Author Archives: Hervé Lebret

A French start-up goes public on NYSE

1 Reply

Sequans is a wireless chip company which went public last month. This is a rare enough event to be worth a post. All the more as the start-up is French and it went public on the New York stock exchange. It may not look like a great IPO but for a non-US company, it is a real achievement (there had been Ilog, Business Objects and a few other French start-ups). What is also interesting is that it did not have US VCs and the company was founded in 2003, less than 8 years to go public.

What else worth commenting?
– the company had raised more than €50M prior to IPO and $66M at IPO.
– the founding team had experience with another US company (Juniper)
– VCs come from France (i-source, SGAM) and the UK (Add Partners, Kennet). Later on, it added strategic investors (Swisscom, Alcatel, Motorola).
– All shareholders sold a little piece of their stake (about 3-5%)

LinkedIn prices IPO

1 Reply

After LinkedIn IPO filing, here is more: LinkedIn priced its IPO at $32-35 and some additional data are provided in the cap. table. The new stuff is in green compared to my previous post:

– the company will sell 4.8M new shares (with an option for 1.17M more) and 3.0M from selling shareholders raising $146M after fees (and more than $180M if the option is exercised).

– the list of selling shareholders is provided, which gave another piece of new info:

– two founders (Eric Ly and Konstantin Guericke) sell some of their shares so that we now know they own respectively 1.3% and 0.9% respectively. We know nothing about Allen Blue and Jean-Luc Vaillant.

Europeans and Silicon Valley

1 Reply

Silicon Valley is well known for its immigrants, particularly those from Asia (India, China, Taiwan, Korea, etc). AnnaLee Saxenian is famous for her books on the topic. The European migrants are lesser known and I think it is a little unfair. Let me first illustrate it with famous examples and then with statistical data.

I have been using this picture for some years now to show that Europe also counts famous Silicon Valley migrants that should be used better as role models. Do you know them? Take a little time to check how many you know and then have a look at the answer.

First row

On the top left, here are the famous Traitorous Eight, the founders of Fairchild in 1957 who can be considered as the fathers of Silicon Valley. Jean Hoerni was from Switzerland, Eugene Kleiner from Austria, and Victor Grinich’s parents from Croatia (he was born Grgunirovich). You may want to know more at https://www.startup-book.com/2011/03/02/the-fathers-of-silicon-valley-the-traitorous-eight.

On the right is Pierre Lamond, founder of National Semiconductor and then a partner with Sequoia Capital. As you may imagine, he is a specialist of semiconductors. More at http://en.wikipedia.org/wiki/Pierre_Lamond.

Then comes Andy Bechtolsheim, from Germany. A founder of Sun Microsystems and a business angel in Google (there is the legend he wrote a $100k to Google whereas the company did not exist yet ; a good investment, worth more than $1B a few years later !). http://en.wikipedia.org/wiki/Andy_Bechtolsheim

Finally on the top row is Michael Moritz, from Wales. He was a journalist with Time Magazine when Don Valentine hired him at Sequoia. A good choice, just for two investments he made, Yahoo and Google… http://en.wikipedia.org/wiki/Michael_Moritz

Second row

Philippe Kahn is probably less famous except in France where he was an icon in the 80’s. He left his motherland when he understood his work would not be appreciated and flew as a tourist in 1982 to the USA. A few months later, he founded Borland. http://en.wikipedia.org/wiki/Philippe_Kahn

The Dutchman is Aart de Geus. He did his undergrad at EPFL where I work and his PhD in the USA. He is the founder and current CEO of Synopsys, the leader in Electronic Design Automation (6’700 employees, $1.4B in revenue). https://www.startup-book.com/2009/12/11/a-european-in-silicon-valley-aart-de-geus/

Andy Grove flew Hungary under the Communist regime and arrived in New York without speaking English. He can be considered as a founder of Intel and would later become its CEO. http://en.wikipedia.org/wiki/Andrew_Grove

Third row

Pierre Omidyar, half French, his family has Iranian roots but he was born in Paris, moved to the USA when he was 6… founder of eBay. http://en.wikipedia.org/wiki/Pierre_Omidyar

Serguei Brin, founder of Google, born in Moscow, also moved in the USA when he was 6. http://en.wikipedia.org/wiki/Sergey_Brin

