Founder, Imdad Capital Ltd.
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Was so busy last week and meant to post about two launches to watch out for.
The first is Garlik being launched by Tom Illube and Mike Harris, my ex-colleagues from Egg days and the second is Brightcove. I am a big fan of Tom's and well this is his third start-up and I think as like his last two - he will do exceedingly well.
What is Garlik? Garlik will help you to fend off personal-data vampires. It simply allows you to control the information that is out there about you. In three words - I LOVE IT! Also, Tom is just a fantastic guy, extremely down-to earth and I'd like to see him bat another home run.
Friday interview: ex-Egg man Tom Ilube on how garlik will fend off the personal-data vampires, source: Tech Digest
Personal information can be a touchy subject. Who's holding data on you, and what do they know? What are they using it for? Should you do something about it, and if so what? These are increasingly common questions, but getting the answers can take more time, effort or expertise than many of us have to spare. A new company that's looking to change that is garlik, which is a startup run by several of the founders of internet bank Egg. It's beta testing a service that claims to help "discover and manage what's out there in the digital world about you and your family", but what does this mean, and how will it work? I talked to garlik CEO Tom Ilube to find out. garlik began when Ilube and Egg co-founder Mike Harris got together last year to figure out what to do next. The research process apparently included spending six months picking the brains of computer-science experts at universities around the UK - which sounds like marvellous fun - before settling on The Big Idea.
"It had to be a consumer play, and something of real scale, or at least intention to achieve real scale," says Ilube. "Essentially something that would shape or change the industry it's in. And the rate of take-up of broadband caught our attention. It's gone way beyond the early adopters now, to people like my mum, my uncle, the lady in the office..." The pair latched onto the fact that there was now a large group of mainstream consumers who were becoming much more active web users - not in terms of blogging, using Skype or hanging out on MySpace - but more activities like online shopping and internet banking. The pair also noticed that a lot of tech startups were ignoring these users in favour of the MySpace people and bloggers. So, there are lots of non-geeks with broadband. How do you turn that into a business? Ilube and Harris spent last summer running focus groups to find out what these users care about. According to Ilube, personal information was high on the list. "It's not the first thing they mention, and if you ask them what they think of identity management, you'll get blank faces," he says. "But before you know it, they're talking about their information online: what happens if someone gets their credit card details or steals their passwords. And if you tell them that their home address is available for everyone to see on the Internet, they'll fall off their chairs in outrage!"
In many cases, it's a negative thing - people are worried about these issues. However, Ilube says a lot of people were also aware of the benefits of having selected personal information available online, particularly when it comes to their jobs. "We decided to create a large-scale consumer-facing company that will help people understand what's out there about them and how to manage it," says Ilube. Initially, this will boil down to a service that rounds up all the publicly-accessible data on a person, including their credit file, but also the records kept by private companies. "The data protection laws are quite powerful," says Ilube. "I have the right to ask any company in the UK what information it has on me, and if they don't respond within 40 days, I can take them to the Information Commissioner."
It sounds like garlik will be doing this on consumers' behalf, which could pose a big problem for many companies who, despite the legislation, aren't set up to deal with lots of these 'subject access requests'. Ilube says that many companies deal with these requests on a case by case process. Surely that means that if garlik takes off, it could paralyse Corporate Britain in a matter of days?! "It's certainly true that in many cases, if just 10% of someone's customers made a request I don't know what they'd do!" he says. "We're starting to talk to companies about this, telling them that consumers are likely to start making more of these requests, and that we'll be encouraging it. We don't want to cause companies a huge problem, we just want consumers to be able to exercise their rights."
