"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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