Edouard Bugnion, from Switzerland, is a founder of VMware. More on https://www.startup-book.com/2010/03/16/a-swiss-in-silicon-valley/

The last examples have more of a Europe-USA-Europe background:

The three founders of Logitech are Daniel Borel, Pierluigi Zappacosta and Giacomo Marini. “The idea for Logitech was spawned in 1976 at Stanford University, in Palo Alto, Calif. While enrolled in a graduate program in computer science at Stanford, Daniel Borel and Pierluigi Zappacosta formed a friendship that would become a business alliance. While completing their education, Borel, a Swiss, and Zappacosta, an Italian, identified an opportunity to develop an early word-processing system (therefore the name which means Software Technology in French). The pair spent four years securing funding and eventually built a prototype for the Swiss company Bobst.” The rest is history.
http://en.wikipedia.org/wiki/Daniel_Borel
http://en.wikipedia.org/wiki/Pierluigi_Zappacosta
http://en.wikipedia.org/wiki/Giacomo_Marini

Some similarities with the next story: Bernard Liautaud studied at Stanford before working for Oracle in Europe. A founder of Business Objects with Denis Payre who moved very early in the USA as he had understood that IT = USA. http://en.wikipedia.org/wiki/Bernard_Liautaud

Pierre Haren, founder of Ilog, got his PhD at MIT. No Silicon Valley here but Pierre told me once the importance of the American culture in his entrepreneurial venture. http://en.wikipedia.org/wiki/ILOG

I finish with Loic Lemeur, a friend of Sarkozy, who has left France to launch Seesmic in SV. One of the latest European migrants who show that the flow never stops. https://www.startup-book.com/2010/06/21/why-silicon-valley-kicks-europes-butt

🙂 or 🙁 ?

Now the stats. One could always argue that those were only a few examples / exceptions. The table which follows is in my book but comes indirectly from a study by AnnaLee Saxenian. She and her co-authors analyzed where were SV foreign entrepreneurs coming from.I do not think they had compiled Europe as a group which I did from her data. The result is quite impressive because Europe is very similar to China or India. I am not sure this is that well known…

Source: AnnaLee Saxenian et al. “America’s New Immigrant Entrepreneurs” Duke University and UC Berkeley, January 2007.

Pitch Perfect

Leave a reply

Pemo Theodore had interviewed me a few weeks ago about Women and HighTech Entrepreneurship. I was all the more honored that I joined a group of very famous entrepreneurs and investors on Pemo’s Ezebis web site and I am not sure why I belong to it! Among them, Guy Kawasaki, Neil Rimer, Vivek Wadhwa, Randy Komisar, Jeff Clavier and many more.

Pemo is doing a great job on role models and I just learnt she is also a coach. Her program, Pitch Perfect, looks very exciting. She summaizes it as:

  1. P rove your concept & presentation start to finish
  2. I mprove your confidence & passion despite rejection
  3. T est drive your demo
  4. C hoose the best kind of investment
  5. H one everything to a fine PITCH

and as a short reminder, what I had said is since yesterday on The Next Woman magazine

Board members and equity in start-ups

Leave a reply

I’m regularly asked how to share or distribute equity in start-ups. One related question is how much equity should be given to board members. I am not discussing here investors’ seats on the board as they represent the equity owned by the funds, but only the independent board members, those who have a specific expertise to help the company (industry expert, scientific expert, business expert). There is an implicit assumption: board members do not receive cash (except the reimbursement of out of pocket expenses).

As a general rule, I heard many times that the independent board members as a group should not represent more than 2% of the company, and individual board member not more than 0.5-1%. (As a comparison, I had mentioned in documents in the past (including Equity Split in Start-ups) that a CEO is about 5-10%, a VP between 0.5 and 2% and a technical director about 0.2%. The rule of thumb is dividing by 5 at each level, CEO 5, VP, 1, director 0.2).

I just had a look at my past cap. tables and S1 documents and listed below examples of independent board members. The table gives the company and board members’ names and then how much the director had just before the IPO, which is related to the founders’s specific shares. On average, they have 0.24% of the company and about 1% of what founders own. This is consistent with what I had been saying for years. 🙂

Wozniak is back!