Ilube says that garlik isn't intending to try and be a campaign group, pointing out that existing organisations like Privacy International are doing that job well. However, garlik will take a firm stance in terms of being "on the side" of consumers rather than companies, which he says is a commercial rather than a moral decision. "We can't give consumers 100% power, but they will be more aware of what's out there on the net and in publicly available sources, and working through us we'll exercise their rights to get things changed, hidden or enhanced. If we're able to do it, we will. If we're not, we'll tell people why not." Isn't this a bit scaremongering though, trying to sell people a service by frightening them with tales of identity theft and nefarious corporations tracking their every move? Ilube insists not, although he has stern words for the insurance companies who've been hawking identity theft policies on this basis. So why is garlik any different? "It's difficult to sell a service to people who you've just scared the hell out of," he says. "We need to convince people that if the digital world is part of their life, then looking after their personal information is as natural as looking after their money or their health. Your personal information is an important asset, so you ought to be aware of that asset, look after it, and maybe even leverage it to your advantage."
When garlik launches in October, it'll be with a single easy-to-grasp product, much in the same way Egg started with a simple online savings account, and later diversified. My bet's on some kind of 'Get a file on what data x, y and z companies are holding on you' service, although Ilube says garlik is still researching 4-5 ideas with its beta testers - you can still sign up here to take part. But how big could this service really be? Are there enough people who care enough about these issues that they're willing to pay for whatever service garlik does launch? "We think there's 4-5 million people in the UK for whom this is a significant and growing concern," says Ilube. "If you have the right proposition so that 10-30% of them will buy it, that gets to you to a business with between 0.5 and two million consumers. In the UK, that's an interesting business, and more so if you can roll it out to other countries like the US."
I wonder if big businesses will try to get involved too. After all, if you're a huge supermarket chain with a database of information on consumers, wouldn't you want to work with someone like garlik to check that you've got accurate information on people, and change it if not? "If our consumer asks us to take action to correct some data, we'd support that," says Ilube. "But if a company says to us 'Look, can you help us tidy up our database?', we'd say that's nothing to do with us. We don't work for companies, we work for the consumer. We've taken a very specific and clear position, even if it does cut off some commercial opportunities."However, he's sure other companies will come along who will, forming part of what Ilube calls "an evolving ecology of personal information". Come October, we'll get the first glimpse of how garlik will fit into this new world, and how many consumers are interested.
By Aline van Duyn and Joshua Chaffin in New York, Finnacial Times
Published: October 29 2006 21:13 | Last updated: October 29 2006 21:13
Brightcove, an online video company, will on Monday launch an ambitious effort to become a main competitor in the emerging market for internet video that Google is also seeking to dominate.
Aiming at professional content-makers rather than the amateur videos favoured by sites such as YouTube, Brightcove will launch a service that allows users to start online television channels. Advertising revenues will be split evenly between Brightcove and the content-makers.
Back to business...basically, it seems that generation X and even the baby-boomers are heavy users of the internet, are comfortable with technology and visiting sites such as YouTube which seem to have a "youthful" appeal, and are not at all reluctant to lie about their age. Am I surprised by anything in this article? No. Your only as young as you feel, and as with hopefully healthier living, diets, improved incomes, and more socio-economic freedom; we are all younger at heart.
What does this mean for Web 2.0 and the future? I think its great news...it increases the cross-spectrum of users of most online services and solutions which can only mean that over time business models will mature and revenue streams will improve...which makes for a healthier bottom line. News that should make everyone who plays in this space, a happy camper for the time being.
Those wrinkles aren't from squinting
YouTube, MySpace, computer gaming -- a big chunk of users approach middle age
All told, the digital revolution illustrates a theory heretofore popularized only by pudgy, balding men in too-tight pants:
Forty is the new 30, baby. Everyone is online
Analysts say new media is bringing the generations closer because age is less relevant online. Ask the generation of lonelyhearts who have lied about their age on Match.com. "It's not about age or gender, it's about how fast your broadband connection is," said Erin Hunter, executive vice president of comScore's Media and Entertainment Group. Today's 41-year-old gamer isn't intimidated by technology; he grew up playing Pong. A 42-year-old woman feels comfortable on MySpace; then again, she grew up shopping online. A 64-year-old passes around salacious video he found on MySpace because the application is so easy to use. Plus, the 35-plus generation has the cash to afford the technology.
