VentureBeat

Today was probably a good day for Robert Ackerman, managing director and co-founder of Allegis Capital. Less than a year after Allegis led the $10 million second venture round for Ribbit, “Silicon Valley’s first phone company,” BT announced that it has acquired Ribbit for $105 million. That’s supposedly a return of more than 500 percent for Allegis.

I spoke to Ackerman this afternoon, and he described the sale as another validation of Allegis’ investment strategy. That strategy emphasizes mergers and acquisitions (which make up 98 percent of Allegis’ exits) and a diverse portfolio, paying off in $2.2 billion in exits over the last three years.

VB: Congratulations! Were you surprised by the news? I mean, presumably you heard about this a lot sooner than we did, but still …

RA: [laughs] I think our initial reaction was one of pleasant surprise. This is a company that we liked a lot. Certainly, at the time we weren’t investing for a quick exit, we were investing for the long term — that’s the business that we’re in. The offer that was made by BT certainly generated a great return for us, and it was a tremendous validation of the team’s vision.

VB: Can you confirm that this was a 5x return on your investment?

RA: Well, I can’t say specifically, but the IRR [internal rate of return] was in the excess of 500 percent. We’re not complaining.

VB: And that’s particularly impressive in light of how bad the exit market is right now.

RA: Here’s the thing, right, in venture capital everybody talks about the cyclical nature of venture capital returns and that it’s tied to the cycles of the public markets. Our belief is — and I wish I woke up one morning with this brilliant insight, but as with most insights it comes from a fair amount of scar tissue — what we realized in 2000, 2001 was that we can’t predict public markets. What we began thinking about was, “We can’t predict the market, so how can we adjust?” Number one, there’s always a market for trade sales. Let’s assume we’re building a company with trade sale markets in mind. If there’s a robust IPO market, great, but let’s plan for the more conservative case. Let’s plan to build a venture portfolio for that more conservative case.

In that more conservative case, what you want is to build a thing where you can identify the value you’re creating. So, for example, you’ll see us not wanting to make a lot of “me, too” investments. We’ve built a portfolio of companies that are perhaps more differentiated from each other than most. If you’re in a trade sale environment, that also tends to mean you really have to watch cash basis and capital efficiency.

VB: How did Ribbit fit into that strategy?

RA: All venture capitalists talk about disruptive. The question is, what do you mean by disruptive? We like platform plays, quite frankly. When you’re able to bring others onto your platform, you’re able to leverage their creative and their financial resources. Now Ribbit, case in point, was a disruptive idea where you build a platform without having to build all the underlying infrastructure. When you open the platform, you harness the creativity and financial resources of all the brightest minds in business.

VB: And what are some areas you’re looking at for future investment?

RA: You’ll see a number of platform plays in our portfolio, where you can leverage the economics of other market participants. We continue to see a phenomenal amount of opportunity in the communications sector. Everyone talks about Web 1.0, 2.0 and 3.0. Well, let’s call this “Communication 2.0.” [laughs] The communication and data worlds are merging around IP networks. That’s going to be transformational, and Ribbit was the beginning of that. The further you go up the stack, the more value is being created.

And enterprise, good grief, coming out of the dark ages of 2001 and 2002, everyone was saying, “Enterprise is dead.” But [software-as-a-service]-based computing models integrate rather well with how corporations do business. Third, security continues and will continue to be a rich vein of ore for many years to come. There’s no such thing as too much security, when everything about you is available online.

BT, the dominant British telecommunications company, has acquired Ribbit, a company that has styled itself “Silicon Valley’s first phone company,” for $105 million.

VentureBeat first heard news of the deal in July and reported it. At the time, the company’s spokesman Don Thorson adamantly denied that any deal had happened, but it was clear something was up. Today, the company confirmed the amount of the deal.

This is an impressive performance for Ribbit, which first launched in January. In a day when there are hundreds of VoIP companies struggling to be heard above the noise, Ribbit came along and showed how success is still possible — if you’ve got deep technology, and put together a sharp team.

Mountain View, Calif.-based Ribbit’s software lets you make a phone call from a web page, or direct your own phone calls to a web page. It includes ways for you to do things like transcribe these calls into text, that you can then search. More importantly, however, the company launched in December a platform for developers who want to build Ribbit’s features into any other application — including a way to sale the phone applications to large companies.

