Success Story - Accipiter
In the late 1980s, Raleigh entrepreneur Chris Evans was working on his latest start-up company. Having started and sold DaVinci Systems, a Windows-compatible email software company he started while an undergraduate at NC State University, Evans was involved in his second start-up, Hotlinx, which published buying guides for high-tech products. It was in researching how he could publish the content of his guides online that the idea for his next company Accipiter was born.
Accipiter developed software solutions that would deliver targeted ads to a specific audience online. Never before commercially available, advertisers had simply had to run generic advertisements that were delivered universally.
In February 1996, the company had four employees. Evans brought his idea to Mitch Mumma of Intersouth at the CED Conference on Entrepreneurship. Mumma was impressed by his market vision and past experience with DaVinci, and agreed to help raise capital for the new company. Within a record eight weeks, Accipiter had money in the bank and immediately recruited a developer who began work on Evans’ concept. In September of that same year, the product was announced. At the last possible minute, Accipiter reserved a booth at the Internet World trade show, hired actors to present the product and drew a huge, enthusiastic crowd. It capitalized on the attention by capturing top website like the Microsoft Network, Lycos and CNet as clients.
In December of 1998, Evans felt that his technical vision needed to be augmented by more experienced operational skills. Mumma worked with him to recruit a president for the company and Accipiter hired Kip Frey, who set about the task of re-orienting the company culture toward a more distributed management structure.
Accipiter’s product continued to perform well in the marketplace, but by spring 1998 it became clear that the company would not be able to grow fast enough to emerge as the dominant ad serving technology. The decision was made to seek a strategic buyer for Accipiter that could accelerate market acceptance at the largest websites. The eventual buyer was CMGI, Inc. and the transaction value at the time of the agreement was $35 million. However, the deal was denominated in cash, which meant that Accipiter shareholders would receive upon closing whatever number of CMGI shares equaled $35 million.
One week before closing, Frey, Evans and the Accipiter board met to evaluate an alternative transaction: one that was denominated in CMGI shares instead of cash. Thus, any increase in the per-share price of CMGI during the period of time that Accipiter investors were required to hold their CMGI shares would inure to their benefit. This alternative was approved, and CMGI subsequently became one of the best-performing NASDAQ stocks in history, splitting four times and increasing the overall value of the transaction to more than $500 million.
Having been through several entrepreneurial cycles, Evans appreciates good partners. “From the first time I talked with Mitch Mumma, I knew that he was someone that understood and appreciated me as an entrepreneur and would be direct and honest with me about their expectations. I’ve always felt I knew where I stood with Intersouth and that I could trust them as a partner in our venture.”