"This all speaks to the evolution of where new media is at now," said Heather Dougherty, a senior analyst with Nielsen NetRatings. "The audience for it is comfortable doing a lot of things online, and they're comfortable with the technology. "A 40-year-old probably has more in common with a younger person these days than may have been the case a while ago. They're adapting to the new media a lot quicker than other generations did."
In the gaming world, many fortysomethings have evolved into what the industry calls "casual gamers," someone who plays for 30 minutes a time, as opposed to the hours a younger person spends in front of a screen. "Most casual gamers are someone who is very busy, who uses games as a quick diversion, a way to take a casual break," said Shannon Loftis, an executive producer with Microsoft Game Studios Publishing. Loftis isn't surprised that half of casual gamers are women. When the 41-year-old Seattle resident meets with her mothers group - a mix of working moms and stay-at-home parents -- they bond over the brain-teasing games they enjoy. While casual gamers tend to be older and hard-cores skew younger, there is a lot of crossover, Loftis said. "The age categories are quite broad."
Age isn't the barrier in the social networking world that it is in the real world, said Sonja Baumer, a researcher at the UC Berkeley's Digital Youth Project. "People tend to affliliate on the basis of their interests and preferences and attitudes," said Baumer, whose research focuses on YouTube. However, she cautioned not to draw too many conclusions from the ages YouTube users give on the site. "There are some serious methodological problems in studying the age of YouTube audience," Baumer said. "People often fake their age there." Another caution on using age-related data, from Debra Aho Williamson, an analyst for eMarketer: While more fortysomethings may be venturing into new media, they are not spending as much time there as the young crowd. The Nielsen NetMedia study did not delineate screen time by age category. "A parent may be looking at these social networking sites once or twice to see what their children are doing, but we don't know if they're there all the time," Williamson said. She cited an Advertising Age story that said teens spent 44 percent more time online than adults; she noted, however, that the magazine did not cite the source of those statistics. Eighteen-year-old Shannon Williams spends about an hour a day on MySpace and 30 minutes on Facebook. There, she has noticed a lot more "old people" on social networks lately. Including, yuck, her uncle.
Limits to interaction
"I thought MySpace was for the younger crowd," said Williams, a San Francisco resident who didn't mind that older folks had gravitated there. "It's OK. It's just kind of creepy when there's someone, like, your dad's age there. "I mean, if there's a woman there on MySpace who likes Hello Kitty, and I like Hello Kitty, we can talk about that," she said. "But I'm not going to say, 'OK, let's go do something together.' " A sure sign that Generation Xers and young Baby Boomers are gravitating to new media: Politicians and marketers are following them, looking to mine the digital world for votes and gold. Thousands of politicians have posted MySpace pages -- from California gubernatorial hopeful Phil Angelides to local town council candidates. Social networking sites are projected to get $280 million in ad dollars from political and apolitical sources, according to eMarketer, and $385 million for video-sharing sites like YouTube. While that's a sliver of the $16.7 billion of overall online advertising expected to be sold this year, eMarketer's Williamson projects social networking advertising to increase to 6.3 percent, or $1.8 billion, in 2010. Aiding the demographic shift to new media are traditional media companies like NBC, which is co-opting YouTube and other sites to market its TV shows. When CNN mentions the latest hot YouTube.com video on its newscasts, analysts say, an old media audience checks out the new media site. At National Public Radio, where 5.5 million podcasts are downloaded a month, 54 percent of its podcast audience is under 34 years old, according to podcasters who answered an NPR survey. But only 25 percent of NPR's radio audience is 18-34. "Last year, podcasting was for the hobbyists and the lunatic fringe," said Elisabeth McLaury Lewin, publisher of PodcastingNews.com. "This year the suits are involved. They smell money, and they want to get involved."
How long will it be cool?