Notably, Ribbit built voice services for online business software company Salesforce, which includes the first service that combines mobile voice automation and so-called software-as-a-service. Ribbit released a consumer-facing product called Amphibian.

We should note the seven month launch-to-sale was deceptively simple. The company was actually built upon years of prior work of its founders, Ted Griggs and Crick Waters. At an earlier venture, Griggs (pictured left) had built a “soft switch” for the phone service that underpinned Ribbit. They brought in AT&T and Sprint executives, and then married that experience with the Web 2.0 magic from engineers they lured from Yahoo and EBay.

The company had raised only $13 million over the past two years. It included $10 million in a second round of capital led by Allegis Capital, with KPG Ventures participating, and before that, $3 million in first round funding from Alsop Louie Partners. It’s a nice win for Alsop Louie, a relatively new fund, which was earliest into the deal, and therefore earned the highest multiple.

Ribbit will continue to be operated independently, but will be a fully owned subsidiary of BT. The move continues an effort by BT to move into other sectors, i.e,, to make money from other services than from pure phone calls.

Thorson said he was forced to deny the initial rumors becuase a deal hadn’t been completed, and because the London stock exchange takes a dim view of deals that are leaked before they’re finalized.

Update: Anthony Ha here. I just got off the phone with Griggs and JP Rangaswami, BT’s managing director of service design. Both of them emphasized that Ribbit fits into BT’s larger goal to transform itself into a next-generation telecommunications company — as Matt notes above, BT wants to move beyond just providing the “pipes” for phone calls, and enabling voice features in any software application is an important component of that. As Rangaswami put it, this “raises the ante in the overall communications platform race.”

For Ribbit, on the other hand, Griggs says BT offers  a “firehose” of opportunities, starting with BT’s 21CN network.

When the possibility of an acquisition came up, Griggs says Ribbit was already looking for a global partner and considering a third round of venture funding. The companies’ similar visions, plus the fact that BT wanted Ribbit to stay autonomous, sweetened the deal.

Updated with a response from the company.

Ribbit, a company that has styled itself “Silicon Valley’s first phone company,” has been purchased by BT, the dominant British telecommunications company, we’re hearing.

[Update: A company spokesperson has gotten back to us denying that there's been an acquisition. However, the company wouldn't comment on whether or not acquisition talks were taking place. There are a few possibilities here. One is that it my source (and I) are completely wrong and that there's nothing happening. Another possibility is that the deal hasn't officially closed but is near closing, with some formalities still to be taken care of. Yet another possibility is that Ribbit is not just looking at an acquisition from BT, but is talking to other potential acquirers; or maybe the company has turned down an offer (or two) and is looking to stay independent. We're digging for more. Let us know if you know anything to add. My source provided me with enough off-the-record details that I think an acquisition is at least in the picture, which is why I decided to publish in the first place.]

[Update Two: If you chose the second possibility from my previous update, then it appears you're correct. Techcrunch is reporting that Ribbit has been bought by BT for $55 million.]

Mountain View, Calif.-based Ribbit’s software lets you make a phone call from a web page, or direct your own phone calls to a web page. It includes ways for you to do things like transcribe these calls into text, that you can then search. The company launched in December, with a platform for developers who are looking to build phone-based web-connected applications for large companies.

Most notably, Ribbit has built voice services for online business software company Salesforce, which includes the first service that combines mobile voice automation and so-called software-as-a-service.

Ribbit also released a consumer-facing product called Amphibian last month.

Meanwhile, a number of other Silicon Valley companies are also working on variations of the concept of connecting calling services and web pages.

Ribbit recently raised $10 million in a second round led by Allegis Capital, and joined by KPG Ventures, which follows on a $3 million round raised from Alsop Louie Ventures more than a year ago.

Here’s a video about the Ribbit-Salesforce integration:

Apprion, a Moffet Field, Calif. company that makes wireless integration systems for harsh environments like industrial plants, has raised a new round of funding led by a strategic investment from cellular giant Motorola.

Plants are a little different from your standard wireless environment — temperature extremes, toxic chemicals and dangerous equipment are all par for the course, and the average worker isn’t exactly lugging around a laptop. That being the case, the requirements for networking are a bit different. Sensors, cameras, RFID tags and walkie-talkies all need to mesh together, which can be difficult if they’re all made by different companies.

Like a Cisco for the manufacturing world, Apprion does the work of integrating different wireless applications together and providing centralized controls and visualization, providing a brain for the growing nervous systems of sensors and monitors scattered around modern foundries, pharmaceutical plants, refineries and other facilities.

