This is an example of venture investing in an e-mail trust solution developed by Postiva, a company that provided “e-mail trust solutions” and also had a complementary line of business in privacy education and consulting services. “E-mail trust solutions” are best-of-breed information technology products and services that uniquely combine aspects of e-mail content security (e.g., antispam, antivirus), authentication, and customer relationship management technologies. In short, the company’s products enabled e-mail sender authentication and accountability, more efficient e-mail processing, and filtering capabilities for ISPs and recipients and heightened privacy, security, confidence, and control to consumers as they wade through increasingly cluttered and danger-filled e-mail in-boxes. This example discusses the company’s business plan and then filters the investment opportunity—from the perspective of a venture investor—with the 15 due diligence criteria.
TopBackground
Postiva, Inc., was formed in December 2000 to assure privacy and trust and enable optimization of messaging platforms, including e-mail, instant messaging, two-way paging, short messaging service, and other existing and future forms of interactive communications (“messaging”). The company developed a patent-pending message-based trust infrastructure that enables various forms of business transaction processing (the “POSTiva Platform”) upon which its software products will be built. The company believed that with one proprietary architecture, it can solve three of the most significant issues facing the Internet and messaging—privacy, legal compliance, and productivity—and enable smart messaging solutions that help enterprises optimize existing business processes and conduct novel messaging-based transactions. The POSTiva Platform could also be used to integrate and provide interoperability for many applications, serving as secure “lite” transport for data between applications, architectures, operating systems, and devices.
The company initially hoped to generate revenue by offering trust business services (an e-mail/messaging trust seal and privacy consulting services) and software and infrastructure relating to privacy and legal, regulatory, and best practices compliance—the RightPathtm compliance system. The company then expected to leverage and build upon its installed base and technology of the POSTiva Platform to offer a smart messaging suite of solutions, EM-Agents.tm. EM-Agents.tm intended to provide novel and light-transport productivity and transactional solutions for direct marketing and customer relationship management (CRM) messaging, message-based billing and payment solutions, streamlined and asynchronous information gathering and retrieval and supply chain management, workflow and productivity processes.
The company believed that significant value and competitive advantage derived from the architecture of the POSTiva Platform that uniquely is intended to provide a common platform for both legal and regulatory compliance as well as productivity and transactional smart messaging solutions. The company designed the POSTiva Platform to provide companies with a number of benefits, including, but not limited to (1) automated/anonymous legal, regulatory, and best practices compliance, (2) new business opportunities, (3) heightened productivity, (4) a simplified means of integration and interoperability, and (5) as a result of the foregoing, an increase in the return on investment on installed technology and marketing practices.
The POSTiva Platform and the related trust business services were intended to provide a novel and sustainable solution to problems posed in an approximately $60 billion market that encompasses privacy, security management, application integration, e-mail marketing, and other services. The privacy and security management planning market is projected to reach $5 billion by 2004, while the market for application integration services is estimated to reach $17 billion in 2005. With regard to the specific or general markets related to the functionality of the company’s smart messaging solutions, the company will compete directly in or tap into the following markets: the overall markets for outsourced CRM and e-mail marketing services are projected to respectively grow to $4.8 billion in 2004 and $7.3 billion by 2005; bill payment services were estimated to be an $11 billion market in 2000; the aggregate corporate online procurement marketing sector will reach $10.1 billion by 2005; and all of mobile- and location-based commerce is estimated to be a $5 billion market in total by 2004.