Internet acquirers such as Google (GOOG), Yahoo! (YHOO), and News Corp. (NWS

Technology

Big Tech Buyouts

How 10 Internet startups cashed in big, and what their founders will do with the loot

By Douglas MacMillan

Silicon Valley angel investor Jeff Clavier expected August to be a slow month for acquisitions. To his surprise, two of the seven companies in his portfolio got bought within weeks of each other. Kaboodle, a site that combines shopping and social networking, sold to Hearst. Maya's Mom, an online parenting community, sold to Johnson & Johnson (JNJ). "It's a good time to be an investor because there are tons of opportunities out there that are interesting," says

Clavier, who put some of his returns toward starting a $12 million early-stage venture fund.

What's good for investors is an outright bonanza for entrepreneurs. Not only are established Internet acquirers such as Google (GOOG), Yahoo! (YHOO), and News Corp. (NWS) spending lavishly on budding properties, companies such as Hearst and Getty Images (GYI) are placing smaller, strategic bets.

But what changes when these company founders see their handiwork snapped up by the highest bidder? Sure, some of these lucky ducks will plow proceeds into the next big thing. But many opt to stick around, keeping a hand at the tiller long after the ownership changeover.

In this slide show, BusinessWeek.com highlights the founders and venture capitalists behind some of this year's biggest tech buyouts to learn how they got their seat at the negotiating table with millions on the line, and what it's like to be among Silicon Valley's nouveau riche.

Mozy

Founder: Josh Coates
Acquisition Price: $76 million
Buyer: EMC
Funding: $1.9 million from Wasatch Venture Fund, Tim Draper, and Drew Major

The Runup:
Perhaps taking a cue from Facebook founder Mark Zuckerberg, who rebuffed a $1 billion offer from Yahoo, Mozy founder Josh Coates spurned advances from a major Internet player last year (rumored to be Google), holding out for a better offer. In October, Mozy, a provider of online data security, got acquired by surprise buyer EMC for nearly 40 times the investment.

The Payoff:
"Deals aren't like winning a lottery. Deals are messy slugfests," says Coates, who studied computer engineering at the University of California at Berkeley and started enterprise online storage company Scale8 before founding American Fork (Utah)-based Berkeley Data Systems and launching Mozy, its consumer-oriented storage service, in 2005. He says nothing in his career prepared him for the deal, which involved hundreds of hours "duking it out" with attorneys, directors, and bankers. EMC plans to keep the Mozy brand intact, but will move Coates into its existing technology division.

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