The opportunity to become the go-to company for Apprion’s kind of product isn’t small, according to CEO Mike Bradley. He says there are about 76,000 plants with 100 or more employees, the size at which they are likely to want networks in place. Systems for each of those plants range from $100,000 to $1 million dollars.

A number of other companies are working on wireless equipment and sensors to go into industry, hospitals, businesses and even the growing, green sort of plants. Motorola itself makes communication equipment for construction and industry workers, including cell phones and walkie-talkies. However, there are relatively few companies working on tying all those pieces of equipment, including RFID sensors, together in a software interface.

The exact size of the investment wasn’t disclosed, but Apprion raised $12 million in its first round, and has now taken a total of $23.5 million. Motorola led, and was joined by existing investors Chevron Technology Ventures, Anvil Investment Associates, Advanced Technology Ventures and Allegis Capital.

Ribbit is a remarkable new company, and it knows it: It calls itself “Silicon Valley’s first phone company.”

That sounds like marketing overreach for a young company barely launched, but when you look at what it’s doing, you can see why they can get carried away.

Ribbit, based in Mountain View, Calif., has developed technology, built on years of prior work of its founders, that lets a developer insert phone software into any Web application. The developer doesn’t have to know anything about phones.

The end result, Ribbit predicts, will be thousands of useful applications for regular people. Ribbit’s applications let you make calls from any page, direct your calls from your own phone to any Web page, and gives you a way to manage it all in new ways. You can transcribe it all into text, search it, and use it to see other kinds of information. Because it can integrate into any application, Ribbit can do things like peer into your friends’ MySpace, Flickr or other accounts, pulling your friends’ latest blogs or photos, so you can consult it all even as your friend calls you on the Web phone.

The company first launched in December, as a platform designed for developers building phone-based applications for large companies. To showcase this, Ribbit built Ribbit for Salesforce, which adds voicemail, memos and calling to your Salesforce account, so you can manage all your clients with your web-based phone. The person who built the application, a former Salesforce engineer, knew nothing about phones.

Today, at the DEMO conference, Ribbit announces the launch of a platform for consumer applications. It’s called Amphibian, and it already has some notable applications on display. About 2,500 developers are building Ribbit applications, the company tells VentureBeat. There’ the Ribbit version of the Adobe AIR iPhone, which builds on the popular application AIRiPhone. Thae original application features an iPhone suspended in the air on a Web page, and lets you play with its data, turn it around and so on. Ribbit’s application, however, has added a way to include your own phone’s features within it and make calls.

There’ also the Chalkboard phone, which lets you make calls from your computer with a Flash-based phone, designed like a chalkboard. See iGoogle screenshot here.

The company was co-founded CEO Ted Griggs and Crick Waters. They spent nine months researching how people used phones. They noted how people use a cellphone and VoIP services from their computer, but that these two services were in silos. Services Jajah and Skype are good at letting you make cheap VOIP calls, but they aren’t designed to be inserted in other applications. The Ribbit founders also noticed that each large company needs phone features to work in different applications, tailored to the company’s specific workflow needs, and that it cost at least $250,000 to build phone features to fit into their application set.

So Ribbit decided to make it very easy: Provide an API to let non-phone experts build phone features on their own, allowing them to put them on any Web page and tie them into any application. Former AT&T and Sprint product executives, they recruited some Web 2.0 engineers from Yahoo and eBay to help them.

Griggs earlier founded a company called Junction, a VoIP software company that was merged with Summa Four, and which was sold to Cisco in the late 1990s. Ribbit’s core invention is something called a telephone “soft switch,” so called because it is a piece of software that can manage phone calls. Griggs built the basis of it at his most recent company, Syndeo. That company received $98 million in investment during the Internet boom years, but had struggled during the downturn and slow buildout of new networks in the U.S. It was a carrier grade phone switch, used in Japan for VoiP, but it was otherwise neglected. So Griggs acquired the intellectual property for the switch. It was built to work with any major protocol: SIP, PSTN, etc. Rejigged for Ribbit, this means it can call fixed line numbers, mobile phones, but also Skype, GoogleTalk, or MSN — all voice networks running proprietary protocols.

The Ribbit team added a flash interface, to handle calls from within any browser, so that it can work from almost any kind of data object, including jpegs and more. This lets you take messages, transcribe voice into text (using an application called Simulscribe), search it, add directory services, integrate it with Plaxo so you can manage your contacts, and more.

