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Welcome to
the Spring 2007 issue of the Blueprint Corporate Insider. Blueprint
Ventures has a specialized investment practice in Corporate IP Spinouts,
where we spin out non-core technology (pre- revenue or early-revenue) from
high-tech companies to create new venture-backed start-ups. The Blueprint
team has led Corporate IP Spinouts from leading technology companies
including Intel, NEC, Fujitsu, and Brocade. Overall, we remain
well-positioned to help entrepreneurs, technologists and executives bring
great technologies to market and build successful companies.
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NEW INVESTMENT: IntelliPath,
a Corporate IP Spinout from Brocade
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We are pleased to announce the closing of Blueprint Ventures’ most recent investment, IntelliPath
(www.intellipathsolutions.com),
a Corporate IP Spinout of Brocade. Blueprint led the $6.5 million Series
A financing along with new investor L Capital Partners.
Based in
Lumberton, NJ, IntelliPath
develops and sells physical-layer switching systems for optical and
digital cross-connects in large data center applications. IntelliPath’s multi-port switches allow IT professionals to reconfigure
thousands of high- performance data connections quickly and error-free. IntelliPath was spun out following Brocade’s acquisition of publicly traded McData
in early 2007.
IntelliPath is a vivid example of how a corporate
M&A transaction can result in strategic misalignment and a subsequent
Corporate IP Spinout. When Brocade acquired McData,
Brocade identified McData’s Matrix switch product
line as non-core to its current focus and chose to spin it out.
This technology had significant prior corporate investment and over 10
years of prior R&D. As part of the spinout, IntelliPath
enjoys over 350 active customers and oversees over 1,200 installed
systems. This technology and customer head start serves as a solid
foundation for IntelliPath’s future physical
switching roadmap, positioning the company well to expand its product
roadmap. We have hired a CEO (former McData VP)
familiar with the technology and the team to lead IntelliPath
going forward.
Read the rest
of the story
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INTERVIEW: The Advantages of VC Investing in
Corporate IP Spinouts
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Managing Director George Hoyem recently spoke about Blueprint Ventures’ Corporate IP Spinout practice on the
PricewaterhouseCoopers Start Up Show on wsRadio.com. He shares his
experiences and perspective on Corporate IP Spinouts, having led these
transactions from companies including NEC, Fujitsu, and Cisco.
Highlights:
- Spinout rationale: Corporate IP Spinouts
occur for a variety of reasons including high project hurdle rates,
increased corporate focus, or restructuring.
- Corporate momentum: Technology
corporations are seeking ways to make use of their dormant IP.
Spinouts are viewed as an attractive means of monetizing their
technology assets.
- Team transfer: Blueprint typically
brings across the technology team from the parent corporation and
injects a seasoned management team to lead the new start-up going
forward.
- Success story: LANDesk, a Corporate
IP Spinout from Intel, was acquired by Avocent
(Nasdaq:AVCT) in
2006 for $416 million. Intel received over $60 million as part of
this deal.
Listen to full
interview
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INTELLECTUAL ASSET MAGAZINE: Another Arrow in the
IP Quiver
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In a recent article in Intellectual Asset Magazine, Managing Director Jim
Huston discussed how corporations should view Corporate IP Spinouts as
another means of monetizing unused or unwanted intellectual property.
Licensing practitioners know the difficulty of finding the right licensor
and generating sufficient compensation for early-stage technologies. Unlike
patent licensing or buy-outs, the Corporate IP Spinout model is based on
taking equity in a newly formed company in lieu of licensing royalties or
upfront cash payment. There are multiple reasons why Corporate IP
Spinouts are attractive propositions for the parent corporation:
- Equity upside: The parent
participates in the technology’s future upside (through an equity stake) without being required to make
any further capital investment. The standalone start-up leverages VC
dollars going forward. The parent corporation – at no additional expense – may recoup its initial R&D
dollars and potentially reap substantial rewards if the start-up
blossoms.
- Ecosystem development: Corporate IP Spinouts
enable the parent organization to build up its technology ecosystem
without exposing its bottom line. From the parent’s perspective, the spinout creates a natural partner for a customer,
supplier, channel or OEM relationship.
- Emerging markets: The corporation
gains learning and an opportunity to move into a new market if the
spinout proves its viability. This is particularly true of research
projects started in corporate labs; in many cases, the parent
corporation doesn’t want to enter a
nascent market
directly, but via a spinout it can put its eyes and ears into an emerging
sector.
- Expense realization: Corporate IP Spinouts
enable the originating corporation to move the R&D expenses off
its balance sheet and avoid future expenses while still retaining
upside potential. They can also unlock potential tax loss benefits
associated with earlier acquisitions by generating a tax realization
event if there has been some write downs.
Read the rest
of the story
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HOLIDAY CARD 2006: Gary Snoman
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Blueprint Ventures' 2006 holiday card featuring Gary Snoman,
the entrepreneur turned VC, received kudos from leading industry
publications including Business 2.0 and VentureBeat.
For those of you who missed Gary's
antics, we've included the YouTube video for
your viewing pleasure.
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About Blueprint
Ventures
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Blueprint Ventures is a San Francisco Bay Area investment firm focused
on technology start-ups including components, systems, and
software/services. The firm works with exceptional entrepreneurs to
deliver disruptive technologies to market in a capital-efficient
manner. Blueprint is the industry innovator in leading Corporate IP
Spinouts by partnering with high-tech companies to commercialize their
non-core, pre-revenue intellectual property. Blueprint's investment
professionals provide significant entrepreneurial, operating, and
investment experience to their portfolio companies.
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Contact Information
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Bart Schachter, 415.901.4004, bart@blueprintventures.com
George Hoyem, 415.901.4005, george@blueprintventures.com
Jim Huston, 415.901.4000, jim@blueprintventures.com
Richard Yen, 415.901.4025, richard@blueprintventures.com
David Frankel, 415.901.4009, david@blueprintventures.com
Learn More
About the Team
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