by Kim Hanson
The Financial Post, Tuesday, September 19th, 2000.

A U.S.-based software company founded by Canadian entrepreneur Mark Skapinker has been bought by California's Broadbase Software Inc. in a stock deal worth nearly $1-billion.

The sale of Boston-based Servicesoft Technologies Inc., an e-commerce customer services firm that was started and funded by a group of Canadian investors, commanded a significant premium of about $957-million.

Servicesoft, which makes software used by such clients as Eddie Bauer to improve customer service online, was founded by Mr. Skapinker, the former Delrina Corp. entrepreneur who now heads Toronto-based incubator Brightspark Inc. He co-founded the technology in Israel and brought it to Toronto on his return to Canada.

Mr. Skapinker owns about 6.4% of Servicesoft, according to the company's latest prospectus, valuing his stake at about $61-million. He was not available for comment.

Other investors include venture capital firm Sofinov, a subsidiary of the Caisse de dépôt et placement du Québec, with a 9.8% stake. J.L. Albright Venture Partners, a Toronto-based venture capital firm, invested $6.2-million in three funding rounds starting in 1998. Today, that stake is worth about $38-million.

The deal comes on the heels of a string of acquisitions of Canadian startups by U.S. companies. Earlier this month, network systems giant Cisco Systems Inc. purchased Waterloo, Ont.-based PixStream Inc. for $545-million.

On the same day, Quack.com, a company started by Canadians that provides Internet access over the telephone, was snapped up by America Online Inc. in a deal worth $300-million. In August, Vancouver-based Abatis Systems Corp. was purchased by U.S.-based Redback Networks Inc. for about $845-million. Both deals pooled in large gains for the participating Canadian VCs, not to mention the entrepreneurs behind the various firms who as a result of the transaction became instant millionaires.

Servicesoft has not turned a profit since its inception and had an accumulated deficit of approximately US$90-million, according to public documents.

Servicesoft was also in line to conduct an initial public offering in the spring but the company delayed trading its shares due to the uncertainty of the markets.

"Servicesoft is the best product on the market today and that's what [Broadbase] is paying for, and the culmination of our product with theirs is very significant," said Gary Rubinoff, a principal of J.L. Albright Venture Partners.

Servicesoft, which provides software that combines e-mail management with self-help options, started in Toronto but later moved its head offices to Boston. It now employs about 300 people.

Broadbase is a maker of analytic and marketing software based in Menlo Park, Calif. The company said the deal will allow it to provide a closed-loop platform for customer interactions across all touch points, including sales, marketing and service.

Under terms of the agreement, Broadbase will issue in exchange for all securities of Servicesoft, a combination of about 35.1 million shares of its common stock and options and warrants to purchase its common stock, representing about 36.5% of the combined company on a fully diluted basis. The acquisition is subject to shareholder and regulatory approvals.