unlike songs purchased on iTunes and other commercial services, songs downloaded with AllofMP3's software can be copied without restrictions.

Will Ask make a comeback? -- This piece thinks the distant fourth-ranking search engine, Ask, will pick up market share, because of less-intrusive ads, compared to Google, and a rejigg of some of its other features.

The IDG Ventures turmoil -- IDG, which has long run a venture fund active China and San Francisco, had recently tried to create an array of affiliates -- separate funds to invest in start-ups in places like Europe, Vietnam and the West Coast/Silicon Valley. Now it seems two of those efforts are being abandoned. We've heard the West Coast/Silicon Valley fund has given up trying to raise $200M. Amos Barzilay, Philippe Bouissou, and Kimberly Davis, all of whom were supposed to be working on the fund, have disappeared from the Web site. We see that Amos is back at Walden International, where he is a consultant. (Update: Amos has since confirmed this.) Meanwhile, the European affiliate has also been abandoned, according to Dan Primack.

Viator, tour and activity company, raises more cash -- This San Francisco company makes the bold claim that it "is world's largest online resource for tours and activities." Now it has raised $4 million from Carlyle Venture Partners and Australia's Technology Venture Partners. Seven months ago, it raised $6 million. For what it's worth, here is its offering for SF.

Adbrite changes CEO -- As you may recall, Adbrite, a start-up that offers online advertising, was founded by controversial F***kedCompany.com founder Philip Kaplan. The company, backed by Sequoia Capital, last week mentioned it has replaced Kaplan, who will remain Chairman and become AdBrite's "chief product officer." Ignacio (Iggy) Fanlo, the former president of Shopping.com, becomes chief executive.

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From: Vonage
Excerpt: PC World in an older article said that Vonage set up was easy, which is still pretty accurate. The lawsuit, filed...
Tracked: August 9, 2006 11:23 PM


Successful IPOs are priced accurately and don't have major swings in either direction over the first couple of weeks. Major swings up in price hurt the company because they could have raised money at a higher valuation and major down swings hurt investors because they could have bought at a lower valuation. Its clearly better to have an IPO skyrocket than plummet but somebody isn't happy with the investment bankers either way.

I think what you meant was that Vonage was a successful venture investment, which clearly it was. According to Dan Primack (via Paul Kedrosky):

"When Vonage priced at $17 per share, it had a market cap of around $2.65 billion. As of market close yesterday, that figure had dropped to around $1.81 billion (although it was up to $1.85 billion in early trading today). Not so good for those who paid $17, but the VCs obviously bought in much lower. What follows is Vonage's institutional VC funding history, including post-money valuations:

* Series B: $15m at $67.69m (2003)
New Enterprise Associates

* Series C: $40m at $125m (2004)
Meritech Capital Partners, NEA, 3i Group

* Series D: $105m at $405m (2004)
Institutional Venture Partners, NEA, 3i, Meritech

* Series E: $200m at $915m (2005)
Bain Capital Ventures, NEA, 3i, Meritech, IVP"


Andrew Fife on June 5, 2006 4:04 PM
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