TechPulse 360

Azure Capital Partners was largest shareholder

Citrix Systems announced Friday it purchased the private startup Vapps for $26.6 million in a cash deal that brings audio-conferencing technology to the software maker.

The buyout also offers Vapps an additional $4.4 million if certain financial and operational milestones are reached.

In a Securities and Exchange Commission filing, Citrix said it saw Hoboken, N.J.,-based Vapps’ products appropriate not only for small and medium-sized business but for large enterprises.

The largest shareholder in Vapps is Azure Capital Partners of San Francisco, which saw a return of 3.6 times capital in less than 18 months, according to an e-mail. Azure and several angel investors had put less than $5 million into the company.

Azure General Partner Paul Weinstein said Citrix plans to incorprorate the Vapps technoogy into its GoToMeeting technology for collaborative online meetings. The Vapps offering supports large meetings with a thousand or more people on a call, he said.

Azure, which invested in the company in early 2007, played an active role in reshaping Vapps’ business model from a product company to the provider of a service. Vapps now charges customers by the minute for conference calls.

“We were very actively involved,” says Weinstein, who added that the weak mergers and acquisitions market for startups could improve.

“There is more likely to be an uptick in M&A” than IPOs, he said. “We see the M&A market picking up in technology.”

First of all, valuations for startups are down, making them more attractive. Second, technology companies have cash reserves for possible purchases. In addition, there is a wave of young companies now six or seven years old and mature enough to go public if there was the demand for initial public offerings. They could interest acquirers.

“There could be attractive opportunities,” he said.