Yet there's nothing like having "old" people get into something new and cool to suck the hipness out of it. As San Francisco advertiser D.J. O'Neill said, "As the saying goes, you can sell an old man a young man's car, but you can't sell a young man an old man's car." O'Neill points to his 64-year-old dad. Before the online boom, O'Neill said, his father would mail photocopied bad jokes and racy cartoons to friends. "The other day," O'Neill said, "he sent me a video link from YouTube." Analysts believe that while there will always be young people in search of the next hot tech thing, so far they're not abandoning new media sites just because their parents have found them. Like many young social networkers, 17-year-old Joseph Tomsovic, keeps his online explorations private, so people have to know his e-mail address to contact him. "It would feel weird, you know, to be friends with someone who is 40 or 50," said Tomsovic, who lives in Daly City. "I wouldn't do that in real life, so why would I do it online?"
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The debate about the state of venture capital continues. Its become more pronounced since Sevin Rosen announced it was aborting its tenth fund. Find below two articles one making the case for a VC Shakeout and a second article more positive article comprised of interviews from the leading venture capitalists from Israel which have a very significant and strong venture community. I have pasted at the bottom of the page a link to the New York Times' article "A Kink in Venture Capital's Gold Chain".
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“Innovation has not disappeared, nor will venture capital”
Local venture capital funds are well aware of this and have been trying to come up with the formula that will keep venture capital alive and kicking. More than anything else, they hope that this is a passing phase. The venture capital industry in the US and its affiliates in Middle East was known as a successful one that would deliver double digit returns for investors. During the bubble years the returns even reached triple digit figures, but since then they have fallen to an average threefold, a return that investors can also get on investment in bonds and at much lower risk.
Eventually there will be balance
Is the venture capital sector about to become history? It depends who you ask. Pitango Venture Capital managing general partner and co-founder Nechemia (Chemi) Peres, Vertex Venture Capital founder, managing partner and Israel Venture Association (IVA) chairman Yoram Oron, BRM Capital managing director Menashe Ezra, whose fund, BRM was one of those who completed a home run this year (a 20 fold yield on Passave, which returned one third of the $150 million fund), all feel that the venture capital sector is not nearing its end, and that this is difficult period, a reaction to the bubble. Chemi Peres says that at Pitango too, they have been asking themselves the tough question - does the venture capital model work? “My answer is that it does. I do not believe that we can predict what will happen in the long-term future, but I do believe that venture capital is the only answer for innovation and entrepreneurship. I cannot see how new innovative technology companies will manage to function otherwise. There will be a place for venture capital as long as we have innovation and entrepreneurship.”
In theory, this sounds great, but venture capital funds have to return money to investors with fat multiples, and this has not been happening in recent years.
Peres: “True, reaching an exit is difficult. At one time, the main goal for start-ups and investors was an IPO on Nasdaq. This is difficult to achieve today for a number of reasons: the requirement for high profitability and growth rates which young companies have difficulty reaching, and the stringent regulatory requirements of the Sarbanes Oxley rules. All these have made it difficult for companies to make an IPO. I believe that we have reached a situation that is the exact opposite of the bubble period when you could float unstable companies which didn’t make any profit at all. Today we are experiencing unreasonable difficulties and I expect that this will eventually balance out in coming years.”
What about Sevin Rosen’s claim that too much money has flooded into the venture capital business and too many companies were being given financing in every conceivable sector?
“They have a point here. It’s true that too much money has flooded into the venture capital sector but I believe that this too will eventually balance out. The crisis in 2000 brought about a significant drop in the volume of investment. Since then they’ve all returned and there is now a tendency to continue investing while disregarding the exit factors.” Peres feels that not everything is black. He notes the successes of Skype, which was acquired a year ago for $4 billion by eBay Inc. (Nasdaq: EBAY), and You Tube, which was recently acquired by Google Inc. (Nasdaq: GOOG) for $1.6 billion. Additionally, the Israeli companies Passave and Saifun Semiconductors Ltd. (Nasdaq:SFUN), which floated on Nasdaq a year and a half ago, are also examples of companies that have performed well. “We should not forget Israeli companies that have become significant players, such as M-Systems Flash Disk Pioneers (Nasdaq: FLSH), Amdocs (NYSE: DOX), Mercury Interactive Corp. (Pink Sheets:MERQ.PK), and others; Israeli companies that have become really big. I believe the potential exists. "It should be understood that venture capital funds operate under an existing model but the process of delivering returns takes time and requires patience. I compare it to marathon runners. We get involved at a stage that requires funds to work efficiently, to finance the companies that can make a leap forward.”
