Captura sells at loss for investors

The decision was made, practically over coffee, to sell Captura at a price at which no investors would get all of their money back — a price equivalent to about one-eighth of the amount they had put into the company.

Captura, an expense-management company in Kirkland, was acquired yesterday by Concur in Redmond for $12.5 million to $14.9 million in cash and stock. Captura raised more than $100 million as a private company.

"I think what you have to do is not look so much at what you have in there — at what's in the pot," said Tony Audino, a venture capitalist with Voyager Capital, which invested as recently as mid-June. "If you keep looking back, you'll make the wrong decisions."

Companies with stock prices of $2 to $4 that are profitable and growing in revenue have a "remarkable ability to increase in value," Audino said.

Yesterday, Concur also reported its third-quarter financial results, saying the acquisition would delay profitability one quarter from fourth quarter 2002 to fiscal first quarter 2003, which ends Dec. 31.

Because both companies essentially do the same thing — develop software to help companies compile and track employee travel expenses, they make a good fit, leaders of the two said.

Discussions to join started after a chance encounter in the same coffee line at same time in the same Clyde Hill neighborhood that both CEOs live in.

"It turned out to be a good discussion," said Steve Singh, chief executive of Concur Technologies about the talk with Dan Vetras, chief executive at Captura. "We are clearly competitive guys, but we found out that a lot of our priorities were the same. We thought we shared a lot in common, so maybe we should talk more about the opportunity to combine the company."

Captura, founded in 1994, has some of the largest companies in the world as customers: General Motors, Ford and Hewlett-Packard. The combined company will have seven of the top 10 global 500 companies, Singh said.

All of Captura's assets will be bought for about 5.2 million shares of Concur common stock, or about 16.6 percent of the combined company, plus about $2 million in cash.

Combining the companies was the best choice for Captura, Vetras said. Plan B — to change the company's business plan and have a fourth round of layoffs — would have been worse.

Audino said he's willing to hold on to the stock to see if the stock price of the combined company could increase enough to at least cover the investment.

The company asked investors for more money as recently as June. Those who did not invest then will get less stock.

Along with Voyager, The Sprout Group, Oak Investment Partners, Merrill Lynch and Westbridge invested in June.

In general, venture capitalists like to see at least two or three times what they invested in return, nowhere close to what they got for Captura.

"Ouch, that hurts," said Chad Waite, a venture capitalist with OVP Venture Partners in Kirkland. "They are obviously betting that getting stock at $2 a share is a good deal because the combined companies have a better chance at increasing the value and giving a return."

Concur's stock dropped 1 cent yesterday to close at $2.47. During the third quarter, it reported a net loss of $2.4 million, or 9 cents a share, on $10.8 million in revenue.

Concur will support Captura's software and eventually meld the two together.

Concur will acquire some of Captura's 140 employees. About 50 were laid off. The combined company will have about 350 employees.

Vetras will stay to help with the transition but has made no plans for what he'll do next.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com