Mastercard Strengthens Bill Payment Services with Acquisition of Transactis

From transactis.com:

PURCHASE, N.Y. – May 3, 2019 – Mastercard (NYSE: MA) today announced it has entered into an agreement to acquire Transactis, a platform that helps businesses deliver bills and receive payments through one simple-to-navigate experience.

In today’s digital age, a surprising 44 percent of the 15 billion bills that Americans pay each year are made by paper check or cash. Consumers who pay their bills online do so in a variety of ways, including online banking applications or biller’s websites.

Transactis’ technology helps companies improve their customers’ bill payment experience, while reducing inefficiencies associated with paper bills and checks.  It provides access to a flexible digital service that can be used by even the smallest businesses, such as schools and property owners, who often don’t support online bill pay.

Transactis distributes its technology through a broad network of bank and non-bank partners.

“We see Transactis as strengthening our support of the bill payments space,” said Colleen Taylor, executive vice president of new payment platforms, North America for Mastercard. “Transactis’ technical and commercial know-how, combined with our reach and comprehensive payment options will greatly simplify the entire process. We’ll be able to deliver a better real-time consumer experience, from sign-up to viewing and paying bills, leveraging the investments that have been made in the core infrastructure.”

Redefining Online Bill Pay

Last fall, Mastercard announced Mastercard Bill Pay Exchange, a new digital solution that makes it easier for consumers to view, manage and pay telecom, utility, rent, credit card, mortgage and other personal bills. The platform allows consumers to use their existing banking apps to easily set up all billers, receive notifications when a bill is due, see bill details, and manage multiple bills in one place including specifying when and how much to pay.

Bill Pay Exchange is offered to banks and credit unions through a core set of APIs, enabling them to provide this service to their customers through one easy interaction. While some bill pay services only offer card or ACH-based payments, Bill Pay Exchange provides the choice of all payment types – including real-time payments – through the consumer’s existing online or mobile banking app.

Enhanced Capabilities, Better Experience

With the acquisition of Transactis, Mastercard will now be able to address bill payment needs in online bank applications as well as in biller websites with enhanced end user interfaces, expanded payment options and digital bill presentment capabilities.

“Mastercard has been a great partner and pushed the industry forward in this space,” said Joe Proto, Transactis CEO. “Historically, neither the Bank Bill Pay nor Biller Direct models has delivered the ideal experience or the complete solution. We see this as a unique opportunity to bring our complementary technologies together to deliver a better bill pay experience accelerating the migration of paper bill and checks to these online channels.”

Terms of the agreement were not disclosed. The transaction is anticipated to close in the second quarter. Mastercard Bill Pay Exchange is slated for full launch later in the year.

About Mastercard

Mastercard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. Our global payments processing network connects consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. Mastercard products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MastercardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.

About Transactis

Transactis transforms traditional billing and payment processing with innovative, reliable, and secure digital solutions. Its advanced technology simplifies receivables management, and is delivered to market through banks and service providers that support millions of businesses. Transactis meets the strictest regulatory and compliance requirements including HIPAA, SSAE 16, PCI Level 1, and SOC 2. Transactis has received the Inc. 500 Award, Deloitte Technology Fast 500 Award, AlwaysOn OnFinance Top 100 Award, Red Herring Top 100 Award, PYMNTS Innovation Award, PayStream Advisors Innovative Technology Award, and has been named a ‘Cool Vendor’ by Gartner. Transactis’ investors include Compound, ff Ventures, MacAndrews & Forbes, Safeguard, StarVest, Capital One, Fifth Third, PNC, TD and Wells Fargo. For more information, please visit Transactis .com or follow us on Twitter @TransactisUS.

Forward-Looking Statements

This press release contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical facts may be forward-looking statements.  When used in this press release, the words “believe,” “expect,” “could,” “may,” “would,” “will,” “trend” and similar words are intended to identify forward-looking statements.  Examples of forward-looking statements include, but are not limited to, statements that relate to Mastercard’s future prospects, developments and business strategies, as well as Mastercard’s acquisition and operation of Transactis’ business.  We caution you to not place undue reliance on these forward-looking statements, as they speak only as of the date they are made.  Except for the company’s ongoing obligations under the U.S. federal securities laws, the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events.

