Belated congratulations to the guys at NewMedia SPARK for the sale of Mergermarket to the Financial Times Group for £101m. NewMedia had invested £1.2m in the business, and cashed out nearly £28m. Not a bad return...
This caps a good year for what is probably the most tenacious survivor among the VC incubators that briefly flourished during the dot-com bubble. SPARK not only survived the implosion of the incubator model, but they also floated early on AIM and lived through trying times as an out-of-favour public company. In fact, SPARK continued making investments--cautiously--right through the nuclear winter of tech investing.
Most incubators threw in the towel pretty quickly in 2001 when they couldn't support the cash burn of their portfolio companies and they realised most were many years away from exiting. Remember Brainspark? AntFactory? GorillaPark? Europe@Web?
But NewMedia SPARK acted early to rationalise its portfolio, cut its own overheads ruthlessly, and then focused its support on a handful of portfolio winners. The result: several successful exits that took some of the traditional UK VCs by surprise: the sale in 2004 of Pricerunner for $36m, and the sales in 2005 of Elata for $57m and Footfall for around £35m.
And the portfolio still packs some punch: earlier this year, IMImobile raised $10m from Pequot Ventures in the US, while semiconductor business Aspex seems to be making waves with its software-programmable chips.
I like stories like this because they demonstrate the rewards of managing investment portfolios over the long term. When markets get really frothy, as they are getting to be in some technology segments now, this patience and discipline often goes out the window. SPARK is an advertisement for the value of focus and tenacity.