That’s all well and good but what about the future?
“I see companies entering big global such as India, China, Brazil and Russia, all of which have a big market for technology products and have tremendous potential. True, competition is stiff, and perhaps some of the things that were simple once are not that easy any more. So funds will have to provide a response by supporting companies at the more advanced stages and not just the first ones. “I believe that the current level of exits will pass. In Israel the future is vital, we don’t have a local market so financing entrepreneurial companies is critical. Venture capital has not come to an end; there may some adjustments and changes but it will continue to operate. I see new companies in the fields of water, energy and nanotechnology. Innovation has not disappeared, nor will venture capital.” IVA Association chairman and Vertex managing partner Yoram Oron takes a similar view to Peres. “Looking it from the macro perspective, it has been proven that investments in venture capital deliver the highest profits over the long-term, compared with those in other fields: a 15-20% yield over 20 years, compared with 10% in stocks and 4-5% in bonds. Venture capital investors consider these alternatives, and the fact is that over the last three years, since the end of the international crisis (which, incidentally, was reflected to a much greater extent in stocks than in venture capital), more and more money has been flooding into venture capital.
Is the future secure?
Oron: “As far as venture capital is concerned, we are in a global market that is expanding continuously, with 5% growth in the West, and 10% in Asia. This means that demand for new technologies and their products is on the rise, and that there is a willingness to pay an extremely high premium on technological innovation. It is true that when it comes to venture capital investment in companies with high working capital or manufacturing companies, the profitability is borderline.”
What about IPOs on stock exchanges?
“It’s true that these investments have yielded a low return due to the small number of IPOs, as a result of the more stringent market regulation, but 9 out of 10 exits in the US last year were through acquisition deals in which the return on investment is very high. The return on these deals is exceptionally high because the buyers are technology companies which prefer, for financial and organizational reasons, to acquire an off-balance sheet R&D activity which will not be seen in the company’s financial statements, and which will not affect the organizational character of a mature, publicly-traded company. These companies are willing to pay five times the R&D costs of start-up companies, and this is very worthwhile for investors.”
Oron and Peres may well be trying to preserve the goose that laid golden eggs for them in the past, believing that it will continue to lay eggs for them in the future. In contrast to Oron and Peres’ funds, which have not had any rich exits recently, Menashe Ezra’s BRM has had a fantastic year. Passave delivered a 20-fold return-on investment for BRM, a success that enabled it to send generous checks to the fund’s investors.
Ezra has reason to believe that the future is promising and that the uproar caused by Sevin Rosen is unrepresentative. “The Sevin Rosen letter to investors is odd,” he says. “After 25 years of activity in the field, they decide that there is no model for venture capital. I would have expected that a serious team like them would have looked into this before they began raising capital and not after they already received commitments totaling $250 million. I am convinced that there is more than meets the eye here.
“As for the letter itself, some of the claims Sevin Rosen made in the letter are correct. It was very difficult to float companies on Nasdaq in 2005 and 2006 too, and mergers were done at multiples of 3. Before the IVA conference back in June, we conducted a study which examined the length of time it took companies to reach an exit from the time they were founded. The study found that the average time to an exit was 5-6 years; that is to say, investors who invest today in new companies, or a fund that commences activity in 2007, can expect exits in 2017. Who knows what will happen by then?
So you’re not concerned?
