Highlights last week on Philly Tech News (10/8/2012 to 10/14/2012)

Enterprise cloud software vendor Workday saw its shares rise 74% in its first day of trading after repeatedly increasing its offering price, and its market value approach $8 billion. Workday is seen as a rising competitor to SAP and Oracle.

I discovered that InterDigital had relocated its corporate headquarters from King of Prussia to Wilmington, DE.

There has been a good deal of venture investment activity in the Philly area lately, and I provided a roundup of it.

Safeguard Scientifics held its Investor Day 2012 conference in New York last week.

An unredacted version of a lawsuit against several PE firms released last week alleges that several of them cooperated to hold down bidding in the 2005 $11.4 billion LBO of SunGard Data Systems.

DreamIt Ventures filed to raise a new fund of up to $50 million, suggesting that it will be doing a little more follow on investing in incubator companies.

NJTechWeekly's Esther Surden contributed a report on Princeton Tech Meetup's late August event.

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Breaking down some numbers in the Accenture/Octagon Research deal

Tom Paine

I reported on the closing of Accenture's acquisition of Wayne-based Octagon Research Solutions, which Accenture announced on September 26, and Accenture's post-acquisition plans for Octagon. Accenture did not disclose the purchase price, and since
the deal is likely immaterial relative to Accenture's overall size it probably won't have to disclose it in regulatory filings.

Lawrenceville, NJ-based Edison Ventures, a key investor in Octagon, subsequently issued a press release stating that it had received a 6X return from its investment in Octagon. I thought I'd try to put together all the numbers I could find related to investments in Octagon, although I can't promise this is a complete picture:

February 2003: $3.8 million from Edison and Milestone Venture Partners.

March 2005: $3.5 million Series B preferred equity; three investors, of whom Edison was presumably one.

August 2006: $10 million, of which $2 million was from Edison, bringing its total investment to date in Octagon to $8.4 million. The other investors in this round were Phoenix Life Insurance, Zurich Financial, and Ticonderoga Capital.

September 2008: $12 million, with $10 million coming from Ticonderoga and the other $2 million coming from Edison, bringing its total investment to $10.4 million.

That's the last record I can find of any financing. When Octagon anounced last year it would increase staffing by 100, I presumed it might need some type of bridge financing, but apparently it didn't.

In terms of revenue, Octagon reported revenue to Inc. Magazine for the 2010 Inc.5000 of $37.5 million in 2009. One article cited 2010 growth of 20%. And Octagon said its revenue through the third quarter of 2011 was up 20% for the year. And presumably the staffing ramp up beginning in the middle of last year was in anticipation of increasing revenue streams. So I think it safe to assume Octagon's current run rate is well in excess of $50 million. No word on profitability, but if Octagon has indeed gone since 2008 without significant additional equity financing (although you can't rule out the possibility of some debt financing) it is probably not doing too badly on that score.

If Edison's total investment in Octagon was just over $10 million as last reports indicate, then it probably will receive proceeds in the $60 million range. Although Ticonderoga's total investment of $10 million plus is slightly larger, its return should be lower because it got in later.

The closest comparable deal for which pricing information is publicly available is Oracle's acquisition of Phase Foward, a company with a somewhat similar range of services for clinical trials, in 2010. Oracle paid $685 million, or more than 3 times Phase Forward's trailing revenue, and the company was marginally profitable.

My guess is Accenture paid at least $150 million, perhaps somewhat more, for Octagon.


Daily Links 10/16/2012: SAPTeched 2012, SCTE Cable-Tec Expo kick off

The Enterprise: I’m Not Sexy And I Know It (TechCrunch)
Very good article on current limitations of the Cloud in the enterprise.

After Larry Ellison Keynote, I Can’t Wait For SAPTeched 2012, Las Vegas (Vijay Vijayasankar/Vijay's thoughts on all things big and small)

SAP puts its HANA in-memory database on Amazon Web Services (Computerworld)

SAP Pumps Up Mobile Analytics Power (Information Week)

Edison data center company attracts $90M investment from venture group (NJBiz)

Cable-Tec Expo: Motorola Transcoder Spits 3 Billion Pixels Per Second
Vendor Claims GT-3 Provides 10 Times Density of Server-Based Transcoders
(Multichannel News)

Boxee Looks to Reinvent Itself with Cloud-Based DVR Box (All Things D)

Comcast trademarks DEEPDRIVE, AIRBASE for network DVR product (FierceCable)

Sprint Said Not to Plan Buying Clearwire After Softbank Deal (Bloomberg)

Uber quietly shutting down taxis in New York after fight with regulators, cabbies say (The Verge)

Deacom Invests in Mid-Tier Process Manufacturing
(PR Newswire)

PHD Virtual Announces Record Revenue Growth With 40 Percent Increase Year Over Year (Business Wire)
Also adds to management team and board.