Hunger Strike – Day Five

“You want answers? You can’t handle the truth.”
— Jack Nicholson as USMC Major Nathan Jessup

If you wonder how long this DTM-inspired Blogging Hunger Strike has been brewing (see prior post “Hunger Strike – Day One” June 16-10), consider the recent Google acquisition of Toronto software startup BumpTop (see prior post “Google acquires BumpTop” May 1-10):

Dateline: Mountain View, California

Exits are exciting, and particularly when they involve Google on the buyside.

Although no one involved will talk about it, it sounds as though the owners of BumpTop sold their baby to Google over the past two weeks. One is able to deduce this, in part, by the fact that Microsoft no longer carries BumpTop as a BizSpark partner. Something that had been the case up until a short time ago. According to Microsoft, Bump asked to withdraw a few days ago. Travelling to Silicon Valley is a great way to come across the skinny back home.

Second, BumpTop quietly announced to its users yesterday that life was taking a different turn.

Given the arm wrestling going on between Apple and Google over who will have the sweetest user experience, Bumptop’s cool desktop and underlying technology are a natural piece of Google’s user interface puzzle as they prepare to take on the current kings of all consumer electronics. The ones down the street in Cupertino.

As to price, we can assume that it wasn’t above US$63 million, since the acquirer didn’t make a public announcement as might have been required under the Hart-Scott-Rodino Act had it broken that threshold. My guess is that the number comes in around US$35/40 million. Given the type of company it is, and what has been discussed on the grapevine over the past year, if it safe to say that $2 million to $3 million has been invested to date. No more than that. Let’s guess the VCs got half the business for their capital. What’s the all mean, sports fans?

The folks at Extreme Venture Partners, GrowthWorks and a Montreal-based angel (I think I have those right) appear to have achieved the magical “10 bagger” that defines success in the world of angel and venture capital investing.

You may recall that we wrote about BumpTop more than three years ago. Although I am generally wrong about most things, at least I was able to see the investment opportunity, if not the commercial application (see prior post “U of T BumpTop buzz” March 11-07):

If you know what BumpTop is, please let us know. One feels the burning need to finance it, even if there’s no obvious commercial need for whatever it is that they are trying to do.

I might have a career as a seed investor yet. Although it wasn’t clear at the time where the start-up fit into the UI universe, it sure got the attention of the folks in Silicon Valley.

For the “first fund” team involved (Extreme), this is a great example of the ability of Canadian seed stage venture capitalists to do their jobs exactly by the playbook. For Ontario’s GrowthWorks, it is just another reminder that good VC teams can pick ‘em, even if they work for a Labour-Sponsored Fund (see prior posts “The great LSIF myth” July 2-08 and “LSIF funds see another win as Microsoft acquires Opalis” Dec 27-09).

In Extreme’s case in particular, it also proves that their unique in-house incubator model can work. And BumpTop isn’t the first deal they’ve started and sold for a profit since things got rolling there a few short years ago.

It’s early days, of course, but a 10-bagger often defines a successful fund vintage, particularly when it’s not the only win in the portfolio. For all the protests that limited partners may make about putting their bucks into the Canadian venture capital asset class, I predict that greed may swamp fear once word gets out that XVP’s model is working as it should. If it were me, and you were investing my retirement savings or tax dollars (which many of you are), I’d take the leap of faith.

Congrats to everyone involved.

I wrote the piece late on a Saturday, posted it on Sunday morning, and immediately flipped it to a trustworthy Globe journalist at 10:21 am — knowing that it was a great bit of hard news about Canada’s venture capital space. Which surely meant great profile for the good fellows at Extreme Venture Partners. Our Bumptop acquisition blog post was forwarded at that point, I assume, to the Globe’s technology reporter Omar El Akkad. A few hours later, Google changed the Bumptop home page and acknowledged the acquisition, which at that point had been unannounced for about 2 weeks.

Mr. Akkad eventually filed this story later that evening:

The search engine company has acquired BumpTop, a Toronto-based firm specializing in software that turns a computer desktop into a 3D environment. The parties involved in the sale did not disclose the purchase price, but it is believed to be between $30-million and $45-million.

BumpTop – a startup that operated out of Extreme VP, a Toronto-based venture capital firm – creates software designed for touch screens, especially next-generation screens that allow a user to operate the device using more than one finger at once. For example, BumpTop’s software lets users drag items on their desktop into piles, rotate photos and perform other operations using their fingers.

The BumpTop purchase highlights Google’s effort to update many of its services for the mobile market. Products such as Apple’s iPhone and iPad have made touch screens, rather than keyboards, the norm for operating many handheld devices, and most of the smart phones powered by Google’s Android operating system rely primarily on touch screens.

The Google-BumpTop deal was arranged some time in March. This weekend, the startup replaced its usual homepage with a note advising users of the acquisition.

“This means that BumpTop (for both Windows and Mac) will no longer be available for sale,” the company said. “Additionally, no updates to the products are planned.”

BumpTop will still allow users to download a free version of their software for another week, and will provide support and refunds for users who have purchased full versions.

Since launching its software last year, BumpTop has drawn attention in the tech world, with coverage on many leading industry blogs. Google’s purchase marks the end of the product’s standalone availability to the public, but means the technology may well surface on Google’s own devices soon.

Did you notice anything strange about the Globe’s piece (first published on Sunday, May 2nd at 7:53 p.m.)? No mention of where they got the initial story from. Certainly no hint at the source of the estimated purchase price, other than it is “believed to be between $30 million to $45 million.” Believed by whom exactly, Omar?

The Wall Street Journal, Toronto Star, Financial Post, Fortune, PC Magazine, etc. all gave specific credit to our blog for breaking the news first (see prior post “Media Hat Tips #58, #59, #60, #61 and #62” May 6-10). Naturally, the Online blogs, such as TechCrunch and Techmeme, gave a hat tip. Only the Globe & Mail would pretend to their readers that the story had a virginal birth, and refuse to provide attribution to the initial source.

The Globe’s ethical challenges started long before Mr. Milstead’s KO piece (see prior post “Canadian Business Magazine KOs the Globe & Mail” June 15-10). As such, dear reader, there’s nothing to read here again today.

Happy Father’s Day, but the hunger strike continues.

MRM
(disclosure – my first professional newsphoto in The Globe and Mail was published in 1983, of Canada One at The America’s Cup via the United Press International wire)