How Not To Finance Your Company: TalkPoint CEO Nick Balletta (Part 4)

Sramana: What was the process of building NextVenue? Was Goldman your first customer?

Nick Balletta: CNBC was technically our first customer because we had a take back agreement with them. Morgan Stanley and Goldman were the first who clients we had.

Sramana: Were they bringing their clients onto your platform as part of the road show work?

Nick Balletta: Yes. They had agreements with us and used us to support their clients.

Sramana: What was the financial structure of these deals?

Nick Balletta: It was a per-event fee that we got paid for by the bank. Interestingly enough, the funds came from syndication expenses for the road show. It was nice for us because it was relatively price insensitive. If a company is going public they have incidental fees they pay to banks. This became an incidental fee.

Sramana: What was the price point?

 Nick Balletta: We were getting paid 15,000 dollars per webcast.

Sramana: You were funded in 1999. What was your revenue in 2000?

 Nick Balletta: The first full year we did 1.3 million and the second year we did a little over 3 million.

Sramana: So your business model was focused on recruiting banks to do the roadshows?

 Nick Balletta: Yes. We also expanded into research content and had research analysts doing updates via the Internet. We knew that the universe for roadshows was finite and cyclical. We were aggressive expanding our footprint outside of equity capital markets.

Sramana: How did that business develop over the next few years?

 Nick Balletta: It was nice through 2001 and then it completely collapsed. We were probably close to 7 million dollars in revenue before we were merged with iBeam.

Sramana: Did iBeam acquire NextVenue or was it the other way around?

 Nick Balletta: iBeam acquired us. They were already public with a great trading multiple. We saw the markets turning and we felt it was an opportunity to provide liquidity to the ownership.

Sramana: That was a decent amount of revenue. I would expect that led to a valuation of 20 to 30 million dollars. Is that correct?

Nick Balletta: We got a 400 million dollar valuation. We received 20 times projected revenue. Our revenue for the following year was 20 million. The irony was that it was a discount to the multiple of iBeam.

Sramana: What happened next? 

 Nick Balletta: We got confederate currency. The stock struggled and the company went into debt spiral. Everybody got crammed down on that one. Most of the investors made a small return on their money. I was locked up because I was on the board. Some people made 30% return on their money, which was good for post 9/11. Live and learn.

Sramana: After the business went to Williams you ended up buying it back. What year was that?

 Nick Balletta: That was 2003. It was an asset purchase. I had to get financing and we took on the liabilities such as the real estate liabilities and employees. We picked up severance packages.

This segment is part 4 in the series : How Not To Finance Your Company: TalkPoint CEO Nick Balletta
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