Ezra: “There’s no doubt that everyone is concerned at the abysmal number of exits today. I think that those who should be more worried than anyone else are the mezzanine funds, which invest in mature companies and expect a fat exit within a year. Twofold of threefold returns are not dramatic and they have a real problem. Israeli funds, however, focus primarily on early-stage investment, and I cannot predict what will happen in the coming years. Economics is cyclical.
"For some reason, investors invest when things are good and get depressed when there’s a crisis. It should be the other way round. We invested in Passave at the lowest point of the depression in 2002. No one wanted to invest, the companies’ values were low, as were the amounts of capital that were raised. It turns out that these were the good years. A professional investor knows that you invest when prices are low, and not when they are rising. To sum up, I’m optimistic.”
Is there any real basis for this optimism?
“It’s true that the industry is undergoing significant change. I think that we will find the right balance over time. Israel has a young industry that is undergoing substantial change. In the US, the industry is older and there are funds that have clearly delivered results, and those whose returns are not all that good. Venture capital investors are professionals and they look at the returns in relation to the alternatives on the public market over time.
"The venture capital market is affected by the public market. It is impossible to make a successful IPO today, and so investors in companies agree to acquisition offers that are not at the levels they might wish for. However, we need to remember that this is a long-term business, and that venture capital takes a long-term perspective, and I have not noticed any dramatic development that should make investors change their positions. This is a tough period, and it has happened before. We should not be influenced by seasonal changes. Either way, I don’t invest in companies that have a valuation which I believe will deliver less than a threefold return on the money.”
Published by Globes [online], Israel business news - www.globes.co.il - on October 23, 2006
http://select.nytimes.com/gst/abstract.html?res=F60D17F839540C748CDDA90994DE404482
So what is the most important factor for success on the internet? The answer is pretty well known its the consumer. However, its also about a consumer who now creates his//her own content and pushes/pulls all on his own. I found this panel discussion interesting enough to post here...its well worth the two minutes to read.
Panel: New Media Growth Fickle, Source: The Hollywood Reporter, Oct 25, 2006
Put it up and watch what happens -- that's the mantra of executives at leading Internet news and video sites as they try to keep tabs on how content is evolving in the era of YouTube and MySpace, according to a panel featuring Internet and creative executives Tuesday at the Digital Hollywood conference in Santa Monica. "Since you can't predict it, you sort of have to just let it get out there," said Alan Citron, general manager of TMZ.com, about his surprise at what generated response from the online audience. "There's a huge appetite for this stuff," he added, referring to the celebrity-driven news that TMZ features. "People want to see people as they actually are in public. This stuff bounces around the Internet like a boomerang," Citron said.
Citron also said that any content has value on the Web as long as it is interesting. Joe Michaels, director business development at MSN Entertainment, emphasized the interactive nature of content in the digital realm and the prevalence of multitasking behavior during the panel, held as part of the conference at Loews Santa Monica Hotel, which runs through Thursday. "We want to enable users to share their content and draw on community aspects of technology," Michaels said, comparing the scale that Internet leaders like MSN bring to content distribution to the traditional networks.
For Albie Hecht, founder and CEO of Worldwide Biggies Inc., it's that same multitasking behavior of the younger generation on which he plans to capitalize. "Kids now are watching TV, listening to music, talking on the phone and IM-ing," Hecht said. "For me, it's an opportunity to create an entertainment experience that really captures that."
Jordan Hoffner, Google Video's head of news and premium content partnerships, raised the question of digital rights and how digital content creators should be compensated for exhibition of their work. Shawn Gold, chief marketing officer and head of marketing and content at MySpace, said that sites like MySpace are operating in a world where everyone has the rights to content. "How people use content on the Web is really changing," Gold said. "MySpace users are taking content and really selling it to each other through their own MySpace pages." It's that user-created content aspect that John Penney, HBO's senior vp new media business planning, said was most revolutionary. "To take a look at the creative work without a studio is very exciting," Penney said, "to see what changes in the actual creative process when people are using these new technological tools."
