Contact: Ben Kolada
Rather than go for the quick exit, Andreessen Horowitz’s investing thesis focuses on the long haul, investing in companies that have the potential to become tech giants. Its investment in anti-fraud startup Silver Tail Systems counters that thesis, but that’s what happens when the money comes knocking early.
Andreessen Horowitz first disclosed that it invested in Silver Tail in June 2011. The thought was that, like the malware wave, sophisticated fraud attacks would first hit the largest enterprises and eventually move downwind to SMBs. However, the market has greatly expanded, as a variety of fraud attacks are now hitting businesses of all sizes.
Noticing the market’s potential, EMC moved to take Silver Tail’s capabilities in-house. Terms were not officially disclosed on EMC’s acquisition of Silver Tail, although the price was reported to be in the $300-400m range.
As we understand it, though, Silver Tail was initially looking for the opposite of an exit. The story we’re hearing is that Silver Tail was out on the fundraising circuit, looking for upward of $30m, but EMC made a table-clearing offer. That reported price, if true, would have been about twice the post-money valuation Silver Tail was seeking in its round. As it is, the midpoint of the reported price is actually about five times the post-money valuation it took in its last round, according to our understanding.
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