David Ladd Speaks Out on Orative Acquisition
• Due To Hot Market, Mayfield Lets Orative Go Early
By John Letzing 10/27/2006
Venturewire
David Ladd, a managing director with Mayfield Fund, hatched mobile telephony company Orative Corp. within his firm some four years ago. And while Ladd said he would have liked to develop the company further, he and other investors were compelled to part ways with Orative this week due to the hot nature of the market by selling to Cisco Systems Inc. for $31 million.
Orative had raised a total of $18 million in funding from investors including Mayfield, Diamondhead Ventures and Trinity Ventures. After Ladd formed the company, Mayfield seed funded it, hired management and eventually brought in Diamondhead Ventures to raise its initial Series A round in 2003. A Series B round, including money from Trinity, followed in 2004.
San Jose-based Orative develops technology that connects mobile phones to nominally separate communications networks within enterprises. The market for technology enabling the convergence of formerly disparate networks such as cellular and Internet has become very active in the last few years -- and companies like Cisco have taken note. Its acquisition of Orative is slated to close in early 2007.
Ladd, who sits on Orative's board of directors, said the acquisition "happened sooner than I would have liked," in part because Cisco "was actively looking at other deals" among Orative's competitors, thus forcing the investors' hand.
Cisco has actually invested in one of those competitors: Traverse Networks Inc. Traverse has raised at least $16 million to date from Cisco, Foundation Capital, Lightspeed Venture Partners and Labrador Ventures. Another Orative competitor, FirstHand Technologies Inc., is backed by $17 million from investors including BDC Venture Capital, Covington Capital Corp. and Skypoint Capital.
Cisco spokeswoman Jacqueline Pigliucci said the Orative acquisition will have no impact on Cisco's Traverse investment, which will continue. "Our investment and acquisition strategies are related, but not dependent on one another," Pigliucci said.
Ladd said despite wanting to spend more time developing Orative, he is satisfied with terms of the deal, which he called "a good exit." Cisco, which had partnered with Orative in the past, "decided it was too important to have it available to anyone but themselves," Ladd said. "You've got to take these things when they come."
Mayfield began placing a heavier emphasis on incubating start-ups around the time Orative was born. Other products of the firm's incubation program include open source calendaring and email developer Scalix Corp., and online gaming company PlayFirst Inc.
Pigliucci said that all 33 Orative employees will be absorbed by Cisco's Voice Technology Group. Pigliucci said that with the acquisition, Cisco is able to add a mobile aspect to its Unified Communications line of enterprise products.
Just like a BlackBerry pushes email to users, "Orative allows enterprise users to take everything they have in their office and push it to their mobile phones, including voice," Pigliucci said. "For us, [Unified Communications] is quadruple play for the enterprise... and we're adding mobility."