| 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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