BLPA’s Rearview Mirror Hits the Pause Button

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Pause1
Korg electribe play/pause. Creative Commons. Flickr

I will confess to be taken over by life’s events. All good, but a lot. Hence, BLPA’s blog will be taking a hiatus. During that period, we will publish sporadically, at best.

We can’t tell you when publication will resume on a regular basis, but it will resume. This blog is fun to write, and keeps me informed and helps me formulate a perspective on the current state of financial markets, IPO’s, M&A and private placements.

Believe me, it’s killing me not to write about the Billion Dollar Private Company Valuation Club, and how the dearth of IPO’s has led to a lack of discipline in valuing these companies. Private companies need the foil of the public markets.

Happy Holidays, and keep praying for that Santa Claus rally.

Margaret Johns

Founder, BlueLake Partners, LLC

BLPA’s Rearview Mirror: On the Beach

November 30, 2014

BLPA’s Rearview Mirror

Mergers & Acquisitions and Private Placements

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Source:  www.desktop-nature-wallpaper.com Creative Commons
Source: www.desktop-nature-wallpaper.com Creative Commons

We’re officially on to the post-Thanksgiving/pre-Christmas season. Lots of gatherings, social engagement, and change to be had. We’re expecting the financial markets to cooperate, but as we always say: If we had that forecasting ability, we would be retired, on the beach in Hawaii.

Mergers & Acquisitions[1]

Click on the highlighted text for more deal information.

Visual

LAGOA, a cloud visualization and distribution platform for engineers an designers, is being acquired by Autodesk for $60m.

Cooliris, which created 1) photo viewing platforms, allowing you to view all your photos in one place, be it on the web, mobile, or desktop, as well as 2) a visual messenger app, Beamit, is being acquired by Yahoo!.

Ads/Media

isocket, a leader in order automation technology, is being acquired by Rubicon Project, creating a world-leading advertising automation platform.

Shiny Ads, a media buying solution, is being acquired by Rubicon Project.

Supply chain

AirClic, which provides proof of delivery and logistics mobile supply chain solutions, is being acquired by Descartes Systems Group.

Education

Boston-based, Smarterer, a skills assessment company, is being acquired b y Pluralsight, an education company based out of Salt Lake City, for $75m.

Healthcare

Nashville-based healthcare price transparency company, Change Healthcare is being acquired by Emdeon, a healthcare payment management company, for up to $185m.

Photonics

Ithaca, NY-based BinOptics, a leading merchant provider of Indium Phosphide lasers for Data Centers, is being acquired by M/A-COM Technology Solutions for $230m.

Programming

RelativeWave, which lets you build custom native prototypes directly on the device, is being acquired by Google.

Energy

Boston-based First Wind, an independent renewable energy company focused on the development, financing, construction, ownership and operation of utility-scale power projects in the United States, is being acquired by SunEdison and TerraForm Power, for $2.4b.

Portugal/Sweden

Lusomedicamenta, a pharmaceutical contract development company, is being acquired by Recipharm, a Swedish pharmaceutical contract development company, for $139.7m.

United Arab Emirates/US

Shahiya, an Arabic food and recipe-focused social website, is being acquired by COOKPAD, a cooking community app, for $13.5m.

Cross-Border: US/India

Lightbridge Communications Corporation, the world’s largest independent global provider of Network Engineering Services to the Telecommunications industry, is being acquired by Techmahindra for 4240m.

Private Placements[2]

Click on the highlighted text for company and deal descriptions.

Transportation

Getaround, a peer-to-peer car sharing and local car rental company, raised a $24m Series B round, that included Cox Automotive.

Flywheel, a taxi hailing app, raised a $12m Series C round.

Apps

Kik, a smartphone messenger with a built-in browser, raised a $38.3 Series C round.

Media

Pluto TV, a free internet based, music focused TV, raised a $13m Series A round.

Finance

FastPay, which provides liquidity and financial workflow solutions to the media industry, raised $15m.

Cognical, which provides integrated alternative financing for online shoppers, raised $10m.

Energy

Essess, which helps electric and gas utilities meet energy efficiency goals using advanced thermal imaging technology, raised a $10.8m Series B round.

Food

Sweetgreen, a locally sourced takeout food chain, raised $18.5m.

Software-Cloud

Prezi, the cloud-based presentation company, raised $57m.

InsightSquared, a salesforce analytics product for SMBs, raised a $13.5m Series C round.

Consumer

Harry’s, the shaving products company, raised $75m.

LiveAuctioneers, which enables you to bid for products online at live auctions, raised $47.5m.

Teespring, a custom merchandise manufacturer, raised a $35m Series B round.

E-Commerce

Bigcommerce, provider of e-commerce platforms, raised a $50m Series D round.

OrderWithMe, a platform for ordering from vendors any time, any place, raised a $28m Series B round.

Social

Accompani, which is focused on relationship intelligence, to form your network into a stream of opportunities,m raised a $15m Series B round.

Redbooth, an online collaboration platform for team and task management, raised a $11m Series B round.

Hardware

Lighting Science Group, which makes LED light bulbs, raised $13m.

Security

Endgame, which is focused on security intelligence and analytics, raised a $30m Series C round.

Blockstream, a technology which makes you able to trust anyone, raised $21m.

V-Key, a mobile security company, raised a $12m Series B round.

Menlo Security, a stealth company which is focused on eliminating the threat of advanced malware with a new security model, raised a $10m Series A round. (stealth)

Ads/Media

Boost Media, with an ad optimization platform, raised a $19m Series C round.

Medical

Northwest Biotherapeutics, which is a clinical stage biotechnology company focused on the development of personalized cancer vaccines designed to treat a broad range of solid tumor cancers, raised $35m PIPE.

N30 Pharmaceuticals, which is developing a novel class of disease modifying therapies with a focus on cystic fibrosis, raised a $30m Series B round.

Cambridge-based Genocea Biosciences, which was founded to commercialize key breakthroughs in vaccine discovery and development, raised $27m post IPO debt.

North Augusta, South Carolina-based AmbioPharm, a full service peptide manufacturing company, raised $24m.

NephroGenex, an innovator in the development of drugs to treat kidney disease, raised $12m PIPE.

SomaLogic, developer of SOMAscan™ technology which unlocks protein biomarkers for life sciences research, drug discovery and development raised $16.5m.

Cambridge-based Intellia Therapeutics, which has developed a type of gene editing technology, raised a $15m Series A round.

Novaerus, that improves the business and quality of care through the application of airborne pathogen control technology, raised $10m.

Cambrian Genomics, which does DNA laser printing, raised $10m.

Germany

Hamburg-based cruise portal, DreamLines raised a $20m Euro Series C round.

Hong Kong

GoGoVan, an app-based logistics service, raised $10m.

France

Finexkap, a online working capital platform, raised a 12m Euro debt round.

China

iQiyi, a Chinees ad-supported television service, raised $300m.

Douguo, a Chinese startup that lets users share recipes, raised a $25m Series C round.

metao.com raised a $30m Series B round.

India

Mytrah Energy, a wind-power company, raised $70m in debt.

Zomato, the Indian version of Yelp, raised a $60m Series E round.

Tikona Digital Networks, which offers nationwide wireless broadband using high quality wi-fi technology, raised $45m.

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

———————-

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

———————-

Dave Henshaw, our regular editor/proof reader is off in New York City for the holidays.  We apologize for any typos,e tc.

 

[1] TechCrunch and company websites

[2] TechCrunch and company websites

BLPA’s Rearview Mirror: Stay Away From the Yen!

November 24, 2014

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  • If you like what you read, please click SHARE at the bottom of this post.
tukey
Source: Examiner.com. Creative Commons

Thanksgiving week is here, and we’re expecting a Santa Claus rally. Who knows what the New Year will bring? Hopefully, not coal. George Soros is putting his money behind Bill Gross, now that he’s moved to the Janus Funds. An interesting move.

Feedback?

I enjoy writing this newsletter and one of the benefits is that it forces me to keep current on financial markets, IPOs, M&A and Private Placements. And then I share.

Is this format serving your needs, or of interest? Please feel free to suggest tweaks or wholesale changes, and emailing your suggestions me at mjohns@bluelakepartners.com

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

Source:  freevector.com Creative Commons
Source: freevector.com Creative Commons

This Friday, DJIA set a new high at 17801.06. It seems that with the cut in the Yen as well as interest rates in China, money is pouring into the dollar and the market, pushing new highs. Third quarter earnings season is about over, and as we’ve observed recently, earnings growth, at 8.1 percent is outpacing sales growth at 4 percent. Expectations for the fourth quarter are 4 percent EPS growth and 1.9 percent sales growth. This type of earnings growth is short lived, and will depend on higher sales growth in the near future.