Jordan Levin, co-founder of Generate and former CEO of WB Network, summed up the discussion's main points by stating that content can no longer be separated between different media platforms. "Content no longer is 'just' a network show," Levin said. "There are avenues and platforms to which organic extensions will work." He also said that no matter how creative content is now consumed, mainstream ideas that once filled the broadcast model are no longer prevalent. "The diversity of voices is a pretty radical change," Levin said. "Taking risk with new content is emerging in a big way."
Amazon
Also in the news, Amazon.com has produced a set of quarterly earnings that Wall Street could cheer again on Tuesday, following a string of disappointments that have added to doubts about the long-term potential of its fundamental business model. Despite the better news, however, the latest figures continued to show evidence of the profit margin erosion that has bedevilled the company over the past year, as it has cut prices and spent more on shipping and technology to maintain sales growth. Neither of these two trends bode well for future revenue growth, as the business model itself needs to be reviewed and resurrected. Source: Financial Times
Jack Welch - you gotta love the guy!
Jack Welch, the retired General Electric chief executive, is exploring a bid for the Boston Globe in an effort to return the newspaper to local ownership. Mr Welch, one of the most celebrated managers in corporate history, has teamed with Jack Connors, a Boston advertising executive, to try to assemble a larger coalition to pry the struggling paper away from its owner, the New York Times Company. Source: Financial Times
I thought people might find it notable to see the number of VC deals that have been completed this week, so please see below. I have decided to begin to keep a tally on a weekly basis commencing now, as this might be a good indicator of the industry segment heating up.
Private-Label Portal Creator Synacor Raises $17 Million, a provider of online content delivery services, announced on Tuesday that it has raised $17 million in its third round of venture capital financing. North Atlantic Capital led the investment round; Mitsui Technology Investment Group, Crystal Ventures, Advantage Capital Partners, Walden International, Intel Capital and Rand Capital SBIC also participated. New York-based Synacor services allow ISPs, cable TV providers and other companies to offer private-label portals featuring premium media content. Customers include EarthLink, Charter, Cox and RCN. The company will use the funds to accelerate the delivery of new products and expand into global markets. http://www.synacor.com
Comcast, Turner Back User-Created Ad Platform Developer ViTrue, the developer of a user-created advertising platform, announced on Tuesday that it has secured a round of strategic funding from Comcast Interactive Capital and Turner Broadcasting. The amount of the investment was not provided. Previous investors included General Catalyst Partners and ViTrue's founder and CEO, Reggie Bradford. The Atlanta-based company's system provides tools for consumers to create, produce and upload video advertisements, as well as the infrastructure to help companies align the content with their marketing campaigns.
http://www.vitrue.com/press/index.html?id=17
Tablus, a San Mateo, Calif.-based content protection service provider, raised $16 million in Series B funding from Trident Capital and Menlo Ventures. Trident Capital's Peter Meekin will join the company's board of directors. www.tablus.com
Skyrider, a Mountain View, Calif.-based peer-to-peer networking platform provider, raised $12 million in Series C funding. ComVentures led the round, which included previous investors Sequoia Capital and Charles River Venture Partners. The company has raised a total of $20 million. www.skyrider.com
GetWellNetwork, a Bethesda, Md.-based provider of software, hardware and other services to aid healthcare providers care for patients, closed a $9 million Series B round of funding. Valhalla Partners led the round, which included previous investors The Grosvenor Funds, Point Judith Capital, Long River Ventures, Village Ventures and Tall Oaks Capital. www.getwellnetwork.com
DeviceVM, a San Jose, Calif.-based software developer that uses virtualization technology, raised more than $10 million from Storm Ventures, DFJ DragonFund China, Tim Draper, AsusTek Computer, iD Innovation, Harbinger Ventures and strategic and angel investors. www.devicevm.com
NewStep Networks, a Toronto-based provider of fixed-mobile convergence services, raised $7 million in Series B funding from existing investors, including VenGrowth Private Equity Partners. www.newstep.com
Edgeio, a Menlo Park, Calif.-based online classified ad service developer, has raised $5 million in a first round of funding led by Intel Capital and including Transcosmos, according to VentureBeat.
