Headquartered in Silicon Valley, MetaLINCS developed the first and one of the world’s most complete enterprise software suites for electronic document discovery in civil litigations, also known as E-Discovery. The Company’s software automatically analyzes emails, documents, and associated metadata, and enables corporate users and litigators to make better decisions earlier, boost discovery productivity, lower legal costs, and ensure consistency across cases.
Company
Headquartered in Silicon Valley, MetaLINCS developed the first and one of the world’s most complete enterprise software suites for electronic document discovery in civil litigations, also known as E-Discovery. The Company’s software automatically analyzes emails, documents, and associated metadata, and enables corporate users and litigators to make better decisions earlier, boost discovery productivity, lower legal costs, and ensure consistency across cases.
Financing
The Company was founded in late 2003. In September 2004, Newbury Ventures led an $8.75 million financing for the development of MetaLINCS’ product. The Company launched its first product in late 2005. In 2006 the Company showed early signs of commercial success closing many high profile enterprise-level deals, including a major deal with Merrill Lynch worth over $600K annually. To finance working capital, Newbury Ventures and other investors set up a $3 million bridge facility to provide cash runway through mid 2007. This strategy paid off handsomely when the business blossomed with $5 million of bookings in Q3 2007.
Growth
Three years after Newbury’s initial investment, we were able to grow MetaLINCS from a 12 people startup to one of the world’s leading E-Discovery software companies while consuming less than $12 million of venture financing. During the same period, the Company was able to ramp bookings to $5 million per quarter and build a world-class customer base that includes Merrill Lynch, Ernst & Young, U.S. Department of Justice, Cypress Semiconductor, NEC, and Union Bank of California.
Corporate Governance
Newbury Ventures’ role as value-added investor included the following notable achievements:
- Leading initial institutional investment round in the Company, attracting co-investors;
- Attracting additional venture debt financing and commitments from top tier VCs;
- Recruiting, guiding, and grooming the senior management team;
- Providing strategic advice on competition and the business model;
- Working with management and the Board to set annual corporate objectives in the key areas of customer acquisition, product development, business development, and finance;
- Introducing customer prospects including Morgan Stanley and Bear Stearns who evaluated the product and provided valuable feedback to the Company; and
- Working closely with the management team to build in a capital efficient manner.
Exit
The Company’s success did not go unrecognized. In October 2007, MetaLINCS received an offer from Seagate Technology to acquire the Company for $82 million in cash. The transaction was consummated on December 10, 2007. Newbury invested $3 million in Series A financing and subsequently provided $1.2 million as part of a $3 million bridge financing that converted into Series A shares at the time of Seagate acquisition with some additional warrant coverage. Overall, our $4.2 million investment resulted in $21.4 million in sales proceeds. Newbury investors were able to achieve a 5.1x return on invested capital and a gross IRR of 91%.
About Seagate
Seagate is the worldwide leader in the design, manufacture and marketing of hard disc drives, providing products for a wide-range of enterprise, desktop, mobile computing and consumer electronics applications. Seagate’s business model leverages technology leadership and world-class manufacturing to deliver industry-leading innovation and quality to its global customers, and to be the low cost producer in all markets in which it participates. The company is committed to providing award-winning products, customer support and reliability to meet the world’s growing demand for information storage. Seagate can be found around the globe and at www.seagate.com.