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The MBVC investment team gained considerable experience from and delivered exceptional results to investors through starting, building, publicly listing, and finally selling FreeMarkets.  FreeMarkets was a leading provider of software and services that helped Global 2000 companies to automate and improve their sourcing and supply management functions.  Founded in 1995 by Glen Meakem, FreeMarkets went public in 1999, and, after peaking with maximum revenues and fees of almost $200 million, was sold to Ariba (NASDAQ: ARBA) in 2004 for approximately $500 million.

As Founder, Chairman, and Chief Executive Officer, Glen provided overall leadership to the company through every stage of its development.  In particular, he drove the strategy, finance, marketing, sales, human resources, and global expansion of the company.  As President and Chief Operating Officer, Dave Becker led overall operations including software development, R&D, network operations, client service and delivery, and a number of administrative functions.  From raw start-up in 1995, our team at FreeMarkets achieved revenues of $23 million in 1999 and went public on NASDAQ at the height of the Internet bubble in December 1999.

The company reached a peak market capitalization of approximately $13 billion shortly after it went public.  Despite the implosion of the Internet bubble and resulting contraction of FreeMarkets’ market capitalization, Glen and Dave led FreeMarkets through a period of extraordinary growth.  In 2002, with 1,200 employees working from 18 offices around the world, the company generated revenues of $182 million with over $50 million of positive cash flow, and conducted over $20 billion dollars worth of purchasing for customers.  The company achieved this performance by helping its major customers achieve billions of dollars in annual savings.  FreeMarkets’ customers included Global 2000 corporations such as Alcoa, BP, China Light & Power, Emerson Electric, Heinz, Royal Bank of Scotland, Singapore Technologies, Tata Motors, Tyco, United Technologies Corporation, Visteon, Valeo, and many others.

By 2003, due to intense competition and the extreme contraction in enterprise software pricing in the years after the Internet bubble, it had become clear that FreeMarkets’ days of rapid growth were over.  Despite this, the company continued to innovate with new software products and services.  Glen and his team sold the company in 2004, obtaining a final exit, for approximately $500 million.

Because we took the company public in December of 1999, the Internet bubble and the subsequent implosion of this speculative bubble had a large effect on our investors.  Those investors who were not locked up after the IPO achieved cash on cash returns approaching or exceeding 1,000 times their investments.  However, even after the bubble first imploded in March of 2000 and lock-ups expired in June of 2000, many investors still enjoyed returns of over 100 times their initial investments.  We believe that FreeMarkets’ investors achieved impressive results because our team succeeded in building a company of enduring value, one that still exists today within Ariba, Inc. (NASDAQ:ARBA).

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