Best Buy’s (BBBY: Nasdaq) results were better than expected with $9.4m in sales and $0.32 non-GAAP EPS. As someone who wants to see Best Buy survive, we were thrilled to see Best Buy start to price match online retailers. Apparently, that initiative, along with smart merchandising and promotion has stemmed the decline and has been reaping rewards.

On the regulatory side, according to a recently released Senate study, banks are now being seen as having an unfair in commodity markets advantage. The banks are being accused of emulating the Hunts’ Brothers silver hoarding strategies, driving up commodities prices. Also, the SEC approved new rules to address computer trading risks.

No surprise: With the stocks hitting new highs, and trading volumes up, M&A is hitting new highs, and Goldman Sachs is king. On Monday, announced deals totaled over $100 billion.

Tech News

On November 10th, President Obama came out with a position on Net Neutrality, which I applauded. One of my colleagues, John Barr, has pointed me to an article by Dan Rayburn, of Streaming Media, that indicates that some of the issues may be more nuanced. Netflix’s streaming issues may not be wholly due to the ISP’s but also depends on interconnect decisions that Netflix makes.

Finally, my favorite company, Aereo, sent me an email saying they were filing for Chapter 11 after their bid to be classified as a cable company failed. My husband and I were thrilled when Aereo came on the scene, and were totally disappointed when the Supreme Court sided with the cable company side of the argument. We think erroneously.

Finally, the EU wants to break up Google. While the EU doesn’t have the authority to order a break up, it’s an interesting thought. Would Google (GOOG: Nasdaq)  be Google without the self driving car?

IPOs (5)[2]

Click on Company Name for the S-1 filing and the Company Symbol for the stock chart. The Company descriptions is from the S-1 filing.

We think the most interesting company, and potentially the most life altering could be Second Sight Medical, which makes visual prosthetics to give some visual capability to blind people.

The Habit Restaurants (HABT: Nasdaq) sold 5m Class A shares at $18 per share, raising $90m at a valuation of $455m. The stock closed the week at $36.59 per share.

  • The Habit Burger Grill is a high-growth, fast casual restaurant concept that specializes in preparing fresh, made-to-order char-grilled burgers and sandwiches featuring USDA choice tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. In addition, we feature freshly prepared salads and an appealing selection of sides, shakes and malts. The char-grilled preparation of our fresh burgers, topped with caramelized onions and fresh produce, has generated tremendous consumer response, resulting in our burger being named the “best tasting burger in America” in July 2014 in a comprehensive survey conducted by one of America’s leading consumer magazines. We operate in the approximately $34.5 billion fast casual restaurant segment, which we believe has created significant recent disruption in the restaurant industry and is rapidly gaining market share from adjacent restaurant segments, resulting in significant growth opportunities for restaurant concepts such as The Habit.

Medical Related

FibroGen (FGEN: Nasdaq) sold 8.1m shares at $18 per share, raising $145.8m at a valuation of $1.0b. The stock closed the week at $22.82 per share. Another company with development in China:

  • We are a research-based biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics to treat serious unmet medical needs. We have capitalized on our extensive experience in fibrosis and hypoxia-inducible factor, or HIF, biology to generate multiple programs targeting various therapeutic areas. Our most advanced product candidate, roxadustat, or FG-4592, is an oral small molecule inhibitor of HIF prolyl hydroxylases, or HIF-PHs, in Phase 3 clinical development for the treatment of anemia in chronic kidney disease, or CKD. Our second product candidate, FG-3019, is a monoclonal antibody in Phase 2 clinical development for the treatment of idiopathic pulmonary fibrosis, or IPF, pancreatic cancer and liver fibrosis. We have taken a global approach to the development and future commercialization of our product candidates, and this includes development and commercialization in the People’s Republic of China, or China.

Second Sight Medical (EYES: Nasdaq) sold 3.5m shares at $9 per share, raising $31.5m at a valuation of $312m. The stock closed the week at $36.59 per share.

  • We are a medical device company that develops, manufactures and markets implantable visual prosthetics to restore some functional vision to blind patients. Our current product, the Argus® II System, treats outer retinal degenerations, such as retinitis pigmentosa, which we refer to as RP in this prospectus. RP is a hereditary disease, affecting an estimated 1.5 million people worldwide including about 100,000 people in the United States, that causes a progressive degeneration of the light-sensitive cells of the retina, leading to significant visual impairment and ultimately blindness. The Argus II System is the only retinal prosthesis approved in the United States by the Food and Drug Administration, or FDA, and the first approved retinal prosthesis in the world.

Neothetics (NEOT: Nasdaq) sold 4.7m shares at $14 per share, raising $65.8m at a valuation of $185m. The stock closed the week at $11.25 per share. This is a product meant for the baby boomers:

  • We are a clinical-stage specialty pharmaceutical company developing therapeutics for the aesthetic market. Our initial focus is on localized fat reduction and body contouring. We are currently developing and intend to seek approval of our lead product candidate, LIPO-202, for the reduction of central abdominal bulging due to subcutaneous fat in non-obese patients. We use the term central abdominal bulging to describe subcutaneous fat in the central abdomen that is often characterized by people as love-handles, a pot-belly, a pouch or stomach rolls, among a number of other commonly used terms. There is currently no drug approved by the U.S. Food and Drug Administration, or FDA, for the treatment of this condition. If approved by the FDA, we believe LIPO-202 will be a best-in-class non-surgical procedure for localized fat reduction and body contouring. We have completed Phase 2 development of LIPO-202 showing a statistically significant reduction in central abdominal bulging due to subcutaneous fat in non-obese patients. We have tested our injectable formulations of salmeterol xinafoate in approximately 800 patients across multiple clinical trials, and these injectable formulations were consistently well tolerated with a safety profile similar to placebo. We intend to conduct two pivotal U.S. Phase 3 trials of LIPO-202 and expect top-line data at the end of 2015. If our trials are successful, we expect to file a new drug application, or NDA, in the second half of 2016 utilizing the 505(b)(2) regulatory pathway, which permits us to file an NDA where at least some of the information required for approval comes from studies that were not conducted by or for us, and to which we do not have a right of reference, and allows us to rely to some degree on the FDA’s finding of safety, and approval of, another product containing salmeterol xinafoate, the active ingredient in LIPO-202.

China

eHi Car Services (EHIC: Nasdaq) sold 10m ADS shares at $12 per share, raising $120m at a valuation of $680m. The stock closed the week at $12 per ADS share.

  • We are the No. 1 car services provider and No. 2 car rentals provider in China in terms of market share by revenues in 2013, according to Frost & Sullivan. The top three players in China’s car rental and car service industry, including us, in aggregate accounted for 10.7% of the market share by revenues in 2013, according to Frost & Sullivan. We believe such high market fragmentation presents a strong potential for our future growth and industry consolidation.

Meg’s Corner

gas pipeline
Canada’s pipeline. Creative Commons

Massachusetts has fought the natural gas pipeline, so now the companies (Kinder Morgan is constructing the pipeline) are proposing that it cross Southern New Hampshire. Which just so happens to pass about fifty feet from our property. We’ll see if they’re able to obtain the environmental permits to go through all those wetlands, lakes and rivers. Just for the record, I’m a founding member of NIMBY.

Happy Thanksgiving,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

———————-

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

———————-

This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

 

[1] WSJ Morning Moneybeat

[2]Renaissance Capital

BLPA Rearview Mirror: M&A and Private Placements: Hair Restoration

November 18th

  • We love to hear your opinions and comments at mjohns@bluelakepartners.com
  • If you like what you read, please SHARE at the end of this post.

cat mopWe have a varied group of businesses this week. Emerging categories, as measured by the frequency of investments in said category, is the Internet of Things and Machine-to-Machine communication, which is when your security system (SimpliSafe) instructs another system to call the police and report a problem. Or you program your thermometer (Nest), turn on home security, or check your home security video cameras from your iPhone.

On the private placement side, my favorites have to do with a robotic system for hair replacement. If it is effective, it’s bound to do land office business. I wish I had a nickel for every man I’ve met who is concerned about his receding hairline and thinning hair.

Nine of the 25 investments were in the medical/health area. Of course,the companies in the transactions we report on are more mature. Yes we are in the medical economy, Affordable Care Act and all.

Mergers & Acquisitions[1]

Click on the highlighted text for more deal information.

