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Checking the BVP Nasdaq Emerging Cloud Index

Tom Paine

The BVP (Bessemer Venture Partners) Nasdaq Emerging Cloud Index tracks the performance of selected publicly traded Cloud companies .Its performance has far exceeded other major indexes as shown on the above graph. Lately, its growth has been explosive.

The Index trades on Nasdaq under the name EMCLOUD.

The Average Price-to-Revenue multiple is 19.1 The Average Revenue Growth Rate is 39.9%.

Here is the data on the companies that compose the index. Some readers may not follow financial news that closely, but its good to know how companies you may work or partner with are performing, who has the the economic power to buy or dominate others, or who the up & coming stars are. I follow this stuff closely, but am often surprised myself by some changing relative values portrayed in the Index.

One thing you might notice is that there are no Philly-area based companies in the Index, although there are bits & pieces of a few in the region.

Also helpful is the Cloud 100, a list of still-private companies put together by BVP with Forbes and Salesforce Ventures. The Cloud 100 is only published once. per year, so it is more static Several of these companies have already gone public since the end of 2020 when the Cloud 100 was published. No Philly companies here either.

Back to the office strategies vary widely

TomPaine

Different strokes for different folks – that summarizes the varying stratagies of large tech companies on returning to the office post-pandemic policies. Some are still in flux.

Amazon updated its policy today, backing off from its March statement which implied back to the office full-time for all by the Fall. The adjusted policy will require in-office attendence at least three times per week. Obviously, this would not apply to warehouse and. fulfillment workers, who need to be where the action is.

In an interview on Monday, Salesforce CEO Marc Benioff said 20% of its employees were already working away from the office prior to the pandemic. Benioff predicts 50% to 60& will work away from the office post-pandemic.

“The past is gone,” Benioff said. “We’ve created a whole new world, a new digital future, and you can see it playing out today.”

But like Comcast, Salesforce has a gigantic new tower in San Francisco, as well as expensive space in other cities like New York and Indiannopolis to account for.

It took a $216 million writedown for excess space last year.

 SAP, which has its North American headquarters in Newtown Square, declared employees would not be required to return to the office. The software vendor sent an e-mail to all of its 100,000 employees on June 1, promising a “100% flexible and trust-based workplace as the norm, not the exception.” I haven’t seen many large companies take this approach.

Comcast hasn’t yet declared a policy yet, a spokesperson told me. As of now, a few select high-level or essential employees have returned to the office.

Comcast invested a huge amount in real estate to get more employees in the same space to foster collaboration, and I doubt it will want to give that up.

I was going to mention Cerner, which probably has over 1,000 employees in Malvern. But the Kansas City-based company, which has been the subject of takeover rumors lately, announced hundreds of layoff today(550), at least some in Malvern. So I figured the subject was moot for the moment, since these people won’t be returning period. But Cerner decided on a hybrid approach.

Younger employees may often prefer the structure and social atmosphere of being present in the office. One person told me he feared not being in the office so he could protect himself politically. Some people just need a reason to get out of the house.

INTERVIEW WITH JASSI CHADHA, WHOSE BERKELEY HEIGHTS LIFE-SCIENCES SOFTWARE COMPANY AXTRIA RECENTLY RAISED $150 MILLION

Axtria CEO Jassi Chadha | Courtesy Axtria

 June 9, 2021  Esther Surden

Word came last month that Axtria (Berkeley Heights), a high-growth technology company founded in 2010, had received $150 million in a funding round from the Bain Capital Tech Opportunities Fund ( Boston).

The investment raised Axtria’s valuation to almost a billion dollars, Jassi Chadha, CEO and president, confirmed in a recent interview.

Axtria is a global provider of cloud software, data analytics and artificial-intelligence technology to the life sciences industry. The company has grown tremendously over the years, and has gone through several rounds of financing, but Bain Capital is new to the company’s capitalization table, and represents the largest investment to-date.

Essentially, Axtria’s vision is to build an ecosystem for the life sciences industry, so pharma and medical-device companies can run all their commercial operations on a cloud platform.

Axtria has about 500 employees in New Jersey and more than 2,000 world-wide. The company has appeared on many “fastest growing” lists over the last 10 years. Right now, for example, it is one of the top 100 privately held companies in New Jersey.

The company has not only grown fast, however. It has also grown in the right way, keeping the health and needs of its employees in mind, and maintaining a carefully designed cultural ecosystem, Chadha told us. So, Axtria is also to be found on many “best companies to work for” lists. According to the company’s website, “Our values are all about doing the ‘RIGHT’ thing — any time, all the time — for our employees and customers, even when no one is watching.”

Almost all the company’s executives are based in New Jersey, as are the company’s solution-architecture, product-management and product-engineering teams. Also here are all the company’s customer delivery teams for the pharmaceutical companies located in New Jersey.