Many factors and uncertainties relating to the proposed transaction, our operations and our business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved.  Any one of these factors could cause our actual results or the impact of the acquisition to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf.  Such factors related to the completion and impact of the acquisition include, but are not limited to, whether all necessary conditions will be met, and whether the transaction will close on agreed terms and in a timely manner.

For additional information on other factors related to Mastercard’s overall business that could cause Mastercard’s actual results to differ materially from expected results, please see the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K for the year ended December 31, 2018, and any subsequent reports on Forms 10-Q and 8-K.

Contacts:

Investor Relations: Gina Accordino, investor.relations@mastercard.com, 914-249-4565
Communications: Seth Eisen, Seth.Eisen@mastercard.com, 914-249-3153

JPMorgan Chase Announces Five-Year Deal with Persado For AI-Powered Marketing Capabilities

From persado.com:

NEW YORK – July 30, 2019 – JPMorgan Chase (NYSE: JPM) today announced a five-year, enterprise-wide deal with Persado, the leader in using AI to generate the highest performing marketing creative. After a successful pilot, Chase is expanding its partnership across the company to cover marketing creative that will reach millions of current and potential customers. Persado uses AI to generate more effective marketing copy. In its pilot, Chase saw as high as a 450% lift in click-through rates on ads rendered by Persado, compared with others in the 50-200% range.

“Machine learning is the path to more humanity in marketing,” said Kristin Lemkau, CMO of JPMorgan Chase. “Persado’s technology is incredibly promising. It rewrote copy and headlines that a marketer, using subjective judgment and their experience, likely wouldn’t have. And they worked. We think this is just the beginning. We hope to use Persado not just in marketing, but in our internal communications to make things more relevant to employees, as well as in our customer service prompts.”

In 2016, Chase began a pilot with Persado’s Message Machine, an advanced marketing language knowledge base of more than one million tagged and scored words and phrases. Through the tool, Chase redrafted marketing messages in its Card and Mortgage businesses and saw significant lift. Persado technology generates creative content using data science and AI to render copy proven to be the most compelling message to individual customers and segments of customers.

“Kristin and her team are true visionaries when it comes to adopting advancements in marketing technology, and they immediately embraced experimentation on our platform,” said Alex Vratskides, co-founder and CEO of Persado. “We founded Persado to disrupt choice of words by utilizing AI, machine learning and data. Our goal has been to create hundreds of enterprise-wide partnerships with innovative brands like Chase to help them harness the full power of words and drive meaningful communications with prospective and current customers.”

Persado has more than 250 partnerships with CMOs and marketers who are also seeing significant improvement in creative performance.

“We put Persado to the test in various channels, products and services and are highly impressed with the results,” said Abeer Bhatia, head of Marketing Growth and Innovation for Chase Card Services. “The Persado team has been a true partner every step of the way, working with us to drive measurable outcomes. Not only did they drive better marketing performance, but they created language that resonates more with our customers.”

“From our first interaction three years ago, we recognized that Chase had leaders who believe in the power of data to drive meaningful engagement with current and new customers, and who understand the potential for AI to transform their marketing,” said Yuval Efrati, Persado’s Chief Customer Officer. “We were quickly able to scale the partnership into multi-channel journeys across new launches of products and services to deliver the best experiences and value to Chase’s millions of customers. The next stage of our partnership will evolve data-driven messages from audiences and segments to individuals, creating enterprise-wide omni-channel personalization in 2020 as we redefine the future of marketing together.”

About JPMorgan Chase & Co.

JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.7 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of customers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

About Persado

Persado is reinventing marketing creative by applying mathematical certainty to words, the foundational DNA of Marketing. By unlocking the power of words, companies win every marketing moment, experiencing dramatic new levels of brand engagement and revenue performance. CMOs from the world’s most valuable brands rely on Persado to generate marketing creative in a dramatically new way to unlock the power of words and emotionally engage consumers, one by one, moment by moment at scale.

