Source: Willamette Week (6/8/2011)
Tech Wizards of the Silicon Forest
The aggressive dork CEOs spearheading Portland’s startup scene
The Exit Strategist
Name: Nitin Khanna
Age: 40
Title: CEO, MergerTech Advisors
Venture capital funding: None
What colleagues say: “He’s actually been quite a lightning rod in the [startup] community. He’s an entrepreneur’s entrepreneur.”
While most Portland tech executives are trying to get into the software business, Nitin Khanna is interested in getting them out. His formula is simple: He’s a multimillionaire who thinks Portland urgently needs more people as rich as he is.
“The only way to create the kind of investing that’s going on in Seattle and the Bay Area is to create tech millionaires here in town,” Khanna says. “If we’re not keeping them in town and not helping them exit [their companies], that work’s never converting into wealth—and therefore not being multiplied for future companies.”
Khanna says this from a couch in the lobby of the Hotel Lucia. Parked outside on Southwest Broadway is his white Maserati with the license plate “KHANNA.” It’s the second one he’s bought since selling Saber Corp., the software company he founded with his brother Karan, for $420 million to Electronic Data Systems in 2007. Saber started by making voter registration and driver’s license-processing software for the state of Oregon, and by the time the Khannas exited, the company had expanded to provide similar software to elections, DMV and child-services departments in 46 states.
Khanna, who was born in Ambala, India, and spent his childhood watching his uncle sell wood and coal, now lives in a condo in the South Waterfront’s John Ross tower. (“Helps my liver not being by all the bars,” he says, though he adds that he’s thinking of opening his own pub there.) He says the millions haven’t changed his life. “Hardly. I probably travel over a hundred days a year for pleasure, but other than that freedom, I’m much more deeply involved with my kids.”
But he’s sure that enough fellow tech millionaires would create a groundswell for software investment and mentoring—and local entrepreneurs who can start a second company with plenty of cash on hand. So he and Karan have started MergerTech, an investment bank designed to help startups “exit” by selling to a buyer.
The bank aims only for startups trying to sell for less than $100 million: “The big banks won’t look at you” if your company is that size, he says. “In my mind, there was an almost complete gap—there was almost no solution for that entrepreneur to say, ‘I want, not a broker, not somebody who knows a few guys, but an actual investment bank with investment bankers who are very tech-savvy and who’ll actually market me on a global basis.’”
MergerTech’s first big sale was last month, when it struck a deal for the purchase of year-old Portland startup SecondPorch—which links vacation homeowners with potential renters—to a similar company in Austin, Texas, called HomeAway.
In April, Khanna announced the start of another group—this one a private-public partnership—with the same millionaire-producing goal: Portland 100, a Portland Development Commission-led initiative that seeks to identify 100 local companies in technology, apparel and alcohol that could eventually be sold for millions. The project officially kicks off this week, with the vocal support of Oregon State Treasurer Ted Wheeler.
So, how soon can Portland’s software scene compete nationally? Khanna mulls that question.
“Three to five years, maybe,” he says. “Because it’s been a drought, and we need to fix that. Over a 15-year period, with two bubbles, we haven’t had one company be north of a half-billion valuation from start to finish. None that I can think of.”
But he believes that helping companies stay and sell is the answer. “If we can do that, we are going to be Boulder or Austin.”
