| Liaison
Technology Software Firm Shuts Down From the
Austin Business Journal, April 12, 2002
By Stacey Higginbotham, Austin Business Journal
Staff
Austin's
Liaison Technology Inc. has told customers it has
gone out of business, and its Web site no longer
can be accessed.
Company
executives couldn't be reached for comment. The
company, founded in 1999, developed content
management software for e-commerce Web sites. Its
offices are at 11044 Research Blvd. in Northwest
Austin.
Jack
Allewaert, CEO of Long Beach, Calif.-based
AcquireX, a procurement network for education
products, still plans to use Liaison's software
to manage the 500,000 products it sells over the
Internet.
That's
because an escrow service stored Liaison's source
code. Now, AcquireX can generate its own
adaptations for the software if needed and handle
customer support.
"The
losses of customer support was a risk we
identified in the purchase, so contractually we
arranged to protect ourselves," Allewaert
says. "They have a great product that we
wanted despite the fact that they could not get
financing."
According
to MoneyTree surveys, Liaison received a total of
$22 million in venture capital from investors
such as Dell Ventures, Austin Ventures and
Techxas Venture Partners.
AcquireX
is able to keep using the software by arranging
for extra training of some AcquireX employees and
by gaining access to the escrowed source code --
akin to the recipe for the software.
Allewaert's
protection of his investment in Liaison software
is becoming more common as software companies
collapse after failing to receive enough venture
capital.
"With
the [information technology] industry in flux,
you don't have to look too far for examples of
people putting source code in escrow," says
Jim Ford, CEO of Austin-based Guard-IT Corp.,
which stores source code in escrow.
Ford
says he releases software held in escrow fewer
than 10 times a year. AcquireX and Liaison aren't
Guard-IT clients.
"I
thought we would have seen more last year, given
the state of the economy, and we could still see
more this year. But it's not in the same league
as bankruptcies," Ford says.
Ford
says the Sept. 11 attacks brought awareness of
various business risks to the forefront, so
escrow activity is increasing. Guard-IT has been
in business since 1999 but has seen a 30 percent
jump in business leads through the end of 2001.
One
of the companies propelling Ford's business is
Austin-based QuickArrow Inc., which escrows its
software as a customer service. QuickArrow
develops software that provides online sales,
support and business management.
Ron
Jennings, chief financial officer of QuickArrow,
says his company was responding to a customer's
request when it set up its first escrow account.
But now, after so many customers have coped with
shut-down software firms, he uses his company's
willingness to place its software in escrow as a
bargaining tool.
Jennings
estimates it costs about $200 per customer to set
up an escrow account. QuickArrow's software sells
for about $85 to $135 per user.
Michael
Davis, a partner with the Austin office of the
Haynes and Boone LLP law firm, says that when
dealing with escrow services, it's important to
ensure the source code and other information
placed in the account are sufficient to replicate
the software. In addition to setting up the
account, he recommends concerned companies test
the source code to make sure programmers can work
with it.
Article
text copyright 2002, American City Business
Journals Inc.
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