Maxcom’s IPO cash call

Despite a tough market today, Maxcom Telecommunications (NYSE: MXT) pulled off a successful IPO.  The offering price came at the top of its $15.50-$17.50 price range and the shares are trading about $18.70. The company raised about $200 million.

Maxcom is a telecom services provider based in Mexico.  From 2002 to 2006, the company’s voice lines went from 125,231 to 269,598.  What’s more, the churn rate declined from 3% to 1.6% (which is always a good sign in the tough telecom space — and is an indication of strong customer service).

It also helps that Maxcom continues to innovate.  For example, there are VOIP services and even Internet Protocol Television. Then gain, the company operates its own network as well as the proverbial “last mile” premise level infrastructure (which is certainly a powerful competitive advantage).

And the growth has been fairly strong.  Last year, revenues came to $155.4 million, whereas revenues for the first half of 2007 have already reached $99.7 million.  Although, the company is still losing money.

And it looks like the growth should continue for the long-haul.  Mexico’s population is growing and so is its middle class.  More importantly, the telecom market – such as for voice, data, mobile and so on – is underserved in terms of penetration rates.

If you want to check out more info on the offering, click here.

Giant Interactive IPO will be ginormous

Giant Interactive announced the initial terms of its public offering.  The price range is $12-$14 and the firm plans to sell 57.2 million shares.  Yes, the company may raise as much as $800 million.  In fact, the market cap will be in excess of $3.3 billion.

Giant is a top operator of online games in China (and it seems like the nation is obsessed with such things).  More importantly, the company’s financials are sterling, with revenues of $90.3 million and net income of $67.3 million (for the first half of 2007).

In light of other Chinese IPOs, I suspect investors won’t have any qualms with the frothy valuation.

Also, if you want to check out other recent IPO activity, click here.

Biz Lessons from TranS1

It’s a good day for the folks at TransS1.  The company has pulled off a successful IPO, with the stock price surging more than 60%.

What’s even more impressive is that the company is in a sector that’s out-of-favor:  healthcare.

So what makes TranS1 different?

Well, the company certainly has strong technology (medical devices to help with back surgery).  And the management team is strong.

But it’s also crucial that the company has been focused on getting market adoption for its innovations.

And one useful strategy is training.  This is how TranS1 explains it (from the prospectus):

“We devote significant resources to training and educating surgeons on the specialized skills involved in the proper use of our instruments and implants. We believe that the most effective way to introduce and build market demand for our products is by training spine surgeons in the use of our products. We accomplish our training objectives primarily through cadaver and surrogate models and live case observations with surgeons experienced in our TranS1 approach. After this training, surgeons are generally able to perform unsupervised surgeries using our TranS1 approach. We supplement our training with online didactic tutorials. As of June 30, 2007, we had trained approximately 500 U.S. spine surgeons and 54 surgeons outside of the U.S. in the use of our products. Of the surgeons trained on our TranS1 approach, approximately 190 have performed a procedure in the 12 months ended June 30, 2007 using our TranS1 approach. We believe we have the necessary capacity to train a sufficient number of surgeons to meet our current goals.”

Also, to check out other IPOs, click here.

Biz Lessons from Compellent

Yesterday, Compellent Technologies (NYSE: CML) had a supercharged IPO, with the stock price rising 43.90% to $24.19. 

The company develops sophisticated storage technologies primarily for the small to medium size business (SMB) segment.  In fact, revenues have more than doubled over the past year.

So how does Compellent standout from its rivals, like IBM (NYSE: IBM), EMC (NYSE: EMC) and Dell (Nasdaq: DELL)?

No doubt, Compellent has a strong management team.  And, its engineers have developed cutting-edge products.

However, there’s something else that’s critical; that is, Compellent strives to make its products easy to use.

Have you ever tried to use advanced storage products?  If so, you understand the concept of “customer pain.”

Actually, if you read Compellent’s IPO prospectus, you will see the following explanation of ease-of-use:

“We designed Storage Center to reduce the complexity associated with traditional storage systems. Our intuitive interface and integrated architecture enables even less sophisticated users to accomplish advanced storage tasks in minutes, by automating manual, time-consuming storage management tasks, such as volume provisioning, tiering, disaster recovery and boot from SAN. This enables enterprises to more efficiently deploy their information technology resources. According to an end user study commissioned by us and conducted by Enterprise Strategy Group, an independent third-party consultant, 98% of our end users surveyed were able to manage their SAN in three hours or less per week, while only 31% of other storage system users surveyed were able to do so. We believe that enterprises could purchase and integrate a number of different hardware and software products and still not achieve the functionality of Storage Center.”