Apps

Appia, a leading independent mobile app marketer is being acquired by Mandalay Digital Group, a platform for the distribution of mobile entertainment, for $100m.

Leftronic, a data visualization business intelligence company, is being acquired by AppDirect, a business app marketplace.

IoT/M2M

Ohio-based RacoWireless, which provides solutions for IoT (internet of things) to M2M (machine to machine) is being acquired by Virginia-based KORE Wireless Group, an M2M communications services company,.

Software

Silicon Valley-based Xtime, a vehicle service and repair software company, is being acquired by Atlanta-based Cox Automotive, the auto company related conglomerate.

Media/Ads

BrightRoll, a programmatic video advertising platform, which has transformed the way video advertising is bought and sold,, is being acquired by Yahoo! for $640m.

Finance

Austin-based SecureNet Payment Systems, the payment industry’s only cloud-based solution mobile payments platform, is being acquired by Worldpay, a provider of global payments and services .

Gaming

Big Fish Games, a gaming website, is being acquired by Churchill Downs, the horse racing venue, for $885m.

Medical-Related

Botox-maker, Allergan is being acquired by Actavis for $65.5b, avoiding the clutches of Valiant Pharmaceuticals Intl.

Franklin, TN-based Centerre Healthcare, which operates rehab hospitals, is being acquired by Louisville, KY-based Kindred Healthcare for $195m.

MicronTechnologies, a leading global provider of particle size engineering technologies, is being acquired by Catalent, a global provider of advanced delivery technologies and solutions for drugs, biologics and consumer health products.

Green

Solar micro-inverter company, SolarBridge Technologies, is being acquired by SunPower Corporation. Sun Power is majority-owned by the oil company Total.

United Kingdom

MyDeliveryCab is being acquired by its competitor, dinein.co.uk.

Switzerland

Zurich-based maps.me, a three-year old mobile maps company, is being acquired by Mail.Ru Gorup.

Israel

Israeli cloud security vendor, Aorato, is being acquired by Microsoft for $200m.

Thailand

Thailand’s largest automotive classifieds site, One2Car, is being acquired by iCar Asia, ASEAN’s largest network of automotive portals, for $16.7m.

Switzerland

Zurich-based CLS Communication, a privately held provider of translation solutions, is being acquired by Waltham-based Lionbridge Technology for $77m.

Canada

Toronto-based IntelliResponse, an IVA (Intelliresponse virtual agents) platform, is being acquired by California-based [24]7, a customer engagement platform for service and sales.

Private Placements[2]

Click on the highlighted text for company and deal descriptions.

Software

VersionOne, an agile project management platform, raised a $20m Series B round.

Tel Aviv-based Forter, a fraud prevention solution for online merchants, raised a $15m Series B round which included Sequoia Ventures.

Mindjet, the mind mapping software company, raised $10m.

Apps/Services

VisaNow, an immigration service that is technology enabled, raised a $22.1m Series A round.

Gogobot, which enables you to get recommendations for vacations, hotels, restaurants and more, raised a $20m Series C round. HomeAway led the round.

Evernote raised a $20m Series E from Nikkei to build out Evernote Context and add Japanese language support for Context.   Nikkei will also provide some of the editorial content.

Shiftgig, which helps restaurants, bars and retailers fill current openings, raised a $10m Series A round.

Education

Echo360, an “active” learning platform, raised an $18m Series C round.

Course Hero, which provides students with course-specific study documents, homework help, and flashcards, raised $15m in a Series A round.

Hobbies

Craftsy, a website for classes, and supplies, raised a $50m Series D round.

Full Spectrum Laser, a fifth generation hobby laser, raised a $10m.

Retail

Revel Systems, an iPad POS system, raised a $100m in a Series C round.

San Diego-based Pirch, an online as well as bricks and mortar source of appliances for kitchens, bathroom, laundry and other areas of the home, raised $42m. They are using the “experiential” retail model, as in let’s cook real food on the range you are thinking of buying.

Door to Door Organics partners with organic farmers to bring local produce and natural groceries to your doorstep, raised a $26m Series B round. Areas include Colorado, Kansas City, Chicago, Michigan and the Tri-State region on the East Coast.

Raise Marketplace, a gift card marketplace, raised a $18.1m Series A round.

Gaming

Scopely, a mobile gaming startup, raised a $35m Series A round.

Medical/Health-Related

Restoration Robotics, which has a system for hair transplants, raised a $45m Series C round. Now I’ve seen everything!

Ziarco, a therapeutics company focused on skin diseases, raised a $33m Series B round.

Monteris Medical, an MRI-guided system, which enables minimally invasive laser ablation of soft tissue in the brain, raised a $30m Series B round.

Skincare company, La Lumiere, raised a $20m Series B round, which included Johnson & Johnson Development Corp. Between Restoration Robotics and La Lumiere, we’ve covered the waterfront.

North Carolina-based nContact Surgical, a minimally invasive arrhythmia treatment company, raised $20m.

Flowinix, which is developing implantable intrathecal pumps to manage chronic pain for cancer patients and patients with back pain, raised $20m.

Spiracur, a wound therapy company, raised $16m.

Boca Raton-based Modernizing Medicine, which has developed an iPad-based electronic medical assistant (“EMA”) for vertical areas in medicine, raised a $15m Series D round. The EMA does interface with other EMR and practice management systems.

BioPharmX, which provides innovative drug delivery products, raised a $12m Series A round.

Sweden

Fyndiq raised $20m for its online eBay-like marketplace.

China

HIHEY.COM, a very tasteful online art auction site, worth the time to explore, raised a $100m Series B round.

======================================

Meg’s Corner

palm tree_snowNew Hampshire’s current weather is cold and piercing. Black ice and morning commute accidents up and down I-93.  Black ice and accidents up and down I-93.   The sort of weather that prompts my stepson, who lives in Southern California, to say “It’s 85 degrees and sunny here, how is it in New Hampshire?”  Knowing full well the answer.  I’ve lived in that area of the country, and while it’s beautiful it can be monotonous.  Believe it or not, come February, the weather we’re experiencing in November is remembered as being relatively mild.  They’re right:  you do get used to it!

 

 

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

———————-

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

———————-

This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

 

[1] TechCrunch and company websites

[2] TechCrunch and company websites

BLPA’s Rearview Mirror: Week Ending November 16th-Up, Up and Away

November 16, 2014

  • We love to hear your opinions and comments at mjohns@bluelakepartners.com
  • If you like what you read, please forward.

sine_curve2An interesting week with the President in China making progress on the trade front, and Congress’s new Republicans majority demonstrating their new bravado. A bit like the Democratic version six years ago, when Obama swept into office, indicating that both parties have similar personality profiles. No olive branches in this crowd.

Not much on the tech front—except China.  The new product cycles are more pronounced and building momentum.  The sea change is beginning to impact the old stalwarts such as Oracle and SalesForce.

Finally, another ISIS execution—or shall we call it what it was, a beheading— of an American aid worker in Syria. ISIS is stealing the humanitarian aid sent to Syria for their own territories. These moves can’t generate much good will in those territories. Very troubling.

At least the final market news was upbeat.

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

We have another new record on the S&P 500 as of Friday, when it closed at 2039.82, and the DJIA fell back from Thursday’s high to 17635. Before you celebrate, a great deal of the recent gains are due to the move into utilities. Feeling a sense of ennui? You aren’t alone. It’s a safe bet to say investors are worn out form all the market back-and-forth, and the September/October sinusoidal wave curve.

Importantly, Walmart (WMT: NYSE) and Nordstrom’s (JWN: YNSE) had good quarters, but Macy’s, JC Penney and Kohl’s. However, consumers are the most optimistic since 2008. Nordstrom’s earnings rose to $142m or $0.73 vs. $137m or $0.69 per share. Revenue rose 8.9 percent to $3.04b, and same store sales grew 3.9 percent.

Also, I think the US and China agreements to drop certain tariffs on goods estimated to be about one billion dollars a year, was a spur to the market. We are all feeling the economy get s-l-o-w-l-y better.

Oil prices are down, which should put more discretionary funds in consumer pockets. However, the negative side of low oil prices is that it reflects an economy that is lacking in demand.

Rackspace Hosting (RAX: NYSE), based out of San Antonio, has seen a lot of volatility over the years, finally had a great quarter, with earnings at $25.7m or $0.18 per share vs. $16.3m or $0.11 per share YoY. Revenues were at $459.8m vs. $388.6m. The cloud is on a roll.