Axtria recruits graduates from top schools like Stanford, Lehigh, Michigan, Purdue, Penn State and Cornell. They are engineers, mathematical statisticians and computer science majors. They come to New Jersey, and they train here. Also, the company looks for experienced professionals who know the pharma industry well.

Our interview begins here:

How did Axtria become acquainted with Bain Capital?

JC: This is the first investment that Bain Capital has made in Axtria. …We’ve been talking to them for a number of years. It’s a classic thing. When you are growing and make news in terms of high growth rates or new customer wins or new product launches, all investment groups have marketing and sales teams that will knock on the door. We get a lot of inbound calls from large U.S. private equity firms and large venture capital funds and even some foreign funds. A lot of them we know because we’ve participated in conferences run by private equity or investment bankers. We participated in one last year that was run by William Blair [New York], an investment banking firm. We met with Bain Capital again, along with a lot of other companies. We decided to only meet with seven, but there were 17 or 18 companies that were options, and a wait list of over 40 companies who wanted to talk to us, so we were highly sought after. There are very few tech companies like us that are of scale; growing very, very rapidly; and who have not taken a lot of outside investment.

Why was Axtria able to attract so many suitors?

JC: A lot of companies, as you know, think of an idea and they want to raise $100 million. They often spend that $100 million to get their first revenues. After that, they usually remain unprofitable for many years. We, on the other hand, have been very disciplined about raising capital and leveraging capital. At the same time, we’ve been able to build scale, build amazing products and be profitable. And we have done that largely without institutional investment.

Technically, we did have one institutional investor in the company prior to Bain — a small venture capital firm called Helion Venture Partners [Port Louis, Mauritius, and Gurgaon, India]. Most of the funding that we have had so far before Bain Capital came in has come from some really smart entrepreneurs like Richard Braddock, Fred Khosravi, Amarpreet Sawhney, Desh Deshpande, and Sanjeev Aggarwal, who built some very successful large companies. Obviously, a lot of people can offer money, but very few people can add value. So far, we have done well with the strategic and investment partners we have worked with. Bain Capital is the first institutional investor coming in, 10 years into our growth journey.

What was it about Bain that prompted you to accept their capital, since you were able to choose?

JC: At some point it does become harder to distinguish between investors. And it also sometimes comes down to personal chemistry. For us, the culture in the industry is very important, and it’s not only about the company, but also about the investors. Before we actually went into the financial diligence process with Bain, we requested that the person who was going to be our primary contact to come in and meet our board. We have a proud culture among our board members. So, we did as much due diligence on them as they did on us.

They have an amazing platform, and are a great firm with a great track record in venture capital and private equity investment. The Bain fund that specifically invested in us is called the “Bain Capital Tech Opportunities Fund.” This is a relatively new fund for them. It has been set up as a separate organization to only invest in tech companies. … The fund is well financed, with about $1.5 billion. The second thing is that Bain knows healthcare and life sciences really well. They invest in a lot of pharma and biotech companies, in both venture capital and private equity; but they also have invested in many healthcare tech companies, so they understand our business case really well. Also, a lot of the private equity and venture capital firms we talked to were based in Silicon Valley. This team is based in Boston, not too far away from our headquarters in Berkley Heights, New Jersey.

Most of the firms we worked with in the past were highly focused on the financials, which is what they should be absolutely focused on.  But we also liked that the Bain Tech Opportunities Fund worked with Bain’s management consulting division to do a whole deep dive into our management strategy. They had a more holistic view of our business, while the other firms were almost solely financially oriented.

How did you pull this off during the pandemic?

JC: Well, we actually only had one face-to-face meeting with our investors, and that was after the term sheet was on the table and signed. Both Bain’s representative, Darren Abrahamson, and I were double vaccinated, so we said it was safe enough for us to meet and shake hands before we became financial partners. Otherwise, we ran this entire process virtually, even the investor conferences that we spoke about earlier. What we found was that, for investors who knew us, the process was relatively easy for us to continue interacting with them. We were in some ways fortunate because at scale we grew 50 percent last year, and have always been a fast-growing company. And there is this buzz around us right now. I mean we’ve been adding a lot more people, won a lot of awards and all that, so it’s easier for investors to find us.

How will Axtria make use of the funds?

JC: We have been investing very heavily in products and are investing very heavily in building scale because our target customers are global life sciences companies. We also work with some smaller and medium-sized organizations, but we work primarily with large global companies who license our products all over the world. Our software operates in more than 50 countries, and our customers expect us to actually have operations in a lot of countries where they operate.

The biggest use of capital is going to be to accelerate our investment in products. For example, we have invested more than $50 million in products and we are committing to investing no less than $100 million in our future product evolution.

