We are pleased to announce that Liron Gitig has joined FTVentures as a Principal on our software team in our New York office. Prior to joining FTVentures, Liron was responsible for software investments at venture funds including Lazard Technology Partners, Giza GE Venture Fund and BRM Capital. Before entering the venture capital field, Liron served as Vice President of Corporate Development at Fundtech Corporation (Nasdaq: FNDT), a global provider of electronic payments, cash management and settlement solutions. Liron began his career as an investment banker at Lehman Brothers.

Boris Rapoport has been promoted to Vice President. Since joining our New York office in June 2003, Boris has made outstanding contributions to the firm and our business services team. He has played a key role on the deal teams of both Nexxar Group and Global Document Solutions.


Within our focus on business services and software companies that provide meaningful solutions to the financial services industry, we are enthusiastic about and actively pursuing a number of themes including:

• Knowledge Process Outsourcing

Knowledge Process Outsourcing (or “KPO”) is the offshore execution of domain-intensive analysis, research and other highly skilled functions. While the pioneers in Business Process Outsourcing (“BPO”) focused on the execution of standardized processes, the offshore model has evolved to include higher value-added services that enhance decision making and planning. KPO started primarily in the captive operations of multinational corporations and has expanded to third party providers who specialize in particular industries, such as finance and pharmaceuticals, or particular functions, such as equity research and patent drafting. The same advantages that are characteristic of BPO apply to KPO. Labor arbitrage is significant, even among highly-skilled workers; advanced financial analysis can be accomplished at 25% of the cost in the US, while clinical pharmaceutical trials performed by PhDs are $60,000-80,000 less expensive per FTE.

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• Web Analytics

Armed with the lessons from the late 90’s dot.com boom and bust, Fortune 1000 companies increasingly view the Internet as a strategic sales and marketing channel. One of the most important lessons of that era was that ROI matters—it is not good enough to simply attract viewers; a successful online strategy involves targeting the right customer segments and guiding these customers to take actions that deliver business results. To implement successful Internet sales, marketing and customer service strategies, enterprises such as our 38 global financial services Limited Partners are increasingly relying on the information provided by web analytics firms.

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• Risk Mitigation / Specialty Insurance

Carriers of specialty insurance lines provide insurance unavailable to clients in the standard market due to unique coverage needs. A heightened regulatory environment focused on corporate risk management through such accords as Sarbanes-Oxley and Basel II, coupled with increased threats of terrorism and recent natural disasters such as Hurricane Katrina, are catalyzing commercial demand for excess / specialty coverage. Such specialty carriers are able to achieve attractive ROE's and public market valuations due to the unique nature of the coverage they provide and limited competition able to underwrite such risks. Additionally, the commercial market has started to develop non-traditional applications for insurance and reinsurance products in areas such as hedging risk in the capital markets; the convergence of the insurance markets and capital markets is a process we expect to continue as equity and credit products grow in complexity and investors seek new hedging tools

• Continuous Data Protection

As compliance requirements (HIPPA, Sarbanes-Oxley, etc.) continue to drive growth in archiving and data protection, continuous data protection (CDP) solutions are starting to emerge as enterprises look for alternatives to slow backup processes, labor-intensive recovery operations, lost data and costly application downtime. CDP is a fairly new approach in which the data protection solution continuously transmits modifications to files or blocks of storage while logging, indexing or journaling these changes as they occur - providing the ability to recover to almost any point in time. Several approaches exist in the market today, ranging from application/platform-specific solutions (Mimosa, TimeSpring) to more generic offerings (Medocino Software, Revivio). Benefits of CDP include: elimination of backup windows, new capabilities to restore data instantly, exactly as it existed at any event or point in time, and to recover business applications very quickly in the event of a data loss, corruption or disaster. CDP will change the way data is protected and the method in which the replication market is structured, blending replication and backup solutions into a single product. Successful offerings will have to demonstrate that they can operate transparently to or integrate with existing applications while providing functionality to minimize administrative requirements yet maintaining enterprise-class performance and scalability. A solution offering these capabilities across key application areas should find broad applicability. CDP is projected to be one of the highest growth segments of the storage management software market, which generated $5.6 billion in sales in 2004 and is forecast to reach $9.4 billion in sales in 2009.

• Direct Market Access

Direct Market Access (DMA) - the automated process of routing securities orders directly to an execution venue - continues to gain adoption among buy-side institutions. Most hedge funds already use DMA technology and now many large asset management firms are also adopting DMA. Several factors are responsible for this phenomenon. First, the shift to electronic trading makes it possible for the buy-side to connect directly to liquidity providers. Second, the increasing fragmentation of liquidity pools creates a need for a way to aggregate sources of liquidity to allow traders to find most efficient ways to execute their orders. Third, bypassing the broker provides the buy-side greater independence and control of its order flow. Finally, the analytic capabilities provided by many DMA firms enable traders to optimize execution costs. For firms that offer DMA solutions, the ability to offer faster, less expensive execution and integrate with a variety of order management systems (OMS) is table stakes. As a large number of DMA vendors already offer connectivity to the relevant liquidity pools and integrate with major OMS, the industry is experiencing price compression. Innovative firms are competing by providing superior functionality, such as algorithms to allocate the order in a way that minimizes the impact of the trade on the market. Others are differentiating by offering their customers the ability to access international markets and trade non-equity securities. Even with several banks having bought DMA platforms (e.g. Citigroup’s purchase of Lava), the DMA race is far from over. We can expect competitive dynamics to lead to further innovations in the way that institutions, such as our Limited Partners, execute their trades.

• Legal Services Outsourcing

Corporate demand for outsourced legal services is expanding and involves the contracting of legal work from emerging specialty firms that are run similar to traditional staffing agencies. Outsourced functions are typically lower level paralegal services, where demand is often cyclical in nature, or services related to special projects that require a short-term contract for a specific function, such as intellectual property law. Growth in legal services outsourcing is rapidly increasing for a variety of reasons: desire to control costs, need for domain expertise on special projects, overflow staffing requirements, and greater familiarity and comfort levels with outsourcing in general. FTVentures estimates that the market for outsourced legal services exceeds $4 billion annually, and that the opportunity exists for companies to grow revenues rapidly and profitably by providing outsourced legal expertise in a professional services framework.