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Tech Startups 3.0

An Online Market for Selling I.O.U.’sNovember 19

Businesses getting pinched by the credit squeeze can now tap a new source of cash — by selling the money owed to them by other companies.

A new online marketplace, the Receivables Exchange, was formally introduced on Monday after 18 months in development. It allows companies to sell their outstanding receivables at a discount to a panoply of financial institutions.

The 35-employee start-up, with offices in New York and New Orleans, should benefit from some good timing. The site provides a much-needed financing option for companies that are finding the doors locked at traditional credit markets. It could also be a safe financing alternative for distressed start-ups that might otherwise have to sacrifice equity in a conventional bridge loan.

“A small business today has about 60 percent of their working capital tied up in these invoices,” said Justin Brownhill, a former Citigroup executive who co-founded the company along with Nic Perkins, a former vice president at the video game advertiser, Massive. “What we are looking to do is build the eBay of working capital.”

For the last three months, the Receivables Exchange has been carefully selecting charter members. On Monday it opened up the site to anyone who wants to turn an i.o.u. into instant cash. A company seeking to sell on the site must first qualify by providing some financial information, so the site can verify its identity. Then the seller puts its receivables up for

OpenCandy Downloads $3.5 Million From Bessemer Venture Partners and O'Reilly AlphaTech VenturesNovember 19

OpenCandy, Inc., a startup that delivers distribution and revenue to software developers, announced today that the company has raised $3.5 million in Series A funding from Bessemer Venture Partners, O'Reilly AlphaTech Ventures (OATV) and angel investors including Reid Hoffman (Chairman of LinkedIn, Board of Mozilla), and Jordan Greenhall (Former CEO and Co-Founder of DivX). The funding will enable OpenCandy to expand the depth and reach of its unique platform for software developers. David Cowan of Bessemer Venture Partners joins OpenCandy co-founder and CEO Darrius Thompson as a member of the company's Board of Directors.

wsj: Financial Crisis Has Venture Capitalists Circling the WagonsNovember 19

"The venture-capital industry is facing unprecedented tough economic times, forcing investors to take a variety of steps to protect their firms and portfolio companies while still looking for the next big thing.

“Obviously this period is the toughest that we’ve probably seen in our investment lifetimes,” said William Tai, general partner at Charles River Ventures, at the Dow Jones VentureWire Technology Showcase in Redwood City, Calif., on Tuesday.

Tai said he was reminded of how dire the overall economic environment is when his firm had a guest speaker last week: Larry Summers, the former Treasury Secretary under President Bill Clinton. Summers, Tai said, told the audience that typical recessions are caused by one or two of five “vicious cycles”–liquidation, deleveraging, credit acceleration, lower spending and unemployment–from which economies can typically self-correct on their own. But we are now experiencing all five, Summers said, so the economy can recover only with massive global government intervention.

At the VentureWire conference, Basil Horangic, partner at North Bridge Venture Partners, summed up the downturn thusly: first, how bad will portfolio companies get hit, and second, what will happen to the flow of cash from investors hit hard by the economic crisis.

“It’s clear that there’s going to be less money available just by the very fact that if your domestic stock portfolio is down one-third and th

WSJ: Board Seeks New Leader That Can Break Culture of Indecision, Improve ExecutionNovember 19

"Two of the many people being considered at this stage are Tim Armstrong, a senior vice president at Google Inc. and Peter Chernin, president of News Corp., said people familiar with the situation.

Spokespeople for Google and News Corp. declined to comment. News Corp. owns Dow Jones & Co., the publisher of The Wall Street Journal.

Another person close to the company cautioned Mr. Yang shouldn't be solely blamed for Yahoo's "consensus-driven" and at times indecisive culture. But others note that Mr. Yang failed in his promise to break those habits.

Even as Wall Street exulted over Mr. Yang's decision to step down, the mood inside Yahoo, where morale has been low, was muted. Yahoo employees were hopeful that a new leader might turn the company around while still expressing affection for Mr. Yang, according to employees who declined to be named."

Citrix acquires audio conferencing startupNovember 17

U.S. infrastructure software maker Citrix Systems Inc (CTXS.O: Quote, Profile, Research, Stock Buzz) has acquired venture capital-backed start-up company Vapps Inc for $26.6 million, according to a regulatory filing.

The acquisition marks Azure Capital's third exit this year, in an economic downturn that has limited opportunities for the venture capital industry.

Azure invested in Vapps, a Hoboken, New Jersey, provider of audio and video conference calling technology in 2007. Citrix disclosed the acquisition in a Nov 5 regulatory filing.

Last month, eBay Inc (EBAY.O: Quote, Profile, Research, Stock Buzz) bought Azure-funded Bill Me Later, an online payments service, for $945 million. In January, Azure sold WorldWide Packets to network solutions provider Ciena Corp (CIEN.O: Quote, Profile, Research, Stock Buzz) for $300 million.

Azure's strategy of studying companies before deciding to invest in them and keeping investors actively involved in its decision-making process has paid off, said Paul Weinstein, a general partner at the firm. "In good and bad environments, it works," he said.

Venture capital firms raise money and invest in start-ups, hoping for huge returns when the companies go public or are sold.