Finally, three year old Hortonworks, specializing in Hadoop, an open source software framework that enables the distributed processing of large data sets across clusters of commodity servers, filed for an IPO valuing the company at $1.8b.

IPOs[2]

Click on Company Name for the S-1 filing and the Company Symbol for the stock chart. The Company descriptions are from the S-1 filing.

Medical/Pharma dominated the offerings this week, including one chiropractor chain based out of Scottsdale. In addition we have a Hong Kong-based solar park operator, and an airline: Virgin America.

Honk Kong-based Sky Solar Holdings (SKYS: Nasdaq) sold 5.5m ADSs at $8 per share, raising $44.2m at a valuation of $387m. The ADSs closed the week at $10.40 per share, which was the low end of the filing range. Looks like the filing range was too high, so the company as forced to reduce it far beyond where it would have been if the stock had been well-priced, initially.

  • We are a global independent power producer, or IPP. We develop, own and operate solar parks and generate revenue primarily by selling electricity. We have focused on the downstream solar market since our inception and have developed projects in Asia, South America, Europe, North America and Africa. We believe our broad geographic reach and established presence across key solar markets are significant differentiators that provide global opportunities and mitigate country-specific risks. We aim to establish operations in Japan, Chile, Uruguay and other select geographies with highly attractive solar radiation, regulatory environments, power pricing, land availability, financial access and overall power market trends. By design, we focus on the downstream photovoltaic, or PV, segment, and as a result, we are technology agnostic and we can customize our solar parks based on local environmental and regulatory requirements.

Virgin America (VA: NYSE) sold 13.3m shares at $23 per share, raising $306m at a valuation of $993m. The stock closed the week at $30 per share, a 30 percent increase. By means of a benchmark, a perfectly priced IPO increases 10 to 15 percent.

  • Virgin America is a premium-branded, low-cost airline based in California that provides scheduled air travel in the continental United States and Mexico. We operate primarily from our focus cities of Los Angeles and San Francisco to other major business and leisure destinations in North America. We provide a distinctive offering for our passengers, whom we call guests, that is centered around our brand and our premium travel experience, while at the same time maintaining a low-cost structure through our point-to-point network and high utilization of our efficient, single fleet type. Our distinctive business model allows us to offer a product that is attractive to guests who historically favored legacy airlines but at a lower cost than that of legacy airlines. This business model enables us to compete effectively with other low-cost carriers, or LCCs, by generating a higher stage-length adjusted revenue per available seat mile. Conversely, while our lower density seating configuration and the cost of our premium services contribute to a higher stage-length adjusted cost per available seat mile than that of other LCCs, our underlying cost structure stemming principally from our single fleet type and point-to-point network is competitive within the industry. As of September 30, 2014, we provided service to 21 airports in the United States and Mexico with a fleet of 53 narrow-body aircraft

Medical/Pharma

FibroGen (FGEN: Nasdaq) sold 8.1m shares at $18 per share raising $146m at a valuation of $1.00b. The Company closed the week at $22 per share.

  • We are a research-based biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics to treat serious unmet medical needs. We have capitalized on our extensive experience in fibrosis and hypoxia-inducible factor, or HIF, biology to generate multiple programs targeting various therapeutic areas. Our most advanced product candidate, roxadustat, or FG-4592, is an oral small molecule inhibitor of HIF prolyl hydroxylases, or HIF-PHs, in Phase 3 clinical development for the treatment of anemia in chronic kidney disease, or CKD. Our second product candidate, FG-3019, is a monoclonal antibody in Phase 2 clinical development for the treatment of idiopathic pulmonary fibrosis, or IPF, pancreatic cancer and liver fibrosis. We have taken a global approach to the development and future commercialization of our product candidates, and this includes development and commercialization in the People’s Republic of China, or China.

While it’s clever to distribute your development world-wide, particularly in lower cost geographies in the connected-world, we have to wonder.  How do you phrase a risk factor about the likelihood of IP theft in China?

Israeli-based NeuroDerm (NDRM: Nasdaq) sold 4.5m shares at $10 per share, raising $45m at a valuation of $164m. The stock closed the week at $9.15 per share.

  • We are a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system, or CNS, disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients’ lives. Product candidates in our pipeline are designed to overcome major deficiencies of current treatments and achieve enhanced clinical efficacy through continuous, controlled administration, primarily subcutaneously or transdermally. Additionally, because our product candidates are based on reformulations of leading, approved drugs, we believe that most of them qualify for an accelerated, lower risk regulatory pathway to marketing approval.

North Carolina-based and KKR-owned PRA Health Sciences (PRAH: Nasdaq) sold 17m shares at $18 per share, raising $306m at a valuation of $1.0b. The stock closed the week at $20.22 per share.

  • We are one of the world’s leading global contract research organizations, or CROs, by revenue, providing outsourced clinical development services to the biotechnology and pharmaceutical industries. We believe we are one of a select group of CROs with the expertise and capability to conduct clinical trials across all major therapeutic areas on a global basis. We have therapeutic expertise in areas that are among the largest in pharmaceutical development, including oncology, central nervous system, inflammation and infectious diseases. We believe we provide our clients with one of the most flexible clinical development service offerings, which includes both traditional, project-based Phase I through Phase IV services as well as embedded and functional outsourcing services. We believe we further differentiate ourselves from our competitors through our investments in medical informatics and clinical technologies designed to enhance efficiencies, improve study predictability and provide better transparency for our clients throughout their clinical development processes.

Scottsdale-based The Joint (JYNT: Nasdaq) sold 3m shares at $6.50 per share, raising $19.5m at a valuation of $60m. The stock closed the week at $6.75 per share.

  • We are a rapidly-growing franchisor of chiropractic clinics that operates on a non-insurance, cash-based model. We seek to be the leading provider of chiropractic care in the markets we serve and to become the most recognized brand in our industry through the rapid and focused expansion of chiropractic clinics in key markets throughout North America and abroad.

Meg’s Corner

The cold air is beginning to blow, with an early morning temperature dipping into the low 20’s. Funny how it seems frighteningly cold now, but the same temperature will feel relatively mild in February.

Thoughts of Thanksgiving celebration have come in to focus. We’re planning on trekking up to Maine, complete with pugz, to celebrate with Reverend Patti, her partner and her three, now grown, sons. New England is enchanting in that the neighboring states are so close and distinctive.

We’ve done the final winter preps: The leaves are picked up, the gutters are cleaned, and the pugs are getting suited for the winter coats.

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

———————-

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

———————-

This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

[1] WSJ Morning Moneybeat

[2]Renaissance Capital

BLPA’s Rearview Mirror: Elections and $78 per Barrel Crude

BLPA’s Rearview Mirror

  • We love to hear your opinions and comments at mjohns@bluelakepartners.com
  • If you like what you read, please click SHARE at the bottom of this newsletter.

November 9, 2014Thefalloftheberlinwall1989Lots and lots of news this week: elections, unemployment report, earnings, oil prices and the Berlin Wall. First, it is the 25th anniversary of the fall of the Berlin Wall. A momentous occasion for those of us with a heritage in Eastern Europe, and even if you don’t. Oil prices have fallen below $80 per barrel such that gas is below $3.00 per gallon—great for the consumer, less good for the oil companies and those companies that supply them. And the unemployment rate eked down to 5.8 percent,. though lots of grumbling about the quality of that employment and the lack of wage growth. You can’t have a robust economy if the workers aren’t seeing wage gains. Finally, the stock market hit new highs. After dipping 7.8 percent between September 18th and October 15th, the market has been on a tear.

Regarding elections results,. what’s up is down and what’s down is up. The Republicans won in Massachusetts and the Democrats won in New Hampshire, which is a bit of a turnaround. I had a swim team member bemoaning the situation after practice on Wednesday morning. Though he can take solace that his home state, Massachusetts, went his way.

ballot 2The Republican’s now have a majority in the Senate and Mitch McConnell is the new Senate Majority Leader, pairing up with John Boehner. Could be a contentious two years ahead of us. Although, statistically, the market has done well when the President and the Congress are on opposite sides of the table.

The most interesting fact about the unemployment is who is doing well and who is doing less well. Unemployment in education is at 3.9 percent, and 3.5 percent in financial services and 3 percent with government workers. Construction is at 7 percent, hospitality at 8.3 percent and retail at 6.1 percent. Which means we should all aspire to be teachers or work for the IRS.

Just one more factoid: we all know mobile is where it’s at, but did you know that the Hispanic population was the fastest growing mobile segment?

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

Gotta love that market. Positive earnings announcements, higher labor enrollment and lower oil prices make a nice elixir for the market.