The Persado Message Machine uses sophisticated AI, data science, computational linguistics and machine learning to generate the perfect message for every campaign by leveraging the world’s most advanced marketing language knowledgebase of more than one million tagged and scored words and phrases. Marketers gain full visibility with quantifiable results and data-driven insights to identify the trends and marketing language that wins every moment in the customer journey while ensuring the marketing message always reinforces brand voice.

For more information about Persado or to schedule a demo, visit persado.com, and follow Persado on Twitter.

Media Contact for Persado

Jaime Tero
Allison+Partners
persado@allisonpr.com

Exponent Exchange brings together 200 women dealmakers for second annual event

From Mergers & Acquisitions

Article by Elina Tarkazikis

https://www.themiddlemarket.com/news/exponent-exchange-brings-together-200-women-dealmakers-for-second-annual-event

“There is this idea in sociology: You’ve got to see it to be it,” said NBC News correspondent Stephanie Ruhle about the importance of building communities of women in the financial services sector, where they are woefully underrepresented. She spoke at the second annual Exponent Exchange, hosted by Exponent Women, a group devoted to nurturing the financial services careers of its female members. “When you enter any sort of room, when you see people who look like you, and sound like you, sometimes you think, ‘I could be really good at this.'”

Before she turned her talents to journalism, Ruhle began her career at Credit Suisse, where she was the highest-producing credit derivatives salesperson in the U.S., and then moved onto Deutsche Bank, where she served as a managing director in global markets senior relationship management. Today, she anchors MSNBC Live with Stephanie Ruhle and MSNBC Live with Velshi & Ruhle.

“The fact that you have an organization that’s actually built on building relationships that will then transfer into dealmaking, that’s extraordinary,” Ruhle commented about Exponent Women. “That is so far from the ‘pink ghetto’ of girls talking about girls, talking about work, and life and balance.”

The event highlighted many of the ways in which women are gaining power in dealmaking. Panels featured investors, including Huron Capital partner Gretchen Perkins and StarVest Partners co-founder Laura Sachar.

“Women need to build our own networks. They aren’t automatic like they are for men,” said Courtney Stapleton, partner at Bliss Integrated Communication and a founding member of Exponent Women.

Trish Costello, founder and CEO of Portfolia, built a business with exactly this in mind. Portfolia is a dealmaking process for women and entrepreneurs that allows investors to help call the shots on companies and products they’d like to see enter the marketplace.

“We have to take venture capital, shake it all up, turn it upside down, and create models that work for women. And by the way, we own half the wealth in the United States,” said Costello. “For the first time ever in recorded history, we are powerful if we choose to use it. So let’s do that — let’s use our financial power to get the companies we want.”

The proof exists; when women are included in the investment decision-making process, business is better. Venture capital and private equity funds with gender-balanced teams outperform their homogenous peers by 10 percent to 20 percent, according to International Finance Corporation. And companies with gender-diverse leadership teams that receive private equity funding outpace others by 25 percent, according to Pacific Corporate Group.

Gender-diverse PE investment committees outperformed all-male investment committees substantially, found a recent study by Oliver Gottschalg, a professor at HEC Paris. The results are compelling: Gender-diverse PE investment committees outperformed all-male investment committees substantially, as measured by several metrics: 7 percent more alpha; .52x more total value to paid-in multiple; and 12 percent higher internal rate of return. Also impressive: the failure rate of gender-diverse investment committees was 8 percent lower. The findings provide concrete evidence showing the value of including women on deal teams and may help to convince skeptics.

Women still hold just 9.4 percent of senior positions at PE firms globally, found a recent report by HEC Paris. The low representation underscores the importance of projects that feature successful female dealmakers, such as Mergers & Acquisitions’ Most Influential Women in Mid-Market M&A.

