April 2016

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A local “overnight success” (17 years in the making!) is being acquired for $1.65 billion by a leading private equity investor and its story is chock full of lessons for business in this region.

The best time to sell a business is when you are not looking to sell, and that was definitely the case for Cvent. The price per share offered in this deal — a 69 percent premium on the trading price immediately prior to the deal announcement — demonstrates just how much the buyer wanted Cvent. First lesson for entrepreneurs to remember: The best time to sell a business is not when you say it is, but when the market says it is.

Cvent is also a story of individual entrepreneurial success. The company was born during the Internet wave of the late 90s and managed to survive the subsequent downturn in the venture capital markets and engage in a long-term strategic growth plan. This is a lesson in the power of sticking to a plan and grinding it out as an entrepreneur.

Chief executive Reggie Aggarwal is a terrific example of how the entrepreneurial characteristics of commitment, optimism and failing upward combined to help him lead his business to this point. Aggarwal was resourceful, irrepressible and willing to be accountable — and he still talks candidly today about devastating failures that…

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Vista Equity Partners is betting big on Cvent Inc. — and the California private equity firm looks to be in it for the long term as it takes the event management software company private.

One thing is for sure: Vista is paying a high price for the Tysons company, according to Michael Faulkender, an associate finance professor at the University of Maryland. The nearly 70 percent premium is about twice as much as the 30 to 40 percent premium on share price he would expect in a deal like this.

That means the private equity group sees a financial upside much higher than the $36 per share it offered. It also means that existing shareholders were not eager to sell, which is why the offer is so much higher than the $21 per share the company had been trading at for the last several weeks.

Vista and Cvent can only realize that gain by taking the company private, freeing the company from the short-term interests and share prices that can prevent long-term investment.

“The private equity investors are not idiots,” Faulkender said. “The only way this is rational for them is that they think by taking it private and getting it focused they can get some big long-term gains.”

The purchase was the end result of an unsolicited offer for Cvent that triggered a bidding war, CEO Reggie Aggarwal told me. He said the company reviewed the multiple offers and picked the best one for shareholders that would allow the company to continue investing in the future. The ultimate purchase price of $1.65 billion is more than eight times revenue, putting it near the top for technology companies.

“They paid such a high premium it was difficult to say no,” Aggarwal said.

While he declined to say what the strategy would be when the company goes private — since the deal must still be approved by the shareholders — he said Cvent has made it clear it wants to grow organically and through acquisitions whenever possible and that Vista Equity Partners has “deep pockets” for additional purchases.

“We are going to be growing and acquiring companies and there is no reason to think that will change,” Aggarwal said.

When newly private, Cvent will be able to ditch the quarterly earnings reports that make it more difficult to balance the short-term gains many stock traders want with the long-term gains that private investors desires.

Jonathan Aberman, the managing director of Amplifier Ventures, a seed and early-stage venture capital fund based in McLean, said strategic pivots can be difficult — if not impossible — when a company has to appease shareholders.

“When you are a public company you pretty much have to manage yourself quarter to quarter,” Aberman said. “There aren’t a lot of long-term investors in the markets anymore.”

Read entire news story at WashingtonBusinessJournal.

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There’s a general consensus that in the future, our region’s jobs will largely mirror today’s. However, my work with tech innovation has convinced me that the future is going to be very different from what we imagine.

Education and infrastructure needs will be challenged in significant new ways and even entrepreneurs will have their worlds rocked.

Advances in robotics and software are already eliminating human jobs. Banks are phasing out tellers in favor of kiosks that use intelligent software. In Europe, a convoy of autonomous trucks recently completed a cross-European trip without human intervention. Amy Ingram is all the rage; she is an artificial intelligence-enabled app who organizes meetings for a growing number of small businesses.

Meanwhile, entrepreneurs are developing business models that center around using DNA to build new life forms, or as a medium for data storage to replace magnetic hard disks. Elon Musk, Jeff Bezos and Richard Branson compete to create new businesses to transport tourists to space, while Boeing and Lockheed Martin develop tourist habitats for spacefarers. Facebook and others will unleash virtual reality later this year and, closer to home, Inova in Fairfax is making strides in cancer treatment on a personal genetic level.

All of these technology trends, and many others, are well under way and have taken root. Quite arguably, our society will…

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A whole industry grew up locally known as the Beltway Bandits — those who made a living from lucrative government contracts. But 21st-century innovation has brought new competition from outside the Greater Washington Region. Jonathan provides a peek into his research on the future of innovation in the region on Federal Drive with Tom Temin.

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The greater Washington region has an accelerator problem and we have to fix it if we want to grow the next generation of technology businesses.

A business accelerator is a term used to describe a broad range of business models that share characteristics: assisting a founder form a new businesses through mentorship, partnership connections, access to related expertise (for example, how to set up a limited liability company or a sales team) and access to investors.

Many accelerators get equity ownership, licensing revenue, rental fees or membership dues from the fledgling businesses. Accelerators tend to be of more use to inexperienced start-up founders since experienced entrepreneurs often already have the skills and networks to cultivate a smart idea.

Steve Case, one of the region’s most forward-thinking innovators made headlines last month by teaming up with others to invest $7.2 million in start-up incubator 1776. Accelerators help businesses scale while incubators often focus on innovation. Both are life-lines for many brilliant young local companies, and we should be doing more to follow Steve Case’s lead.

Because accelerators and incubators serve…

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A friend of mine asked me to share my opinion on where the current presidential candidates stand on entrepreneurship. It struck me that despite the 24/7 political coverage, there is surprisingly little information to be had on this topic.

True, there is some campaign talk on topics entrepreneurs should care about such as lower taxes, less regulation or immigration reform. There are plenty of red meat issues being provided by both sides of the political spectrum that are emotive and many of them are expressed through a prism of business and entrepreneurship. For example, references to “job-killing regulations,” or universal college education to create an educated work force are uttered often by politicians campaigning for a job in the White House.

Even though those issues definitely relate to an entrepreneur’s life — taking a stance on them is very different from creating policies that support and reward risk-taking, small business formation and entrepreneurship.

This matters because most job creation in…

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