The mobile game companies are shuffling the deck, with Zynga (ZNGA: Nasdaq) maker of Farmville and King Digital Entertainment, PLC (KING: NYSE), maker of Candy Crush, suffering.   Alternatively, Activision’s (ATVI: Nasdaq) revenue jumped 78 percent with it’s sci-fi ‘Destiny game,’ and mobile sales. Live by the product cycle, die by the product cycle. Investors in games and entertainment products need hearty constitutions.

Alibaba (BABA: NYSE) grew revenues 54 percent to $2.7bYoY, with earnings up 16 percent to $1.1b. The stock is up approximately 50 percent since the IPO, and the valuation is now greater than that of Facebook.

Meanwhile, my personal favorite, Home Away (AWAY: Nasdaq): Not so great. Business is doing well with revenue up almost 30 percent to $117m YoY to , but costs increased, so earnings fell to $4.9m or $0.05 per share, from $8.5m or $0.10 per share. It takes a lot of IT to run that business. Buying opportunity?

IPOs[2]

Click on Company Name for the S-1 filing and the Company Symbol for the stock chart. The Company descriptions is from the S-1 filing.

Midterm election week was kind to the IPO market:

Software

Upland Software (UPLD: Nasdaq) sold 3.8m shares at $12 per share, raising $45.6m at a valuation of $172m. The stock closed the week at $10.62 per share.

  • Upland is a leading provider of cloud-based enterprise work management software. We define enterprise work management software as software applications that enable organizations to plan, manage and execute projects and work. Our software applications help organizations better optimize the allocation and utilization of their people, time and money. We provide a family of cloud-based enterprise work management software applications for the information technology, marketing, finance, professional services and process excellence functions within organizations. Our software applications address a broad range of enterprise work management needs, from strategic planning to task execution.

Petfood

Freshpet (FRPT: Nasdaq) sold 10.4m shares at $15 per share, raising $156m at a valuation of $477m. The stock closed the week at $19 per share.

  • We started Freshpet with a single-minded mission—to bring the power of real, fresh food to our dogs and cats. We were inspired by the rapidly growing view among pet owners that their dogs and cats are a part of their family, leading them to demand healthier pet food choices. Over the last eight years, we have created a comprehensive business model to deliver wholesome pet food that “pet parents” can trust, and in the process we believe we have become one of the fastest growing pet food companies in North America.

Freshpet started the refrigerated pet food category. Sorry pugz,no Freshpet for you—only your “natural” Eagle Pack kibble, supplemented with brown rice, kosher chicken, green beans and Wholistic Pet Digest All and Joint Mobility.

Pharmaceuticals

Nevro (NVRO: NYSE) sold 7m shares at $18 per share, raising $126m at a valuation of $7.1b. The stock closed the week at $25.3 per share.

  • We are a medical device company that has developed and commercialized an innovative neuromodulation platform for the treatment of chronic pain. Our Senza® system is the only spinal cord stimulation, or SCS, system that delivers our proprietary HF10™ therapy. Our SENZA-RCT U.S. pivotal study met its primary and secondary endpoints, and our post-hoc statistical analysis supports the superiority of HF10 therapy over traditional SCS therapies for treating both leg and back pain. While SCS therapy is indicated and reimbursed for treating back and leg pain, it has limited efficacy in treating back pain and is used primarily for treating leg pain, limiting its market adoption. In our pivotal study, HF10 therapy was demonstrated to provide significant and sustained back pain relief in addition to leg pain relief. Additionally, HF10 therapy was demonstrated to provide pain relief without paresthesia, a constant tingling sensation that is the basis of traditional SCS therapy. HF10 therapy is also designed to reduce variability in the operating procedure, providing meaningful benefits to both patients and physicians. We believe we are positioned to transform and grow the approximately $1.5 billion existing global SCS market under current reimbursement by treating back pain in addition to leg pain and by eliminating paresthesia.

INC Research (INCR: ) sold 8.1m shares at $18.50 per share, raising almost $150m at a valuation of $1.1b. The stock closed the week at $20.4 per share.

  • We are a leading global Contract Research Organization, or CRO, based on revenues, and are exclusively focused on Phase I to Phase IV clinical development services for the biopharmaceutical and medical device industries. We provide our customers highly differentiated therapeutic alignment and expertise, with a particular strength in Central Nervous System, or CNS, oncology and other complex diseases.

Watch out for INC Research’s two classes of voting stock.

Coherus BioSciences (CHRS: Nasdaq) sold 6.3m shares at $15 per share, raising $94.5m at a valuation of $480m. The stock closed the week at $14.79 per share.

  • We are a late-stage clinical biologics platform company focused on the global biosimilar market. Biosimilars are an emerging class of protein-based therapeutics with high similarity to approved originator products on the basis of various physicochemical and structural properties, as well as in terms of safety, purity and potency. Our goal is to become a global leader in the biosimilar market by leveraging our team’s collective expertise in key areas such as process science, analytical characterization, protein production and clinical-regulatory development. Since our founding in 2010, we have advanced one product candidate into Phase 3 clinical development, two others into or through Phase 1 clinical development and entered into partnerships with two global pharmaceutical companies.

Xenon Pharmaceuticals (XENE: Nasdaq) sold 4m shares at $9 per share, raising $36m at a valuation of $122m. The stock closed the week at $13.27 per share.

  1. We are a clinical-stage biopharmaceutical company discovering and developing a pipeline of differentiated therapeutics for orphan indications that we intend to commercialize on our own, and for larger market indications that we intend to partner with global pharmaceutical companies. We have built a core enabling discovery platform for the discovery of validated drug targets by studying rare human diseases with extreme traits, including diseases caused by mutations in ion channels, known as channelopathies. We have an integrated platform that includes in-house capabilities for human genetics, small molecule drug discovery and preclinical and clinical development.

Margaret’s Corner

We like to think that these newsletters contain something for everyone. This week, to my delight, we have Nevro for my husband, who has a spinal cord injury, and Freshpet for the pugz. Who woulda’ thought?

The days are getting shorter—it’s now dark by five o’clock, and the pugz and I wear our reflector vests out on our walks. No street lights in the “Live free or die” state. The temperatures are also declining. I thought I saw frost on the grass last week, though the temperatures have not gotten below freezing—only down to 33 degrees.

Thanksgiving is approaching. It’s going to be a minimalist Thanksgiving, as the kids will be other places, as will the relatives. Make that a tiny organic turkey for us this year.

======================================

 

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

———————-

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

———————-

This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

[1] WSJ Morning Moneybeat July 21 – August 1, 2014

[2] Source: Renaissance Capital, SEC documents, Yahoo Finance. Nasdaq website

[3] Company S-1

 

[1] WSJ Morning Moneybeat

[2]Renaissance Capital

BLPA’s Rearview Mirror M&A and Private Placements: India Rules

BLPA’s Rearview Mirror

M&A and Private Placements: India Rules

November 4, 2014

  • We love to hear your opinions and comments at mjohns@bluelakepartners.com
  • If you like what you read, please click SHARE at the bottom of this post.

 

Source:  creative commons
Source: creative commons

The most interesting acquisition this week was California-based SiTime’s acquisition by Japan-based Mega Chips. One almost never sees a Japanese company acquire U.S. companies, particularly in the semiconductor sector.

On the M&A front, two ultra high end fashion websites, Moda Operandi and ModeWalk merged. Personally, I view many of my prior designer purchases with some degree of regret. In New York City, professionals must dress the part with Zegna suits, Ferragamo ties, Akris dresses and Burberry coats. Dressing in these labels in my current life would be silly and time consuming. Time and energy better spent in the pool and writing. But I am considering a Lexus hybrid.

In acquisitions, Amazon is signaling their interest in the huge and highly lucrative entertainment business with their acquisition of Rooftop Media, an event streaming company.

My favorite private placement is LiquidTime, where companies can make use of their empty office space and meeting rooms by consigning it to LiquidTime who rents out the reconfigured space by the hour, day or month. The Uber of commercial real estate. They have nice looking and well located facilities in Cambridge, Boston and Waltham. But forget New Hampshire and the I-495 loop and most of the 128 loop.

That loud sucking sound you hear is India shepherding all the private placement funds into the country. This week four deals consumed just over one billion dollars.

Mergers & Acquisitions[1]

Click on the highlighted text for more deal information.

Media/Advertising

MobFox, an open mobile advertising platform, is being acquired by Matomy Media Group for $17.5m.