“Let’s continue to encourage women to study finance at both undergraduate and graduate levels,” said Gretchen Dahlberg, general counsel at Merrill Corp. “Let’s continue to target and identify women in the hiring process and early in their careers for leadership positions. Let’s continue to support female-centric networking programs, associations and events like today with our time and our efforts.” 

Laura Sachar in Women in PE Brief’s “In The Spotlight”

For the second time in the past two months, Mastercard has agreed to acquire a portfolio company of Laura Sachar, a co-founder and managing partner with StarVest Partners, in an exit that she tells Women’s PE Briefs was “very successful.” Terms of Mastercard’s purchase of Transactis were not disclosed.Based in New York, Transactis has developed a platform that helps businesses deliver bills and receive payments through one, simple-to-navigate experience. The company raised some $67 million from a group that, in addition to StarVest, also included: Compound, ff Ventures, MacAndrews & Forbes, Capital One, Fifth Third, PNC, TD, Wells Fargo, and Safeguard Scientifics.Laura, a Transactis board member, brought StarVest into the company in 2010. She said that she was drawn to the company by “an experienced A+ CEO addressing a huge market need: the high number of physical checks being written as the world is becoming more digital.” Even today, in this digital environment, she said that 44 percent of the 15 billion bills in the United States are paid “with paper and cash.”The transaction comes just weeks after another company into which Laura led New York-based StarVest — Vyze — also agreed to be acquired by Mastercard. Based in Austin, Texas, Vyze developed a platform that provides financing solutions at the point of sale. Laura said that there was no connection between the two sales. “In both acquisitions, we went through a sales process and Mastercard was the most attractive buyer,” she said.Both Transactis and Vyze “bring unique solutions to add value to Mastercard’s payments strategy of broadening its payments platform,” she said. “We believe both Vyze and Transactis built companies that would not be easy to replicate.”She said that StarVest is taking advantage of a “tremendous opportunity,” namely that, “more than ever, major companies recognize the need and opportunity to incorporate the best and brightest through acquisition.” StarVest has now had three companies acquired in the past six months.In early January, Vector Capital closed its acquisition of Host Analytics, a provider of cloud-based enterprise performance management solutions. Terms were not released. Deborah Farrington, who is also a co-founder and managing partner with StarVest, was on Host’s board.Two years ago, Laura had another portfolio company, Veracode, a provider of application security solutions, acquired by CA Technologies for $614 million in cash. Maria Cirino, a managing director with .406 Ventures, was, like Laura, also on Veracode’s board. Laura is also on the boards of Persado, Inc., Ceros and RetailNext.

-From Women in PE Brief’s Newsletter, May 10, 2019

Globe and Mail: Invest Like a Legend 2018: Our annual guide to making money

NEW YORK | Twice in her 20-year career in venture capital, Farrington has claimed the crown of Queen Midas—informally bestowed on the highest-ranking woman on the Forbes Midas 100 List of top venture capitalists in the United States (where just 6% of VC partners are women). The former investment banker did so initially by specializing in business services and then moving to the Internet as co-founder of StarVest Partners. She stays true to that focus today

Read more…

StarVest Portfolio Company Persado named to CNBC’s Disruptor 50 List

May 16, 2017 – NEW YORK – Persado, the leading provider of AI-generated cognitive content for top global brands, today announced it has been named to CNBC’s fifth annual Disruptor 50. The list recognizes the most innovative private companies transforming the economy and shaping the future of business. Persado is named alongside Airbnb, Lyft, WeWork, and Elon Musk’s SpaceX.

“The frenetic digital space makes it extremely difficult for companies to capture and sustain a customer’s attention and loyalty. Creating an emotional connection with consumers can pay off in a big way, resulting in short term gains as well rewarding relationships in the long run,” said Alex Vratskides, Persado CEO and Cofounder. “Persado uses advanced AI and machine learning technology to help organizations build better relationships with consumers through messages that resonate on an emotional level, at scale. Being named to the CNBC Disruptor 50 is an exciting moment that points to our success thus far and continued impact on the future of personally relevant communication.”