Today there is not a single life sciences company that can be enabled to run all their commercial operations on a single cloud platform. There are consultants running around doing data analytics and there are ad hoc systems that don’t talk to each other, and become obsolete within a couple of years because no upgrades are made.

In a product-based business, you actually have a product roadmap which is getting better with every release and in the cloud world, you will have a new release about every three to four months, which means your product gets continually upgraded over time.

We also want to scale our delivery centers globally.  The third use of the funding is going to be to have a geographic presence in every major market where we operate. North America continues to be our primary target customer market. We just opened a new office in Canada, and we already have people and operations in major European countries like Switzerland, France, Germany and the UK. We want to have our delivery and consulting teams based in China and in Japan, two major pharmaceutical manufacturing areas.

[See also: How Axtria is Helping Employees and Their Families Cope with the COVID Crisis in India]

Esther Surden is the founder & publisher of NJTechWeekly.This article, which originally appeared in NJTechWeekly, is republished here with her permission.

Report: Gopuff, Amazon seek Germany’s Flink, which just raised $240 million Update: Gopuff rejected; Amazon still under consideration

Tom Paine

Update: Flink raised $240 million this month, according to Bloomberg.

A Bloomberg article entitled “Amazon (AMZN), Gopuff Are Said to Explore Deal for Germany’s Flink ” surfaced today. Not being a subscriber, I’m unable to link to the content.

Flink, which officially launched in January, is a “dark store” home delivery startup like Gopuff. It raised $52 million in March. Flink has operations in ten German cities, and has also entered France and the Netherlands.

In May, Gopuff acquired UK-based Fancy.

If I were an investor in Gopuff, I’d worry a bit about its European expansion strategy. Gopuff’s US rollout seems to be proceeding fairly well, but managing Europe simaltaneously creates more financial risk.

Amazon, on the other hand, must be considered a potential acquirer of any major player in the home delivery space.

EY Philly Entrepreneur of the Year 2021 Finalists are out

Some familiar names, some new.

Winners will be named on Tuesday, July 27 at 6:00 p.m. ET, virtually.

https://www.ey.com/en_us/entrepreneur-of-the-year/greater-philadelphia/finalists

Aardvark Mobile Tours | Larry Borden

AeroAggregates of North America, LLC | Archie Filshill

Alkemy X, Inc. | Justin Wineburgh

BAYADA Home Health Care | David Baiada

Century Therapeutics, Inc. | Dr. Osvaldo “Lalo” Flores

Choice Logistics | Matthew McKeever

Circonus | Bob Moul

Crossbeam | Bob Moore

Fair Square Financial, LLC | Rob Habgood

Galera Therapeutics | Dr. Mel Sorensen

Gettacar | Yossi Levi

Harmony Biosciences | John Jacobs

Harris Blitzer Sports & Entertainment (HBSE) | Scott O’Neil

IntegriChain | Joshua Halpern and Kevin Leininger

Intel 471 | Mark Arena

LifeBrand | TJ Colaiezzi

LINKBANK | Andrew Samuel

Misfits Market | Abhi Ramesh

MOBILion Systems, Inc. | Dr. Melissa Sherman

Phenom People | Mahe Bayireddi

Philanthropi | Dr. Keith Leaphart

Proscia | David West

Rampmasters | Lee Yohannan

Shift4 Payments | Jared Isaacman

Sidecar Interactive Inc.| Andre Golsorkhi

South Mountain Merger Corp. | Charles Bernicker

The FlexPro Group | Rose Cook and Lynn Faughey

The Malvern School | Kristen Waterfield

Toll Brothers | Douglas Yearley

Vertex | David DeStefano

Vision Solar LLC, | Jonathan Seibert

SoftBank makes another investment in Philly area

Joseph Kitonga / LinkedIn

Tom Paine

I think many people are aware that the Japanese investment giant SoftBank has participated in two billion-dollar rounds into Philly startup Gopuff.

But there’s another area startup that’s received funding from SoftBank, though the initial amount is not as great as Gopuff’s.

Woodlyn, Delaware County-based Vitable Health, a recent Y Combinator grad, was the first publicly announced recipient of capital from a $100 million SoftBank fund set up specifically for people of color. Its founder is Joseph Kitonga, a 23-year-old whose parents immigrated to the U.S. a decade ago.

Built from Kitonga’s experiences within the immigrant community, Vitable Health offers a way to obtain low-cost, in-home medical care. SoftBank’s funding, first announced last fall, was a $1.6 million commitment that also included Y Combinator, DNA Capital, Commerce Ventures, MSA Capital, Coughdrop Capital and assorted angels .

Knoll: How can office furniture go digital?

A. shot of Knoll HQ in East Greenville

Tom Paine

I was wondering how Digital Transformation could be applied to office furniture. Particularly as the market was thrown in to turmoil by the pandemic and the resulting turn to virtual or hybrid offices?

