The Deal
Wednesday, October 22, 
10:58 pm

[Posted on February 22, 2007 - 5:41 PM]

Reactivity began life very differently from the way it ended this week when it agreed to be purchased by Cisco Systems for $130 million. Founded in 1998 with venture capital from Accel Partners, Austin Ventures and Maveron, Reactivity operated for the first few years of its existence as what it called a "venture accelerator." It offered consulting services and launched startups such as Zaplet that then went on to raise a total of $130 million.

Around the time Reactivity's first sponsor at Accel -- Mitch Kapor -- left the firm, it realized the futility of that model and refashioned itself into a security hardware company. That was a smart shift. With all of the ideas that must have been floating around the "venture accelerator"'s halls, it looks like Reactivity chose to focus their business on something that worked. In the end, the company raised a total of $31 million from Accel, Austin, Diamondhead Ventures and JK&B Capital.

At $135 million, this is another solid exit for Accel and a much needed one for Austin Ventures. Diamondhead and JK&B look to be the big winners because they got in when the company was down. Considering where Reactivity began, it's stellar for all the selling shareholders.

For more on Cisco's purchase of Reactivity, see:
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