Content Matters

SIIA Previews kicked off today with a session on Deal Trends.  Red Herring Editor Joel Dreyfuss served as moderator of a panel including venture capital and private equity professionals.

To no one’s surprise, Dreyfuss described an environment where private equity or corporate acquisition were the end-game, not IPO.  While we have yet to see a Web 2.0 IPO, there were four acquisitions last year, led by Google’s purchase of YouTube.  Geographically, Dreyfuss described a venture investing environment where North America was still the leader, but where China, India and Israel were seeing significant funding.  Europe continues to be the laggard.

One concern raised by Dreyfuss was that today’s big companies were not large employers.  Google today employs about nine or ten thousand people, compared to a company like Hewlett Packard, with more than 90,000 employees.

Will Porteous, of RRE Ventures, talked about the types of companies they are investing in.  An early stage investor, RRE likes to make Series A or B investments and has a 5-7 year time horizon.  RRE still likes infrastructure investments and sees opportunities in storage, where the technologies available to data centers are now being pushed down market to small businesses and consumers.  Will also talked leveraging content in unique areas, such as a recent investment in Storm Risk Solutions, who allow you to hedge weather risk.

Rene Benedetto of Halyard Capital, a middle market private equity firm, discussed how ROI-driven marketing was creating opportunities for companies in lead generation and interactive marketing.  Halyard has created a platform company, Halyard Education Marketing, providing lead generation for universities and supporting services.

Lex Miron, banker at CIBC, described the dearth of strong management.  As he put it, they’d “rather have an “A” Management team and a “B” concept” than the opposite.

All of the panelists spoke of how social software has become the hot area, but Justin Sadrian, of Warburg Pincus, indicated that they’re “not yet sure whether companies will be able to monetize those social networks”.

In closing, all the panelists felt that the recent double-digit multiples would continue in the near-term, but shared concern that the leverage of recent deals was cause for concern.