Leave a reply

Going through the higher and higher number of IPO filings, I was suprised to find Wozniak’s names among the officers of one the filing companies. Steve Wozniak, Apple co-founder, is the chief scientist of Fusion-io, a Salt Lake City start-up which has raised more than $100M with NEA and LightSpeed and made more than $30M in revenues in 2010.

Wozniak is neither a founder nor apparently a big shareholder. At least the S-1 filing does not mention his stake, which means that he has less than 5% of the company. My usual cap. table shows typical numbers. The two founders remain with 6.1 and 4.7% each, investors have about 50% of the company and the ESOP is 20% (25% if I include available options for future grants). All this assumes the company goes public and includes the future IPO shares.

One detail I will focus on in a post to come is equity given to independant board members (VCs are on the board but usually do not own equity personally). Here Ray Bingham and Dana Evan own 0.03% of the company and less than 1% of the founders shares.

The deal that made Bill Gates rich

Leave a reply

I was having a chat with an EPFL professor who asked be if I had read the reprint of the Business Week article about Microsoft IPO. I had not even heard of it. It is a very interesting description of the IPO process so even it is a long article, you should read it.

I had included Microsoft cap. table at IPO in my book and here is a slightly improved version. It is interesting to notice that
– Microsoft had been founded 11 years earlier,
– Microsoft did not need to go public (just as Google a few years ago and Facebook today).
– There was very little venture capital money, so Gates and Allen were not much diluted.

The return of Electronic Design Automation? Apache IPO Filing.

1 Reply

As you noticed recently if you read this blog, IPO filings are piling up. The latest one (I heard of) is Apache Design Solutions and it is very interesting for me because the company belongs the the field of Electronic Design Automation (EDA) which I covered as a full chapter of my book and I follow from time to time the EDA domain on this blog.

EDA is an interestign market because it has reach maturity so you can look at its dynamics over 30 years. I will come back on it at the end of the post. But first, Apache. John Cooley on his DeepChip web site has the best possible description of the company: A brief history of Apache and its IPO.

So here is my usual cap. table. It took Apache 10 years to file despite the fact that the company has been profitable for many years. Not very famous investors (though Intel and Bechtolsheim are not bad!), solid revenues and profits. It shows how much the tech sector has suffered. Such companies would have been public easily ten years ago. In fact,a s Cooley notices, tehre has not been any EDA IPO since 2001.

So what about the EDA market? The last EDA IPO in 2001 was… Magma. I will just let you look at the market data and judge about the market.


Figure 1 – EDA Market and Players 1983, – 2010.


Figure 2 – EDA Market and Players, 1983 – 2010.


Table 1 – EDA Market and Players, 1983 – 2010 (Revenues in $M).

NB: the 2010 figures for Total and Magam are assumptions (as they are not known yet).

Biotech data – part 3/3: A short synthesis

Leave a reply

After Genentech, Chiron and Genzyme, let just me do a simple analysis of biotech start-ups. The table which follows summarizes it all and I added Amegn but it is obviously a little tough to read. You can enlarge it however. So you can see data about the companies themselves, foundation year, IPO year, revenues and profit/loss at IPO, current status and then data on founders, their age at foundation, what they were doing before the creation and what they did after the start-up adventure. Then I provide a link on them.

So what is interesting about the companies themselves?

– On average, it takes them 3 years to go public. So the myth that biotech start-ups develop slowly is linked to the revenue/profit status, not the exit status.
– Indeed, when they go public, they have very small revenues and lose money. Compare to Apple for example, on the first picture.
– They are very similar to Internet companies of the late 90s: they go public very soon without revenues and still losing money.
– Finally, they are acquired by European players. This is in total opposition to IT companies where the only buyers are American (check for example slide 36 of the pdf I published in the past).

Now the founders.
– First, they are not young people. Compare again to the same document, slide 27 now. American founders in the slide are on average of 27 year-old, and Europeans, 33 year-old.
– Many had an academic career they did not have to leave. They may have taken sabbaticals but many went back to their academic life. It is obviously related to the previous point.

These 3 posts have shown my small knowledge of biotech but also the fact that they are interesting not to say major differences between Biotech and Information Technology.