Josh Kopelman speaks at Philly Tech Meetup last week (video)





NewSpring Capital in legal battle with ProfitPoint founders



Tom Paine



Radnor-based NewSpring Capital has responded to a lawsuit from the co-founders and former executives of Clifton Heights (Delaware County)-based ProfitPoint, LexisNexis's Law360 (subscription required) reports. ProfitPoint specializes in stored value gift card and customer loyalty programs for retailers. NewSpring Ventures II LP led a $6 million round in 2007, and in 2008 ProfitPoint moved its headquarters and many employees to Clifton Heights from Franklin, Tennessee.

ProfitPoint founders A. James Battista and Vaden Landers filed a complaint in July of this year against NewSpring, claiming the PE and VC firm went behind their backs to take control of the company away from them and remove them, and then engaged in an ongoing smear campaign against them that damaged their future business prospects.

In its "preliminary objections to plaintiff's amended complaint" filed on October 25, NewSpring says that a heads up from the company's chief financial officer in 2009 alerted them to possible irregularities at the firm, and a subsequent audit confirmed serious wrongdoing. A settlement reached between the parties led to Battista and Landers departing the firm in 2010. NewSpring said in its filing that "this is a case brought by two disgruntled founders of a company that, through their own misdeeds, failures and mismanagement, were terminated after they were caught using the company as their own personal piggy bank.”

NewSpring also objected on more technical grounds, saying the statute of limitations on the defamation allegations had expired, that NewSpring Capital was wrongly named as defendant since the firm had not invested in ProfitPoint (the LP had), and that Philadelphia County was an improper venue since all the principals involved were based in Delaware County.

Founded in 2003, ProfitPoint was ranked at 1379 on the 2010 Inc. 5000, with 2009 revenue of $12.4 million up from $4 million in 2006. In 2008, it ranked 59th on the Inc. 5000. But apparently revenue took a hit from various problems that occurred afterwards. ProfitPoint raised another $1.25 million in 2010 according to an SEC filing (possibly from NewSpring), and secured a $2.5 million credit facility from Square 1 Bank last year. ProfitPoint was a featured presenter at this week's IMPACT2012 Mid-Atlantic Venture Summit in Philadelphia, meaning that it is hunting for more capital.

Kutak Rock LLP represents the plaintiffs. NewSpring is represented by Pepper Hamilton LLP. A. James Battista et al. v. NewSpring Capital et al., is case number 120703905, in the Philadelphia County Court of Common Pleas. NewSpring principals Glenn Rieger and Michael DiPiano are also named as defendants.




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Daily Links 11/9/2012: Could Arris buy Horsham-based Motorola Home?






Could An Arris-Motorola Marriage Work? (Light Reading Cable)

AT&T Better Hope 100 Meg Does Not Become De Facto Anytime Soon (Multichannel News)

Carrier Ethernet Coming to FiOS (Light Reading Cable)


SAP opens up to developers (ComputerWeekly)

How does Google's DB play impact Oracle, IBM and SAP? (Dennis Howlett/Enterprise Irregulars via ZDNet)

Kenexa Announces Financial Results for Third Quarter 2012 (Business Wire)

Devon IT Offers PanoLogic Customers a Conversion Path to New Thin Clients (Business Wire)

Diagonal Consulting Achieves SAP Global Partner Center of Expertise (PCOE) Certification (Business Wire)



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Wayne-based PipelineDeals takes on Salesforce.com

Tom Paine


PtpelineDeals co-founder  Nick Bertolino


Some startups try to launch like rockets, either successfully reaching orbit quickly or rapidly crashing to the ground. Others start off more slowly, bootstrapping their way to gradual incremental growth before reaching an inflection point where they gain more scale.

An example of the latter is Wayne-based PipelineDeals, founded in 2006 by two GSI Commerce alums, including South Philly native and Drexel/Carnegie Mellon grad Nick Bertolino. Playing the role of disruptor, Pipeline Deals is taking on competitors such as Saleforce.com, SugarCRM and Zoho starting from the low end, offering a SaaS
app targeted more at the lengthier BtoB professional sales cycle than the routine order taker at $15 per user per month. Built on Rails and using MySQL, with hosting on Amazon Web Services, PipelineDeals has emphasized relative simplicity and specific focus in comparison to the broader functionality of larger CRM vendors.

Although I didn't get specific revenue numbers from a conversation with Bertolino, the company seems to be growing. Headcount is currently about 10, split pretty evenly between offices in Wayne (were Bertolino is located and technology development is centered) and Seattle; Bertolino expects they will add 2 or 3 more in the coming months. Although PipelineDeals started off mostly with single users or small groups as customers, it is seeing more demand from larger customers despite limited dedicated sales resources. Most of its marketing is inbound to this point as the company has focuded its resources on development and customer support. Bertolino says larger customers started reaching out to them, and now they have about 20 accounts with 100 or more users with the largest account having about 400 seats.

Expansion into larger accounts will inevitably pressure PiplineDeals to add more functionality, but Bertolino says the company is holding the line on that. PipelineDeal offers an open source API, and close integration with Google Apps and Google Calendar. They recently added integration with MailChimp and increased customized field capabilities. On the mobile front, an iOS app is on the way soon.

To this point, PipelineDeals has been bootstrapped without outside financing, Bertolino tells me.



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