NYC-based Torando Labs, founded by bit.ly’s founder Todd Levy, is being acquired by BuzzFeed. Not much is known about Tornado Labs. Levy will become BuzzFeed’s VP of Data Engineering.

Rooftop Media, which has developed a platform that distributes live and on-demand recordings is being acquired by Amazon.

Systems & Services

TASC is being acquired by Engility for $1.1b. Both are government technology services providers, Engility is at the price competitive end, and TASC at the specialty high end of the market.

Kansas-based Overland Solutions, an underwriting support services company for the insurance industry, is being acquired by ExlService Holdings ,a BPO company, for $53m.

Salina, New York-based Systems Made Simple, a provider of health information solutions (“HIS”) to the government, is being acquired by Lockheed Martin. Lockheed must be looking at migrating from defense towards medical after reviewing Express Script’s and McKesson’s financial results and wants to join the party.

PRO Unlimited, a global contingent workforce solution provider, is being acquired by Investacorp in a buyout.

Consumer

ModeWalk is being acquired by Moda Operandi. This is a case, pun intended, of Stanford GSB entrepreneurs’ company being acquired by HBS entrepreneurs’ company. New York City/Boston prevails over Palo Alto.

Cityvox, a French online review site, is being acquired by Yelp.

Medical/BioTech

F-star Alpha Ltd, a developer of FS102 is a novel Phase 1 ready Human Epidermal growth factor Receptor 2 (HER2)-targeted therapy in development for the treatment of breast and gastric cancer, is being acquired by Bristol-Myers Squibb for $475m.

 

Topera, Inc., a medical device company focused on developing innovative electrophysiology technologies to improve the diagnosis and treatment of atrial fibrillation, is being acquired by Abbot Labs for $250m.

Cleveland-based Chantest, which provides ion channel testing services, is being acquired by Charles River Laboratories International, another medical testing company, for $54m.

UK-based Brabant pharma is being acquired by Zogenix, based in San Diego, for $35m. The acquisition includes worldwide development and commercialization rights to BrabafenTM, low-dose fenfluramine, for the treatment of Dravet syndrome, a rare and catastrophic form of intractable epilepsy that begins in infancy

Semiconductor

SiTime, A MEMS and analog semiconductor company, is being acquired by MegaChips Corporation, a fabless semiconductor company based in Japan, for $200m.

Communications

Netherlands-based Nimbuzz, a free messaging and calling app, is being acquired by New Call Telecom, a UK-based ISP, for $175m.

Industrial

Chicago-based Non Woven Solutions is being acquired by Danish-Based Fibertex Nonwovens for $25m.

Private Placements[2]

Click on the highlighted text for company and deal descriptions. Descriptions are from companies’ websites, unless otherwise noted.

Finance

Wealthfront, which helps you mange your money with a simplified, programmable investment platform, raised a $64m Series D round.

Personal Capital, the personal financial planning website that advertises on Leo Laporte’s “This Week in” channel, raised a $50m Series D round. The Company is based in Denver and San Francisco.

iMatchative, which uses their platform, ALTX, to connect the right investor to the right fund, raised a $20m Series B round.

Keyssam [no website], a five-year-old stealth startup that holds a patent for “contactless secure communication”[3], raised a $10.87m Series C round.

Consumer

Minted, which brings you the best in indie design from a global community of independent designers, raised a $38m Series D round.

Enjoy[4][no website], which aids online shoppers making purchase decisions, raised $30m. What makes Enjoy notable is that the founder is Ron Johnson, Apple’s former head of retail, and JC Penney’s former CEO.

ScoreBIG, which is a ticket auction site for a broad array of sports, theater and other event venues, raised an $18m in a Series D round.

Software

Slack, a platform for team communication that is very popular among developers, raised a $120m Series D round.

Cardlytics, which has consumer purchase data provided by bank credit cards, raised $70m. The data is sold to advertisers, retailers and other companies.

Waltham-based Capriza, a cloud-based app development platform, raised a $27m Series C round.

Austin-based Transverse LLC, which developed the billing software called Tract, raised $25m. Tract provides automated billing for companies with subscription and activity-based business models

Joyent, the high-performance cloud computing infrastructure and big data analytics company, raised a $15m Series E round.

Austin-based Krimmeni Technologies, which provides security for a “hyperconnected” world, raised an $11.7m Series A round.

Green

Harvest Power raised a $20m Series D round.

  • We divert discarded organic materials – primarily yard trimmings and food scraps – from landfills and produce renewable energy and soil, mulch and natural fertilizer products through anaerobic digestion and composting.
  • Harvest currently manages more than 2 million tons of organic material through 30 operating sites in North America. The company has nearly 65,000 megawatt-hours per year of heat and power generating capacity and sells nearly 33 million bags of soil, mulch and fertilizer products to agricultural producers and landscapers annually.

Office Space

LiquidSpace, which rents work/meeting space by the hour,day,month, raised a $14m Series C round. The model makes it look like the Uber of office space.

Hardware/Industrial

Boston-based Digital Lumens, which makes intelligent LED High Bay LIghting Systems for commercial and industrial lighting, raised a $23m Series C round. Nokia Growth Partners was the lead investor.

Peraso Technologies, a semiconductor company specializing in the development of 60 GHz wireless chipsets, raised $20m.

uBeam, which does wireless charging, raised a $10m Series A round.

Wellness

Limeade, an enterprise-focused wellness company, raised a $25m Series C round.

Biotech/Medical

Vanda Pharmaceuticals (VNDA: Nasdaq), a biopharmaceutical company focused on central nervous system disorders, raised $54m in a private placement.

Syros Pharmaceuticals, which has a platform which maps gene control circuits in human disease tissue and identifies optimal points of intervention for therapeutics, raised a $53m Series B round.

Cambridge-based Aileron Therapeutics, with a proprietary class of drugs called Stapled Peptides, raised $33m.

Imago BioSciences, developing “novel medicines” raised a $26.5m Series A round.

Paragon Bioservices, is a CRO-CMO whose focuses the manufacturing of biopharmaceuticals, raised a $13m Series A round.

Tel Aviv-based CNoga Medical, which is developing a non-invasive diagnosis method for diabetes, raised $12.5m.

Cortendo, which is focused on Type 2 diabetes, raised $11m. The Company has offices in Gothenburg, Sweden and Radnor, Pennsylvania.

China

Blink,a photo messaging app, raised a $20m Series A round from Tencent. The website is www.blinnnk.com.

India

Snapdeal, India’s largest online shopping site, raised $627m.

Olacabs, the Uber of India, serving Bangalore, Delhi and Mumbai, raised a $210m Series D round.

Laurus Labs, which makes nutraceuticals, specialty chemicals, and pharmaceuticals on a contract and direct basis, raised $90m.

CESC,a power utility company, raised $80m.

Brazil

VivaReal, a real estate site, raised a $42m Series E round. The Company also serves other South American countries and Central America.

======================================

NH Flag
Source: democrashield.wordpress.com, creative commons

This week is midterm elections, and in New Hampshire the Senate race between Jean Shaheen (D) and Scott Brown (R) is hotly contested.  Our phone is literally ringing every 15 minutes with pollsters.  The Governor’s race, a biannual event, is less contested between the incumbent Maggie Hassan (D) and Walt Havenstein (R).

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

———————-

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

———————-

This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

 

 

 

[1] TechCrunch and company websites

[2] TechCrunch and company websites

[3] venturebeat.com

[4] http://appleinsider.com/articles/14/10/23/former-apple-exec-ron-johnson-wants-to-make-online-shopping-personal-with-new-startup-enjoy

BLPA’s Rearview Mirror: Bipolar Financial Markets and Facebook

BLPA’s Rearview Mirror

November 3, 2014

  • We love to hear your opinions and comments at mjohns@bluelakepartners.com
  • If you like what you read, please click SHARE at the end of this blog.

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

Source:  @NikeBearBrown; Creative Commons
Source: @NikeBearBrown; Creative Commons

This roller coaster continues. Courtesy of Friday’s Bank of Japan announcement of quantitative easing, the markets went on a tear for Halloween, hitting new highs. Markets in the U.S. and Europe rallied on the news. If October were a person, I would diagnose it with bipolar disorder. Over the decades, October has had multiple market crashes and ensuing recessions and depressions. One month ago, in September we were literally experiencing new highs, in October we were close to new lows for the year, and now a new high. Whiplash.

If seasonal patterns hold, we should see a strong November and then move into a December Santa Claus rally. If I had to do it again, I would apply my quantitative skills to the financial markets for at least part of my career. Stock picks are partially attributable to company fundamentals and partly to the financial market forces. One can know nothing about a company, and still make educated guesses at revenue and sales forecasts, if one knows historical patterns. The other portion of my career I would spend in Big Data, in this brave new world of advertising and marketing where algorithms are king. But I digress.

