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I see Zombies!

No, not Facebook Zombies. As it turns out, it is really easy for me to ignore Facebooks most viral applications because I totally don’t care.

I see Venture Capital zombies. Junior Hines over at Clickety Clack covers two topical rounds of fundraising: Rapt and Specific Media. TechCrunch covers Specific Media more here. Rapt has raised ~$50m, Specific Media ~$110m. What kinds of exits do they have to look for to create success? Now, if Specific Media found someone willing to pay $500m dollars for their company, if the investors own 50%, then they only see a 2.5x return on their invested capital. On an absolute basis, it might be ok, but for multiples it is pretty low. Rapt has the same issue. Both of these deals are swing for the fences shots.

I fear Rapt has some of the same issues that a Vignette or a Revenue Science has. How many really big web sites are there that can justify this expense? Vignette benefited from being able to target Intranets. Revenue Science has struggled to transition to a network model as they realized that there are very few sites with great behaviors and lots of excess ROS inventory to arbitrage behaviors with.

Are these exits going to be exits that investors and employees can feel good about? I am not so sure. I have blogged about valuation challenges a ton.

Regardless, I wish them luck! If Specific can IPO or sell at a multi-billion valuation, then Time Warner will certainly spin off

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