Drawing from the world’s largest database of codified marketing and emotional language, Persado’s AI-powered Cognitive Content platform designs messages that resonate with any audience, across any channel. Founded by Vratskides, Assaf Baciu, and Guy Krief, the company works with 100+ leading brands and Fortune 500 companies across multiple industries to drive engagement and incremental revenue. Using Persado, leading brands such as Citi, American Express, Microsoft, Staples, and Verizon have realized one billion dollars in incremental revenue and an average uplift of 49.5% in conversions across marketing campaigns. The company has raised $66 million in venture capital. Investors include Bain Capital Ventures, StarVest Partners, American Express Ventures, Citi Ventures, and Goldman Sachs.

The award comes on the heels of a very successful 2016 for Persado. It was named one of 50 Companies Leading the AI Revolution by Fortune, a Cool Vendor in Data-Driven Marketing by Gartner, and Breakout Vendor in Content Intelligence by Forrester.

For the full list of Disruptor 50 companies, please visit: http://www.cnbc.com/cnbc-disruptors/.

Laura Sachar Interviewed by Vator

See below for the article and the link attached:

 

http://vator.tv/news/2017-07-21-meet-laura-sachar-managing-partner-of-starvest-partners

Venture capital used to be a cottage industry, with very few investing in tomorrow’s products and services. Oh how times have changed. While there are more startups than ever, there’s also more money chasing them. In this series, we look at the new (or relatively new) VCs and their investing philosophies.

But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?

We’re highlighting key members of the community to find out.

Prior to founding StarVest, Sachar was responsible for direct private equity investments at Gabelli Securities where she sourced digital media investments in Multex Systems and the first institutional round of Digital River. In the early 1990’s, she identified digital media as a growth area and founded Sachar Capital, which sourced Redgate Software as an investment opportunity for its Advisory Counsel.

Sachar was the Founding Chairman of the New York New Media Association Angel Investors Program, a professional nonprofit organization in which she assisted hundreds of early-stage New York area companies in accessing initial capital.

Laura has a BA from Barnard College, Columbia University, and an MBA from the Columbia University Graduate School of Business. Laura is a former member of the Young President’s Organization and a current member of the World President’s Organization. She is a Private Women’s Investor Network (PEWIN) Steering Committee Member. She has a Professional Director Certification with the American College of Corporate Directors.

VatorNews: What is your investment philosophy or methodology?

Laura Sachar: We invest in B2B technology companies, primarily around the United States, and we are generally looking to invest when companies have about $10 million or more in revenues. We invest at the cusp of growth equity or into growth equity and we are able to invest in a fairly broad range of size of investment. Our initial investments can be as little $2 million and up to $20 million. We bring some more flexibility perhaps than some other investors. We’ve invested in B2B technology for nearly two decades.

VN: What do you like to invest in? What are your categories of interest?

LS: When we started the fund, we were investing in B2B because it was an outgrowth of our experience, as well as where we saw the world going. We were one of the earliest investors in SaaS, before it was defined as SaaS, and the cloud. We saw that trend early and also recognized the application of technology to solve business problems, and the ability to develop those kinds of companies throughout the country, not just in Silicon Valley. Today we see certain sectors within B2B that are growing rapidly, so we see huge market and growth opportunities. That, combined with our experience and our ecosystem, gives us a competitive advantage.

We’re investing in AI (artificial intelligence)/machine learning, the Internet of Things, marketplaces, fintech, infrastructure around retail and e-commerce, and human capital management. While we’ll invest in a number of different areas within B2B, those sectors are where we’re primarily focused and that covers a lot of ground. We see a lot of growth within those areas and we’ve invested in many companies in those sectors, so we also bring experience with those successes.

VN: What would you say are the top investments you have been a part of? What stood out about those investments in particular?

