Our friends at Blossom Street Ventures, a top software venture capital firm here in Dallas with clients worldwide, recently had us look over some posts on their blog. It's a really damn good blog, full of software investor advice. Obviously the market for such investing has (pun intended) blossomed over the last decade plus and software venture capital investing is as hot as ever. We learned a lot from their website:
Since the purchase price of a software acquisition will likely be heavily royalty based (the chances of getting an all cash deal up front are basically zero), you’ll need to be patient as the acquirer’s dev team pours over the old coding, the sales team gets up to speed on new possible avenues for deployment, and the acquirer talks up and promotes your product to the world. If all of the above goes smoothly, getting fully paid maybe twenty or so months after the day the acquirer bought the code. That's being generous.
Selling IP is incredibly difficult and finding a buyer is a big part of the battle. In this case the recovery was very small relative to capital poured into, the process took nearly two years, and there were a lot of people involved to make it all go smoothly in the end. We also spent a ton of money on legal fees, data scientist consulting, patent reinstatement and recovery, shipping of servers, etc. A lot of that expenditure was done along the way so we had to put more money at risk for the possibility of maybe recovering cash in the sale. It wasn’t easy, but it got finalized and we moved on. Hopefully we never have to do it again and neither do you. Learn more at their awesome SAAS venture capital blog by clicking to the left.
Since the purchase price of a software acquisition will likely be heavily royalty based (the chances of getting an all cash deal up front are basically zero), you’ll need to be patient as the acquirer’s dev team pours over the old coding, the sales team gets up to speed on new possible avenues for deployment, and the acquirer talks up and promotes your product to the world. If all of the above goes smoothly, getting fully paid maybe twenty or so months after the day the acquirer bought the code. That's being generous.
Selling IP is incredibly difficult and finding a buyer is a big part of the battle. In this case the recovery was very small relative to capital poured into, the process took nearly two years, and there were a lot of people involved to make it all go smoothly in the end. We also spent a ton of money on legal fees, data scientist consulting, patent reinstatement and recovery, shipping of servers, etc. A lot of that expenditure was done along the way so we had to put more money at risk for the possibility of maybe recovering cash in the sale. It wasn’t easy, but it got finalized and we moved on. Hopefully we never have to do it again and neither do you. Learn more at their awesome SAAS venture capital blog by clicking to the left.
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