Actua Corporation was a venture capital firm. During the dot com bubble, the company had a market capitalization of over $50 billion. The company was originally known as Internet Capital Group, Inc. and changed its name to Actua Corporation in September 2014. In 2018, the company underwent liquidation.
History
Incubator
In March 1996, Ken Fox and Walter Buckley left Safeguard Scientifics to form Internet Capital Group (ICG), a venture capital firm focused on business-to-business e-commerce. They asked Safeguard Scientifics CEO Pete Musser for $5 million in funding, but he insisted on investing $15 million. In total, Buckley and Fox raised $40 million to start ICG, twice what they wanted.
In addition to Safeguard Scientifics, major investors included Comcast, Compaq, BancBoston Ventures, and a dozen individuals. Initially, the company was organized as a limited-liability company.
Following the "keiretsu" model used by Safeguard Scientifics, the company was heavily involved in the operations of the companies in which it invested and the start-ups would do business with each other, increasing the value of all parties. Its annual meetings were opportunities for CEOs of partner companies to share their experiences and cut new deals. One member CEO called it "a perfect way to manage chaos." The work environment was casual, or as one partner company CEO called it, "almost like a fraternity".
One of ICG's first investments was a website called Water Online. Under the guidance of ICG, in late 1997, Water Online hired Mark Walsh, head of AOL's B2B division, as CEO. The company changed its name to VerticalNet, expanded into 47 different industries, and became one of the first B2B companies to become a public company, albeit with limited revenue.
Spurning opportunities to invest in online retailers such as CDNow and AutoWeb, ICG developed a reputation as "the VCs to see if you were an entrepreneur with a B2B idea." In July 1998, GE Capital invested in the company in a financing round that generated $70 million. Early investments began to pay off and ICG generated additional funds by selling some of its positions.
However, unlike traditional venture capitalists, Buckley and Fox envisioned that ICG would hold most of its investments for ten years or longer. The duo were ambitious, aiming to have a stake in 80% of the B2B market. In the fall of 1998, to support this goal, the company aggressively hired top talent from companies such as Microsoft, McKinsey & Co., General Electric, Cambridge Technology Partners, Heidrick & Struggles, and Softbank. After much effort, Fox persuaded Sam Jadallah, Microsoft's chief of enterprise sales and marketing, to join the company. In February 1999, the company converted to a C corporation. In May, $90 million of additional funding was raised via a convertible bond issue.
Public Company
In August 1999, the company became a public company via an initial public offering, offering 14.9 million shares at $12 per share. The company sold another 7.5 million shares to IBM, generating more than $200 million. Dell Computer bought 1 million of the shares in the IPO. High-profile investors now included Amerindo Investment Advisors, the House of Saud, the Penske family, and David Bonderman. Safeguard Scientifics was the largest stakeholder.
At the time of the IPO, ICG held stakes in 35 companies. About half the businesses aimed to create either an online marketplace or online community, while the other half were engaged in software development.
The stock doubled in price on its first day, and hit $50 per share in October 1999. Book value of the company, including stakes in VerticalNet and U.S. Interactive which had gone public, was only about $1 billion and Wall Street was betting on future success.
By December 1999, the stock was trading at over $200 per share. Buckley's stake of 10 million shares, or 3.5% of the company and Fox's stake of 12 million shares, or 4.5% of the company, were each worth over $2 billion. The company was valued at nearly $60 billion, making it the 3rd largest Internet company by market capitalization behind AOL and Yahoo!. By then, the company had invested $300 million in 39 start-ups and had a staff of 29 people to manage and advise those companies. Operations were split into two locations with Buckley serving as CEO and working out of the Philadelphia area, while Fox managed West Coast operations in San Francisco. Three executives were hired in November to head a new European team.