LS:. Persado is a New York-based company in our portfolio that was recently named to the 2017 CNBC “Disruptor 50” as one of the top disruptive companies. It is in the AI sector and provides artificial intelligence-generated cognitive content to marketing services and communications for top global brands. AI is certainly a growing sector that crosses a lot of verticals.

We were an investor in Veracode, where I was on the board, and which was sold just this year to CA Technologies for over $600 million. Veracode is a SaaS security company; a lot of their customers were financial services and retail companies. Veracode is very classic of the kinds of investments that we make: a company that has a product that’s difficult to create, which has defensibility, and then is sold to enterprises, including large enterprises, where you’re able to grow the average contract value over time to be substantial. You “land” a customer, and “expand” into that customer by upselling. You’re forming partnerships and channels and eventually that becomes very attractive to a broad set of acquirers.

Veracode is one example of a recent exit. And, we have had many others that were acquired by companies like Iron Mountain, Dell, Hearst, and other large corporations. The majority of our companies have been acquired; the exception to that is one that we’re known for: NetSuite, which was recently acquired by Oracle for nearly $10 billion. We invested when it had $100,000 in revenues, it went public on the New York Stock Exchange in 2007 and had $1 billion in revenues at the time of sale. That was one of the early leading SaaS companies.

We are also an investor in an IoT company called RetailNext, which is a leader in data and analytics for in-store retail. They have many of the top retailers in the United States as customers, and also have expanded internationally. The company is growing rapidly and in a true leadership position within IoT. They sell both a camera that they manufacture, as well as software that provides the opportunity for retailers to get the kind of data and analytics that they’re now used to getting online with their consumers.

We are also an investor in Snag-a-Job, the leader in sourcing candidates and providing services for hourly workers in service industries. In EPM (enterprise performance management), another leading SaaS company is Host Analytics, which provides planning, budgeting and consolidation solutions for the finance function.

VN: What do you look for in companies that you put money in? What are the most important qualities?

LS: We’re investing at a stage where the company is not a startup, where it has some revenues, customers and a team. Of course, we want to see a team that can execute, but team is something that a company grows and it evolves, so we don’t look to have a perfect team in place initially. We expect it to grow so it has a high-quality team that will attract other high-quality people as it expands to meet the needs of a growing company. So, the person who heads sales at a $5 million in revenue company can be the same or different for a company that has $15 million or $25 million in revenues.

Part of the business is the culture, and it’s how the team works together. That’s very much tied to how the board is working and the investor group. You’re looking for something that has the elements to maintain momentum, or accelerate momentum, in the business and those are important factors. We look at those things, and obviously those things are always changing, so we don’t look at it as something that’s fixed and that has to be certain way going in. But we’re looking for a winning culture. The board and the investors are very much key drivers in a winning team, as well as management. They’re not separate.

We want to see a company with a big market opportunity, and the ability to take a leadership position within their particular market. They should also have some defensibility against competition. For example, in the case of Veracode and Persado, they’re both SaaS companies where the more their technology is used, and the more data is captured, the better the solution becomes. That becomes a defensible position. Veracode could scan code and that meant that it became better and better at that, and so its solution became much harder for others to compete against.

We invested in a company called Fieldglass that was bought by a PE firm and then SAP for $1 billion. These are companies that have been able to stay ahead of what their customer needs and become a partner with their customer in order to be on the forefront of what that sector is looking for, to bring them what those customers need.

VN: What kind of traction do you look for in your startups? And can you be specific? Are you looking for a number of customers or order volume?

LS: It’s not a fixed number, but it’s a threshold that’s important to us, which acts a good guide post. If a company is at or around $10 million in revenues, and it’s in B2B in one of the sectors we look at, it’s a great fit for us.

VN: How long does it take before you meet a startup and make an investment and how do you conduct your due diligence?

LS: We’ve been in this B2B ecosystem for a while, and so we’re proactive. Because we’ve invested in companies in the sector, we certainly have people who we’ve either backed before, or invested with before, or who we work in industry groups with. We have a relationship with them and they’ll think of us as a good investor, especially if they see a SaaS opportunity. At the same time, we don’t rely on that and we’re very active participants in different industry groups. We’re always attending events and developing relationships that we think are helpful. We think all of that is very important.