Facebook (FB: Nasdaq) reported a great quarter, coming in at $3.2b up from $2.0b in revenues and just about doubling profit to $1.1b, as they finally got the knack of mobile advertising. However Mark Z ruined the party by promising to spend with abandon in all sorts of areas. Electronic Arts (EA: NYSE) is playing the product wave of the Playstation 4 and the Xbox One. GAAP revenue came in at $990m vs. $695m, and earnings turned positive to $183m. However, the Playstation was not enough to save Sony, (SNE: ADS) which is suffering from the write off of their foray into mobile phones. Talk about losing the magic. Sony was one company that had UX (user experience) down pat. And then lost it totally.

On the biotech front, Amgen (AMGN: Nasdaq) and Gilead Sciences (GILD: Nasdaq) had good quarters. On the healthcare side, McKesson (MCK: NYSE) and Express Scripts (ESRX: Nasdaq) are riding the Affordable Care Act.

IPOs[2]

Click on Company Name for the S-1 filing and the Company Symbol for the stock chart. The Company descriptions is from the S-1 filing. Both companies are based in Southern California.

No tech IPO’s this week. Rather, breast implants and country western boots. Quite a spread.

Retail

Boot Barn Holdings, Inc. (BOOT: Nasdaq) sold 5m shares at $16 per share, raising $80m at a valuation of $399m. The stock closed the week at $17.75 per share.

  • We are the largest and fastest-growing lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S. With 158 stores in 24 states as of September 27, 2014, we have over twice as many stores as our nearest direct competitor that sells primarily western and work wear, and believe we have the potential to grow our store base to at least 400 domestic locations.

Medical

Sientra, Inc. (SIEN: Nasdaq) sold 5m shares at $15 per share, raising $75m at a valuation of $212m. The stock closed the week at $17.80 per share.

  • We are a medical aesthetics company committed to making a difference in patients’ lives by enhancing their body image, growing their self-esteem and restoring their confidence.
  • Our primary products are silicone gel breast implants for use in breast augmentation and breast reconstruction procedures, which we offer in over 120 variations of shapes, sizes and textures. Our breast implants are primarily used in elective procedures which are generally performed on a cash-pay basis. Many of our breast implants incorporate one or more differentiated technologies.

======================================

Source:  Pug Love on Pinterest; Creative Commons
Source: Pug Love on Pinterest; Creative Commons

This weekend, we saw a foreshadowing of winter. Temperatures are dipping below freezing and the leaves are brown and falling with abandon. My California bred rescue pug Abby, is totally enthralled by the falling and blowing leaves. She paws at the window, wanting to go out and attack, run after, and capture the leaves. I wonder whether she will do the same with snow and near zero temperatures.

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

———————-

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

———————-

This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

[1] WSJ Morning Moneybeat

[2]Renaissance Capital

BLPA’s Rearview Mirror: $542m to Spend

October 26, 2014

  • We love to hear your opinions and comments at mjohns@bluelakepartners.com
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Source:  thewrangleronline.com
Source: thewrangleronline.com, Creative Commons

We’re hoping to be able to take a breath, after the down drafts we’ve seen in the market. Historically, we have seen some upward movement in the stock indices in November and December. M&A was fairly diverse this week, with a heavy concentration in e-commerce.

When we reviewed private placements this week, there were some huge capital raises: $542m for Magic Leap, $350m for Koudai (China), and $185m for Mozido. I hate to be the skeptic, but I have never seen a company be successful in the aftermath of huge capital raises. Frothy market out in the Left Coast. Inevitably, these huge capital raises lead to a lack of focus with some degree of wastefulness. I hope to be proven wrong.

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

Are you feeling any whiplash from the market? The S&P 500 low for the year was October 15th; the high for the year was September 18th. Last week, stocks traded below the 200-day moving average for the first time in two years. This week, we’re back above the 200 day moving average. Scott Minerd, Chief Investment Officer at Guggenheim Partners summed it up: “Last week’s investment roller coaster was something we had been expecting—U.S. stocks delivered their usual bout of seasonal volatility right on cue[2].”   November and December tend to be strong months on the Dow, historically showing growth of between one and two percent.

The Dow blue chips are taking it on the chin: AT&T, Coca-Cola, IBM, Wal-Mart and GE are all stagnant to declining. AT&T and IBM, in particular, generated news. The formula of ditching hardware and selling services and software is no longer working. McDonald’s is retreating on all fronts. As a result of all this dismal growth in large caps, the Dow is lagging the market.

McDonald’s (MCD: NYSE)in particular is an ugly sight, with earnings below expectations, showing declines in all segments, all geographies. Comparable store sales declined 3.3 percent from a decline in customer traffic. Revenues were $6.98b as opposed to $7.32b YOY, with earnings of $1.1b as opposed to 1.5b. Ouch!

Yahoo!, (YHOO: Nasdaq) announced flatfish revenues of $1.15b and Non-Gaap earnings of $0.52 per share as opposed to $0.34 per share. The Company particularly stressed its growth in mobile advertising to $200m per year.

IPOs[3]

Click on Company Name for the S-1 filing and the Company Symbol for the stock chart. The Company descriptions are from the S-1 filing.

Proteon Therapeutics (PRTO: Nasdaq) in Waltham, Massachusetts, sold 6.1m shares at $10 per share, raising $61m at a valuation of $140m. The stock closed the week at $10.00 per share.

  • We are a late-stage biopharmaceutical company focused on the development of novel, first-in-class pharmaceuticals to address the needs of patients with renal and vascular disease. Our product candidate, PRT-201, is a recombinant human elastase that we are developing to reduce vascular access failure in patients with chronic kidney disease undergoing or preparing for hemodialysis, a lifesaving treatment that cannot be conducted without a functioning vascular access. We believe the data from our completed Phase 2 trial of PRT-201 in patients undergoing creation of an arteriovenous fistula, or AVF, support that a one-time, local application of PRT-201 during AVF surgical placement reduces AVF failure, thereby improving patient outcomes and reducing the burden on patients and the healthcare system.

France

DBV Technologies (DBVT: Nasdaq) sold 4.3m shares at $21.64 per share, raising $93m at a valuation of $399m. The stock closed the week at $27 per share.

  • We are a clinical-stage specialty biopharmaceutical company focused on changing the field of immunotherapy by developing a novel technology platform called Viaskin. Our therapeutic approach is based on epicutaneous immunotherapy, or EPIT, our proprietary method of delivering biologically active compounds to the immune system through intact skin using Viaskin. We have generated significant data demonstrating that Viaskin’s mechanism of action is novel and differentiated, as it targets specific antigen-presenting immune cells in the skin, called Langerhans cells, that capture the antigen and migrate to the lymph node in order to activate the immune system without passage of the antigen into the bloodstream. We are advancing this unique technology to treat patients, including infants and children, suffering from severe food allergies, for whom safety is paramount, since the introduction of the offending allergen into their bloodstream can cause severe or life-threatening allergic reactions, such an anaphylactic shock.

Mergers & Acquisitions[4]

Click on the highlighted text for more deal information.

E-Commerce

E-commerce services provider, Digital River (DRIV: Nasdaq), based in Minneapolis, is being acquired by Siris Capital Group for $840m.

Olson, a Minneapolis-based integrated marketing technology and digital solutions provider, is being acquired by ICF International for $295m.

St. Louis-based ShipWorks, a multi-carrier shipping tool used by online merchants, is being acquired by Stamps.com for $22m.

Neighborhood information site, Walk Score is being acquired by Redfin, the online real estate brokerage firm.

RightSignature, an online electronic signature company, is being acquired by Citrix Systems.

Restaurant-Kritik, a Hamburg, Germany-based restaurant review company, is being acquired by Yelp.

Security

Perimeter Internetworking Corp, also known as SilverSky and based in New York, is being acquired by BAE Systems for $232m. SilverSky is a provider of cloud security solutions.

Nexgate, a pioneer in security and compliance solutions for social media communication channels, is being acquired for $35m by Proofpoint (PFPT: Nasdaq), a leading security-as-a-service provider.

Software

Firebase, which helps you build real-time, collaborative apps with the Firebase API, is being acquired by Google.

IT/Telecom Services

Westower, a telecommunications services firm, focusing on construction and maintenance of communications infrastructure related to wireless networks throughout the United States, is being acquired by Mastec Inc., an infrastructure construction company, for $199m.