Ron Paul, Web 2.0 startup guru

Ron Paul, who is a Texas Congressman, has been dismissed as a fringe candidate.  But according to a recent Wall Street Journal/NBC poll, he has about 2% of the vote. 

Basically, Paul is leveraging the amazing power of the Net.  In fact, he is experiencing a “network effect”; that is, the more exposure he gets, the more money he raises.  In all, he’s snagged about $5 million. 

However, Paul’s team realizes that a Web strategy is more than just posting on blogs, engaging on social networks and so on.  Rather, it’s also about presenting an engaging message.  If not, it’s just more noise.

Just as political candidates can get stale and overeager to please, the same goes for startups (just look at all the me-too ventures).

So, to check out Paul’s site, go here.

Biz Lessons: Constant Contact

Last week, Constant Contact (Nasdaq: CTCT) had its IPO and the stock surged more than 70% on its first day of trading.  The company provides an on-demand service that allows businesses to manage email marketing campaigns (such as newsletters, promotions, surveys and so on).

What are some of the takeaways?

Constant Contact lives up to its name.  That is, the company contacts everyone that signs up for the service.  I think this is a great investment – in terms of building the customer base.  According to the company:  the “customer experience is designed to first make sure that every customer is successful in sending their initial email campaign and then to retain customers and generate referrals.”

Interestingly enough, Constant Contact’s phone staff is based in Waltham, MA. (but email support is outsourced to Bangalore, India).

Something else:  Constant Contact has many helpful resources, such as videos, FAQs, and webinars.

The pricing is right.  Basically, the average customer pays $33 per month for Constant Contact’s service. 

What’s more, the company has a 60-day trial period, which provides a user enough time to get accustomed to the service.  There is no credit card required (only a valid email).

In other words, the company makes it tough for customers to say “no.”

Looking for a hot IPO?

Scott Reeves, a writer for Minyanville, has an excellent piece on investing in IPOs.  He also graciously quoted me and mentioned DealProfiles.  Check it out here.

It’s the Team, Stupid

Last night, I was at a swanky dot-com event. 

One of the guests said to me:  “In a startup, the team is the most important thing.  The value of the product is about 40% and 70% is the team.”

True, he was hammered – but that doesn’t detract from his advice. 

For example, at the same event, I talked to someone who recently provided a valuation for a company that received a first round of venture capital.  He said:  “It’s kind of an art when valuing a company.  But when I saw the bios of the team, I knew why the company got funded.  The team had a track record.”

OK, this raises the question:  what if you don’t have a track record?

Basically, this is why it’s tough to get venture capital. 

And here’s some advice:

1. Get a job for a venture-backed company.  Learn how the company operates.  And network like crazy.
2. Or, if you still decide to start a company, then have a laser focus on two things:  build a product and get some beta customers — fast.  In other words, show that you know how to execute, not waste time (and money).

Latest Deals

Venture Capital Fundings:

EverPower Renewables ($55 million):  A developer of utility-grade wind projects
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23andMe (N/A):  An early stage personal genetics company
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M&A

EMC buys Berkeley Data Systems, which develops data protection solutions.  Price was not disclosed.
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eBay buys ViA-Online GmbH, which develops auction management software.  Price was not disclosed.
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Working with beta customers

This week, the Rubicon Project snagged $6 million (the lead investor is Clearstone).  In fact, after several months of intense development, the company is about to release the first version of its product.

Along the way, the Rubicon Project worked with a variety of beta customers. 

What was the process like?

“Actually, I think having a process is a bad idea,” said Frank Addante, who is the CEO and founder of the Rubicon Project.  “Having a process can lead to certain outcomes.   For example, at first we wanted to add a lot of features and allow customers the opportunity to customize.  But, it became clear that customers wanted a product that essentially worked on auto pilot.  They trusted our own decisions on what was important and not.  In other words, if we had a tight process, we might have missed this.”