Applications are built with Adobe’s Flex development tools.

Ribbit recently raised $10 million in a second round of capital led by Allegis Capital, and joined by KPG Ventures participating. This follows $3 million raised from Alsop Louie Partners more than a year ago.

Ribbit charges developer a fee: $25 a month for the basic integration. Additional charges are made services such as voice mail, contact management and transcription services, call logs, provisioning and billing. Building applications is free, but once an application is being used for commercial purposes, Ribbit charges. It also charges the developer for the calls: $30 a month for up to 20 people using the service. The developer can charge their own clients as they want.Ribbit also lets developers sell applications to consumers from a Ribbit store. These apps are analogous to ringtones — except they are phone applications instead. For example, there’s Ribbit Earth, which shows a globe and colored lines connecting the places you are calling. Developers can charge consumers whatever they want. If the developer charges $2.99, he keeps 80 percent of that, and Ribbit takes 20 percent.

Here’s how it works for you, the consumer. You provide our phone number, and Ribbit looks up your carrier, and then gives you a simply set of instructions to forward your calls to the service. When you get an incoming call to your phone, you can do one of two things: You can answer it, and talk as normal. Or, if you ignore the call, it goes to Ribbit’s platform, and it can then go to any Ribbit enabled page you’ve chosen to place your Web phone. It can go to your Salesforce dashboard, for example, where you can manage incoming business calls, and see audio files or see them transcribed. Or you can have it go to your MySpace or other page (see screenshots here).

Ribbit also offers a social network features, too. When receiving a call from a friend, you can have Ribbit call up the feeds from that friend (your friend’s blog, LinkedIn account, Flickr, YouTube, etc) so that you can see what he or she has been up to lately, right when you’re talking with them.

Here’s the latest action:
1) Brightroll raises $5M for video ads
2) LGC Wireless acquired for $169M plus
3) InterviewUp, answers for job interviews
4) Alibaba.com to go public
5) Yahoo’s CMO leaves, without explanation
6) Tesla’s shocking $1M crash tests
7) Tumblr, Collective Media, Veeker, MobileEye, BioFuelBox, GameLayers, Shooner, all raise cash
8) Boston’s Entrepreneur site

Brightroll serves billionth video ad, raises $5 million – The mark comes less than six months after serving half that number. The San Francisco company, which helps large ad agencies and brands sell video ads across leading web sites, has also raised $5 million from new investor KPG Ventures,
True Ventures and Adams Streep Partners.

LGC Wireless acquired by ADC Telecommunications – As we reported last week, LGC Wireless has been bought. Now its official by who. ADC picks it up for $169 million plus about $20.5 million in debt. LGC’s technology strengthens cell signal coverage in buildings, airports and other indoor areas. LGC Wireless had sales of $83 million in year ending Sept. 30. The 11-year-old company had raised $93 million in funding. Investors included Rembrandt Venture Partners, the Mayfield Fund, Allegis Capital, Crystal Ventures, Intel Capital, Hutchison Whampoa Ltd. and Dali Hook Partners.

InterviewUp is Q&A site for job interviews — The site is designed to help interviewers collect challenging questions and interviewees find good answers. We’re not sure the world needs another Q&A site, but a post discussing Google’s interview questions scored over 1500 diggs. If InterviewUp can deliver juicy tidbits like these, it has a shot. For more.

Yahoo’s chief marketing officer Cammie Dunaway leaves – She was head of the customer experience division, and there was no reason given for the departure (details here).

Alibaba Group, 39 percent owned by Yahoo, plans Alibaba.com IPO for Nov. 6th in Hong Kong – The IPO is expected to be the biggest ever by a Chinese Internet company, raising as much as $1.5 billion. Earlier story here from WSJ.

Collective Media, another online ad network, raises funds –The company says it reaches 120 million unique users per month. The round was led by Greycroft Partners, with iNovia Capital participating. More here.

Tumblr, offers you a lean Web site — The New York company offers you a personal site where can collect, share and discuss what headlines and other things found online. It lets you pull in your Twitter feeds, too. Other than that, its has few frills. It has raised $750,000 in a first round of funding from Spark Capital and Union Square Ventures.

Veeker, a mobile video and picture messaging startup, appears to be stuck — The San Francisco start-up raised $2.5 million from Labrador Ventures, but is struggling amid competition.

