SAN FRANCISCO (Reuters) – U.S. infrastructure software maker Citrix Systems Inc. has acquired venture capital-backed start-up company Vapps Inc for $26.6 million, according to a regulatory filing.
The acquisition marks Azure Capital’s third exit this year, in an economic downturn that has limited opportunities for the venture capital industry.
Azure invested in Vapps, a Hoboken, New Jersey, provider of audio and video conference calling technology in 2007. Citrix disclosed the acquisition in a Nov 5 regulatory filing.
Last month, eBay Inc (EBAY.O) bought Azure-funded Bill Me Later, an online payments service, for $945 million. In January, Azure sold WorldWide Packets to network solutions provider Ciena Corp (CIEN) for $300 million.
Azure’s strategy of studying companies before deciding to invest in them and keeping investors actively involved in its decision-making process has paid off, said Paul Weinstein, a general partner at the firm. “In good and bad environments, it works,” he said.
Venture capital firms raise money and invest in start-ups, hoping for huge returns when the companies go public or are sold.
But the economic downturn has made companies cautious about acquisitions. There were 58 M&A deals in the third quarter of 2008 compared to 102 a year ago, according to the National Venture Capital Association.
Weinstein said he expects acquisitions of venture capital-backed companies to pick up since taking a company public is not an option for venture capitalists given tight credit markets and the weak economy.
Weinstein did not disclose how much Azure invested in Vapps, but said the company, founded in 2003, had raised less than $5 million in its lifetime.
(Reporting by Anupreeta Das)