Buy Me Or I’ll File

The 3Par saga is finally over, and the Company with the larger resources and most similar channel won.  HP is buying 3Par for $33/share or $2.4B in value.  This is over 3x where the Company’s stock was trading before the battle begun.

3Par is a classic example of why many private companies go “on file” (meaning, file their S-1) to drive an M&A process.  If you are a unique company with technology and sufficient scale to go public, that should be a pretty desirable asset.  But many times you need to create a compelling event to get buyers to take a process seriously.  By filing an S-1, you are telling a broad audience that you intend to go public.  Once public, there are a whole new set of fiduciaries the Company becomes obligated to and new set of disclosure obligations.  For example, in 3Par, all bidding happened formally and publicly.  Dell had no ability to lock the deal up and drive it to a close.  Their foresight and brilliance tipped others into action.  We saw the same with EMC, when they swooped in on DataDomain and took them away from NetApp. 

If either of these companies chose to buy 3Par when it went public in November 2007, they would have saved over $1.8B!  There are many companies on file today that don’t really want to be public.  It’ll be interesting to see if these recent public battles spark others into action sooner.

Nice Day for NYC and FirstMark

We’ve enthusiastically spoken about the momentum in NYC and our support for the ecosystem.  This morning we had a couple of good events transpire.

First was the announcement of the World Economic Forum’s 2011 Technology Pioneers. Thirty-one companies received awards out of a global pool, thirteen specifically in the areas of Information Technology/New Media (where we focus).  Of the thirteen, three companies are from NYC (Knewton, SecondMarket, and foursquare), two are from the FirstMark portfolio (Knewton, SecondMarket)!   The Wall Street Journal had nice coverage here.  Each company represents a distinct sector – financial services, education, and new media – where NYC has specific depth and expertise.

Second was the announcement that TechStars is coming to NYC.  TechStars is the second accelerator program to launch in the Big Apple, and we believe this is a continuing sign of the growing depth of the NYC market.  We are enthusiastic supporters (and investors), and look forward to working closely with the inaugural class.

Both events underscore what we have been advocating for a long time.  NYC is an incredible place to start a company and one of the most exciting venture markets.  As technology investing has shifted from infrastructure buildout to leveraging the Web as a platform, so value creation has shifted from plumbing to “Internet-optimized” businesses combing the best of technology 2.0 with deep vertical expertise/talent to disrupt large incumbents.  We expect this to be a major trend for the next 5 – 10 years and NYC to benefit disproportionately from it.