Tesla’s $1M crash tests — Ouch, at $1M each, no wonder executives at Tesla were gasping at the cost per crash for the testing of the anticipated all electric sports car. Apparently, though, the cost per crash is now a mere $300,000 (Earth2Tech).

Goldman Sachs invests $100M in Israel MobileEye, for driving tool — MobileEye’s technology calculates the speed and distance of a vehicle in front of a car, and alerts the driver when other vehicles are too close. The company raised the money at a pre-money valuation of $500M, reports Israel’s Globes. MobileEye, which has already raised $50M, plans an IPO for next year. The company says that it will have $10M in sales this year and that it will become profitable in 2008. Here’s its statement.

BioFuelBox, biofuel refining startup, raises $9.46M in first round — Backers of the a Hollister, Calif. start-up include Draper Fisher Jurvetson and DFJ Element. PE Hub has the scoop, reporting that the company’s technology is a “bio-refinery in a box — a modular, containerized innovation that produces biofuel cost-effectively and easily.”

GameLayers, a passive multiplayer online game maker, raises $500,000 — The San Francisco company is backed by O’Reilly AlphaTech Ventures, Joi Ito and Richard Wolpert, reports PEHub.Schooner Information Technology, secretive finance company, raises $3.33 million — The company plans a $15 million total first round, according to regulatory filings cited by PE Week. The round was led by CMEA Ventures. The Oakland, Calif., company is led by Richard Busch, formerly with Sun Microsystems as research director of computer system architecture and analysis.

Social networking site for VCs launching next month in Boston – TheFunded lets entrepreneurs talk about VCs. Next month, the New England Venture Network will launch venturenetwork.vc, a place for VC’s to talk about deals. A deals section will feature a Craigslist-like listing of investment opportunities, including a place for VCs to post about companies that are looking for funding, that they chose not to invest in. A questions section will let analysts query VCs. A jobs section will let VCs advertise openings at portfolio companies. Via The Boston Globe.

The mobile email company, Visto, has become one of the most controversial companies in Silicon Valley.

The Redwood City company has reportedly raised another $35 million in venture backing led by new investor Altitude Capital Partners, adding to the whopping $350 million the company has already raised. It is in the red, after ten years, and hasn’t announced a major customer in several months. Its penchant to file lawsuits is also worrying, and we’ve said before that is a reason why bias has crept into our reporting about this company.

Valley gossip site, Valleywag, says the company is on the rocks, but has no facts to back it up. PE Hub’s Dan Primack says the $35 million in cash, raised in December, would seem to contradict that, however there is no one on the record explaining the terms of that cash — and it is somewhat odd it wasn’t announced. Moreover, the company has a large cash burn rate, as Dan points out, caused by service contracts it pledged to.

Now we’re hearing its investors are spreading word that a 2007 acquisition is better than 50-50 odds. Yet we’re skeptical too, given that the company had said it planned to go public last year — and nothing happened (indeed, read that previous link for notes about the company’s questionable marketing). Indeed, with its huge cash burn, it may have to be sold.

Has this company hit the wall? We’ve contacted the company, and will report back if we hear anything.

Investors include Allegis Capital, Blueprint Ventures, Draper Fisher Jurvetson, ePlanet Ventures, GKM Ventures, Meritech Capital Partners, Oak Investment Partners and Rustic Canyon Partners.

The Google alliance with tax and accounting software company Intuit is a pretty impressive one, if you look at the details.

Google has long been trying to tap into the “long-tail” of small businesses that aren’t online. Less than half of small businesses are online, and so they’re not taking out ads on Google either. Google stands to profit if it can give these businesses Web sites, and then encourage them to take out ads to be placed beside Google search results.

This alliance with Mountain View’s Intuit is a smart way to do that. Under the accord, small businesses using Intuit’s Quickbooks software get a free web site — significant, because less than half of the businesses using Intuit’s Quickbooks software are online. Google will let small businesses create their own ad campaigns by using Google’s AdWords software from within Quickbooks — with a $50 credit to start.

Dean Takahashi, of the Mercury News has a good summary of the deal’s highlights here (Merc site is temporarily down):

StepUp had raised under $10 million in venture financing from investors, according to VentureWire (sub required). The investors included Allegis Capital, Granite Ventures, and Pennsylvania Equity Partners. Granite’s Standish O’Grady said he invested in the company’s $6.6 million round less than a year ago, and that the deal yielded a “good return.”