Knoll Industries, founded in New York in 1936, is headquartered now in East Greenville, Montgomery County, PA. In late April, Knoll agreed to merge with the larger (Zeeland, Michigan-based) Herman Miller for $1.8 billion in cash & stock. Knoll, known for its distinctive designs going back to the late co-founder Florence Marguerite Knoll Bassett (who passed away in 2019), will see its Chairman and CEO Andrew Cogan step down when the transaction closes, while Herman Miller CEO Andi Owen will be president and CEO of the combined company.

Knoll slashed 7% of its 3500 member workforce as Covid-19 took hold in April 2020.

In February of this year, Knoll brought on Facebook veteran Esohe Omoruyi as Executive Vice President of Consumer & Digital Commerce.

And Diginomica’s Stuart Lauchlan writes about how Herman Miller has re-designed its end-to-end e-commerce experience around a variety of Salesforce’s cloud offerings.

MediaMath looks at strategic alternatives; Safeguard Scientifics still owns 13.3%

Tom Paine

The Wall Street Journal ran a story yesterday that said New York-based online ad-buying marketplace MediaMath is exploring strategic options amid an uptick in its market. MediaMath is one of the few independent DSPs (Demand-Side Platforms) left.

MediaMath was one of Safeguard Scientific’s largest portfolio holdings (and still is). Safeguard invested $15.6 million in MediaMath between 2009 and 2010 and accumulated a 22% stake. When the decision to begin gradually divesting its portfolio was made in 2018, Safeguard completed in July 2018 the sale of 39.1% of its 22% ownership position in MediaMath back to MediaMath for $45.0 million in cash. The repurchase represents the equivalent of an implied cash-on-cash return of 4.5x on Safeguard’s 39.1% ownership position. It reflected a total valuation for MediaMath of $523 million.

MediaMath had the right to repurchase an additional 10.9% of Safeguard’s ownership position on or before the 180 day anniversary of the initial repurchase for $12.5 million in cash. However, that date has long passed and Safeguard still owns a 13.3% stake as of the end of its first quarter 2021.

I couldn’t find a current valuation estimate for MediaMath, but my guess is its next valuation will be significantly higher than the $523 million at which Safeguard sold in 2018. But that’s only a supposition, and MediaMath faced significant risk during the pandemic so I don’t think you can criticize Safeguard much for taking the money when it did. And Safeguard may still receive a good gain when the remaining 13.3% is sold.

 

What it took to buy GreenPhire; Vaccines = Cash; A worthy career;

Tom Paine

Refreshing

Senior Executives of and investors in Moderna and Pfizer partner BioNtech have done well from the success of their vaccines. CNN Business counts nine new billionaires from among those two companies plus Chinese pharma CanSino Biologics. Both  Moderna (MRNA) CEO Stéphane Bancel and Ugur Sahin, the CEO of BioNTech (BNTX),  are now worth several billion.

But no word on how Katalin Kariko, whose work at Penn led the way to the mRNA vaccines that both Moderna and BioNTech produced, was compensated. She is an adjunct at Penn and a Senior VP at BioNTech . At least a Nobel would help, as well as tenure at Penn maybe?

Does she own any of the IP? Again, not clear.

Also, yesterday Modena and Thermo Fisher Scientific announced an agreement for scaling production of the Moderna vaccine in a Thermo plant in Greenville NC. Thermo Fisher said in March that it would work with Pfizer Inc (PFE.N) and BioNtech SE (22UAy.DE) to produce their COVID-19 vaccine in Italy.

I recognized the name Keith Krach, briefly former U.S. Under Secretary of State under Trump, while watching a TV interview last night, but couldn’t remember from where. Then l realized it was from a twitter connection, but still wasn’t clear as to who he was.

Looking it up, in addition to his government work, Krach was:

Chairman, CEO & President of DocuSign

Chairman of Board of Trustees, Purdue University

Co-founder, Chairman & CEO Ariba (acquired by SAP)

First entrepreneur-in- residence Benchmark. Capital

Founding Member/COO Rasna Corp – sold to PTC

Fanuc- Co-founder of joint venture with GM

Youngest VP ever at GM

Impressive. Many of these assignments were transformational. Plus, he started out working on the shop floor of his father’s factory, probably the best way to learn.

What’s next?

PE Hub reported that PE firm Thoma Bravo recently agreed to acquire King of Prussia-based GreenPhire for approximately $1.1 billion.

The company is said to be looking at about $75 million in revenue for 2021, with an end – of-year run rate of approximate $100 million. Growth is expected to continue in the 30-35% range, and further M&A is part of the plan. 2021 operating profits are expected to be in the high $20 million range. Those are very good margins for this type of business.