San Francisco-based BEAR Data Solutions, which provides IT infrastructure solutions & services, is being acquired by Datalink for $18m.

Intergen, an IT services firm, is being acquired by Empired, an Australian IT services firm, for 19m NZD.

Entertainment

CinemaWell.com, a service for watching movies or creating videos, is being acquired by Facebook for $99m. Today CinemaWell.com is showcasing Russian and Polish movies.

Finance

Worldwide Payment Systems, a provider of international payment processing, is being acquired by Onyx Payments, a payment processor for hotels and travel distributors.

Energy

ESCO Energy Services Company, a leader in energy efficiency upgrades and lighting retrofit projects, is being acquired by ForceField Energy (FNRG: Nasdaq).

Private Placements[5]

MultiMedia/Technology

Dania Beach, Florida-based Magic Leap, creators of a Dynamic Digitized Light Field Signal(TM), raised a $542m Series B round.

PLAYSTUDIOS, an audio production facility, raised a $20m Series C round.

Software/Tools

Mirantis, a pure play OpenStack company, a $100m Series B round. The valuation is said to be around $800m.

Benu Networks, the Billerica-based provider of networking and software solutions for network operators deploying Wi-Fi and Cloud services, raised a $28m Series C round.

Snowflake Computing, which provides a data warehouse solution in the cloud, raised $26m Series B round.

Urban Airship, a mobile marketing company which provides tools to app developers to increase customer engagement with push notifications and other attributes, raised a $12m Series D round.

Zignal Labs, which designs a real-time data analysis, decision-making platform, raised an $11m Series B round. The Company is based in Washington, D.C. and San Francisco.

Finance

Austin-based Mozido, a mobile payments platform, raised a $185m Series B round.

Bitnet, a digital payments platform company that enables the use of bitcoin in payments, raised a $14m Series A round.

Miami-based Technisys, which provides cyberbank solutions to Latin American countries, raised a $13m Series B round that included Intel Capital.

Orchard Platform, a lending platform serving institutional investors, raised $12m Series A round.

Recurly, a subscription billing and recurring billing management company, raised a $12m Series B round.

Healthcare

Phreesia, a point of service platform for data entry and collections in the healthcare industry, raised a $30m Series E round.

China

Koudai, a mobile shopping platform based in Beijing, raised $350m.

Beijing housekeeping services app maker, Ayibang. raised a $10m Series B round.

Philippines

51Talk, a Philippine-based ESL company targeting China, raised a $55m Series C round.

Indonesia

Indonesian marketplace, Tokopedia, raised a $100m Series E round.

======================================

Pug tuxedo
Souce: Pinterest, Creative Commons

With the crisp weather, the trees are into the last half of the season, shedding all their leaves. The colors are more brown and yellow than red and orange. It’s also getting mighty close to that ghouling time, with Halloween parties galore. The neighborhood children expect, with eager anticipation, the Pugz in costume. True to form, Abby will be the princess, Pierre is the devil and Max is the gentleman.

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

SiVal_Logo

 

 

 

Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

———————-

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

———————-

This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

 

[1] WSJ Morning Moneybeat

[2] Guggenheim Partners, October 23. 2014

[3]Renaissance Capital

[4] TechCrunch and company websites

[5] TechCrunch and company websites

Disruptions: MyFitnessPal takes Weight Watchers

The sculpture Bronskvinnorna outside art museum (Konsthallen), Växjö, Sweden.  Creative Commons
The sculpture Bronskvinnorna outside art museum (Konsthallen), Växjö, Sweden. Creative Commons

Disruptions are happening in all areas of the world, even in weight loss. Weight Watchers (“WW”) has been an old stalwart: attend meetings, keep food diaries, exercise and you will lose weight. It’s been a wonderful franchise opportunity, with multiple product line extensions—scales, bowls, cook books, magazines, frozen food and snack sales.

True confessions: I am a Weight Watchers Lifetime Member. After graduate school at Stanford, I joined Weight Watchers for the first time to lose the Freshman 15, and became a Lifetime Member. Since then, I have subscribed to the WW’s magazine and the online service, and have been back to WW many times. But at this point in my life, I could no longer identify with the leaders or the other members, so it just didn’t work for me.

Being in M&A and finance, the first thing I did upon rejoining was look up Weight Watcher’s stock, and read their 10-K, 10-Q’s and Proxy Statements. Not a pretty picture. The stock currently trades around $28 per share, having topped off at $80 per share in 2011. The market capitalization is $1.67b, with an enterprise value of $3.75b. The Company’s major source of revenues is meetings, which have declined over two years from $990m to $851m, while online revenues have increased from $399m to $522m, but have now leveled off.

In 1999 WW got spun off from H.J. Heinz to an LBO group, the Artal Group, which is owned by Invus. The price was $735m: $244m in equity with the rest debt.[1] Since then, Invus has realized $3.8b by selling stock, and now maintains a 52 percent stake.

When discussing fitness and diet with one of my partners, who is incredibly trim, he suggested the app: MyFitnessPal (“MFP”). To my astonishment MFP is now much better than Weight Watchers Online (“WWO”). And it’s free, in contrast to WWO, which charges $18 per month. I had tried MFP years ago, and discarded it as too clunky. Revisit it several years later, and it’s amazing. After trying it a month ago, I’m impressed and in awe.

Put together MyFitnessPal and Meetup and you have a free Weight Watchers. Whoops. It’s time for the WW CEO, Jim Chambers, to invite Clay Christensen in and confront The Innovator’s Dilemma. Is it time to take the Company private again, but I’m getting ahead of myself.

Of course, I had to look up MFP’s story: MyFitnessPal is based in San Francisco, started by Michael Lee, later joined by his brother, seven years ago. Take one look at these guys, and you would think that they have never ever had a weight issue. But wait. The Company did start in the classic way. Mike Lee, the original founder tells LifeHacker:

The idea for the app actually stemmed from a personal need. My wife and I were preparing for our beach wedding [in 2005] and we both wanted to lose a little weight. We went to see a fitness trainer and he gave us a book listing the nutritional values of around 3,000 foods and a small pad of paper to use for tracking our calories. I’ve been programming since I was 10 years old, so I just knew there had to be a better way to keep track of my meals and snacks, but I couldn’t find anything online that was good enough. Every digital product on the market at that time was just as painful and time-consuming to use as food-logging in that notebook. So, I built my own solution, and it eventually became MyFitnessPal[2]

Mike’s brother, Al, joined him in 2009 to develop the iOS app, and MFP grew to one million users. The first institutional money came in 2013 from Accel Partners and Kleiner Perkins. This February the company acquired Sessions, which pairs people with coaches—demonstrating that the personal touch is still needed.

When I started back at Weight Watchers this year, the beleaguered leader indicated that she was being pressured to improve attendance, and recruit younger members. Sort of reminds me of an old boss who expected us to land IPO’s that were awarded to Morgan Stanley and Goldman Sachs. The Company can’t expect her to be the answer; she’s the messenger. At the same meeting, a WW member in her 20’s said that the younger generation is using MyFitnessPal instead of Weight Watchers. Touché. I’m here to tell you that MyFitnessPal is making inroads and will eat WW’s lunch. WW has met their match.

WW is still the 8,000 pound gorilla, but is incredibly vulnerable in today’s world. You can be sure that the valuation of MFP’s 2013 $18m private placement valuation was nowhere close to WW’s $3.75b enterprise value, but just wait. These types of businesses initially grow slowly, but they never go away. Much like how online dating started. I remember an old business school friend sold Match.com for pennies. It was regarded as too small, and not growing quickly enough. The venture capital timetable does not lend itself to subscription businesses.

Weight Watcher’s CEO, Jim Chambers, is a civil engineer out of Princeton, with an MBA from Wharton and a career in the consumer goods business. I’m sure he’s studying MyFitnessPal, but it may be too late. His demographic is women over 50 years old who are no longer attending WW meetings.

I have no answers for Weight Watchers, only alternatives to experiment with. At this point, it’s time to think about how to work in the Freemium model. Should WW try to buy MFP [though the Lee’s probably wouldn’t sell]? Unfortunately, WW’s legacy businesses may block many of the necessary moves. No pun intended, but Weight Watchers Light? Again, the Innovator’s Dilemma.

Is it time to spin off the food or meeting businesses? And how valuable is one without the other? Should WW’s go private so it can experiment off-line? I guarantee you there is no right answer. How does one decline gracefully?

[1] Forbes, September 4, 2012

[2] Lifehacker, March 19, 2014