Trouble mounts for Big Tech 50: After BlueVine loss, another portfolio company hits severe crisis

Rough days for R&D partnership Big Tech 50: Shortly after reporting an expected loss from the disappointing sale of BlueVine, the partnership updates on a severe crisis at another portfolio company – Open Web Technologies, which has applied to the court for a stay of proceedings.

R&D partnership Big Tech 50 suffers another blow shortly after the disappointing BlueVine exit. The partnership reports that portfolio company Open Web Technologies has run into a severe crisis and filed for a stay of proceedings due to liabilities of approximately ₪177.5 million. This event comes on the heels of BlueVine's sale for $340 million, a deal expected to cause Big Tech 50 a loss on its investment.

Israeli R&D partnership Big Tech 50 reported a severe crisis today at one of its portfolio companies, Open Web Technologies. According to the report, which is based on media publications, the technology company has filed an urgent court application for the appointment of a temporary trustee and a stay of proceedings due to accumulated debts totaling approximately ₪177.5 million. This event constitutes another blow to the partnership's investors and comes shortly after it reported disappointing results regarding the sale of fintech company BlueVine.

The crisis at Open Web, according to publications, stems from difficulties encountered by the company, which it attributes to "market changes and external factors that led to a decline in its revenues." It was further noted that one of the company's lenders seized some of its accounts. Despite the petition for court protection, Open Web stated that it continues to operate and remains committed to serving its customers, partners, and employees. At this stage, Big Tech 50 has not detailed the value of its investment in the company or its expected loss from this entanglement, but a stay of proceedings is usually an indication of significant investment risk, especially for common shareholders.

The bad news from Open Web adds to the disappointment recently recorded in the BlueVine sector. Recall that just recently, Big Tech 50 updated that the American fintech company, which provides banking services to small businesses, is being acquired by Valley National Bancorp (NASDAQ: VLY) for approximately $340 million. This price represented a painful "down round," as it is significantly lower than the $630 million to $800 million valuation at which BlueVine raised funds back in 2019.

For Big Tech 50, which invested $1.5 million in BlueVine in 2021, the sale results are expected to be negative. The partnership had already estimated in its recent financial statements that the value of its holding had eroded to approximately $741,000. Following the acquisition deal, it clarified that since it holds common stock, it is "not expected to receive its full original investment in the company." This implies that preferred shareholders will receive priority in the distribution of proceeds, leaving a small amount, if anything, for common shareholders.

The sequence of negative events highlights the high risk inherent in R&D partnership investments and the challenging environment in which many technology companies have operated in recent years. While the loss on BlueVine is already priced in, the crisis at Open Web opens a new front of concern for Big Tech 50 investors, who are now awaiting updates regarding the fate of their investment in this company.