In terms of timing, we’re competitive going from due diligence to being able to close.

VN: These days a seed round is yesterday’s Series A, meaning today a company raises a $3M seed and no one blinks. But 10 years ago, $3M was a Series A. So what are the attributes of a seed round vs a Series A round?

LS: There’s been a trend where companies have been able to raise a lot of money earlier in their lifecycle than companies have in the past. Therefore, companies are taking longer to exit, so, in total, they’re having to raise more money.

The problem some companies run into is that they have not always been as capital efficient and then, with competition to get money into certain deals, have had their valuations pushed up, where the company then has to grow into that performance. If they don’t, and they have further capital needs, then they’re getting themselves into a not ideal situation. I think some of the large rounds, and some of the high prices, have put some companies into positions where they didn’t fully appreciate the risk that they were taking on to do that. If you have companies that are influenced not be capital efficient, or you have companies where the valuation was inflated and then they have to raise money at a lower valuation, that can certainly impact how successful they are in building the business, as well as impact employee morale and their access to future capital. Those are all real issues.

VN: Tell me a bit about your background. Where did you go to school? What led you to the venture capital world?

LS: I graduated from Barnard College, worked in investment banking for a couple of years, then became a financial journalist. I then went to Columbia Business School to make a career change. I really had loved the process of being a journalist, of collecting information, analyzing it, having a critical eye, and I think I was able to apply a lot of that to the due diligence process and the process of building relationships and finding and analyzing deals.

I had a passion and a drive to start a venture fund in 1998 and played a catalyzing role in forming StarVest. My partner, Deborah Farrington, had extensive experience in both operations and venture investing, so we combined that with some more traditional experience, which led to us raising a fund with institutional backing. I’ve enjoyed over nearly 20 years of investing in over 50 B2B companies where we’ve been active as board members and contributing to those companies and growing.

I have a background before StarVest, but StarVest is very much a part of my professional career.

VN: What do you like best about being a VC? What makes you excited?

LS: The talented people I get to work with. The talented CEOs that are able to build successful companies and to invest in them with capable people. So, it’s the people and capabilities of people and the intellectual challenge.

VN: What is the size of your current fund?

LS: We have invested from several funds with over $400 million under management. We’re investing now out of a $245 million fund, and we also have a pledge co-invest vehicle that we’re making new investments out of. We do those investments on a deal by deal basis, and that has allowed us to scale to make larger investments.

VN: What is the investment range?

LS: We can go in as an initial investment with as little $2 million and up to $20 million. We can look at a range to follow the company through until it would be cash flow break even. We would look be able to meet our pro rata.

VN: Is there a typical percent that you want of a round? For instance, do you need to get 20% or 30% of a round?

LS: Historically, we’ve had anything from 10 percent to 25 percent. Going forward we’ll be more flexible because the approach we’re taking allows for that.

VN: Where is the firm currently in the investing cycle of its current fund?

LS: We are in the later part of the $245 million fund, and in the early part of the pledge fund.

VN: What percentage of your fund is set aside for follow-on capital?

LS: Depending on the stage, it would be anything from 30 percent to 50 percent. In other words, if you put in $8 million, you’d look to put in another $8 million over time. It depends on the cash needs. Some of these investments are later and they don’t need as much follow-on cash.

VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?

LS: We’re looking at Series B and C deals.

VN: In a typical year how many startups do you invest in?

LS: We are aiming to make four to five investments a year as a firm. We really do work as a team.

 

Deborah Farrington featured in this month’s JEGI Client briefing discussing insights in media & technology innovation. Click below to see more.

Celebrating International Women’s Day

We at StarVest are celebrating International Women’s Day and have been impressed with the hubbub surrounding the statue in front of the Wall Street Bull. See article below:

http://www.businessinsider.com/stage-street-global-advisors-girl-statue-in-front-of-wall-street-bull-2017-3