Zebra Imaging, an Austin, Texas-based display technology product developer, raised $5.9 million in Series C funding. Voyager Capital led the round, which includes Nuevo Private Equities and SAIC Venture Capital. The company will use the funding for product development and business expansion. www.zebraimaging.com
Neocase, a San Francisco-based provider of customer service software, raised $6.5 million in its second round of venture funding. Iris Capital led the round, which included Caisse des Depots et Consignations (CDC) and Supporter Group. The company will use the new capital to expand internationally. www.neocasesoftware.com
SupportSpace, a Herzliya, Israel-based tech support provider, raised $4.25 million in Series A funding from BRM Capital and Gemini Israel Funds. The company will use the funding to develop its online tech support services and establish operations in the U.S. www.supportspace.com
Source: PE Weekwire, Digital Wire, RedHerring and others.
By Richard Waters in San Francisco, Financial Times
Google will on Tuesday launch a customisable search engine that users can carry on their own blogs and other websites, a move that potentially opens up a big new market for its search listings and related advertising.
Marissa Mayer, vice-president of search products and user experience, said it was the most significant launch that Google would announce in the final months of this year. By letting companies and individuals build their own specialised search engines, it will also create competition for the many new “vertical” search products that have recently been launched on the web, she added. These sites, which deal with narrow areas of interest from job vacancies to information technology, have become one of the industry’s big new growth areas.
Users of Google Custom Search Engine will be able to select the websites they want to be included in their searches, and add to this list in future by “tagging” websites they visit. Any searches will then return results just from that slice of the Google search index. Google also said it had created an easy way for users to “paste” a search box for the personalised engine on to their own webpages, so that visitors can carry out searches using their preferred parameters. Results to those searches will also carry context-relevant advertising from Google’s AdSense network.
Any revenue from the advertising will be shared with website owners on the same terms that Google offers to existing publishers that carry its search results, executives said.
The ideas behind Google’s personalised search engine echo experiments tried by some other “Web 2.0” companies. Rollyo (short for Roll Your Own Search Engine) offers a similar service.
Google shares set a fresh lifetime high of $480.78 on Monday that followed last week’s report of surging financial growth and Wall Street’s upgrades on the stock, Reuters reports.
Shares jumped 4.6 per cent to close at $480.78 on Nasdaq, surpassing an intraday trading high of $475.11 set on January 11 2006. The stock fell to lows around $330 in March.
Copyright The Financial Times Limited 2006
By Kevin Allison in San Francisco
Published: October 22 2006 19:03 | Last updated: October 22 2006 19:03
Yahoo, the internet portal, is facing investor scepticism over its ability to regain its footing in an online advertising market being changed by Google and social media rivals such as MySpace and Facebook. Terry Semel, Yahoo’s chief executive, last week pledged to “get back to basics” in an attempt to get the company back on track. Investors appear to be questioning how well Mr Semel and his team can execute on their plan to regain lost ground in search and expand the company’s footprint in graphical advertising and social media. “The market is saying this management team can’t hack these new challenges,” said Mark Mahaney, an analyst at Citigroup. “It’s possible, and the evidence seems to be mounting that this is the case, but I’m not willing to throw them out yet.”
Yahoo’s shares have fallen more than 45 per cent, while Google’s shares have slipped 2.5 per cent, from peaks in January. Analysts say two big problems lay behind the company’s weak third-quarter performance. First, Yahoo had fallen behind rivals in its ability to make money from internet search. Meanwhile, Yahoo had begun to lose new users – and new advertising dollars – to fast-growing social networking sites such as MySpace, Facebook and YouTube. Although Yahoo announced last week that it had launched the first phase of “Project Panama” – a new search technology designed to improve the revenue Yahoo generates from search queries, the company is not expected to see any financial benefit from it until the middle of next year. “Google’s superiority [search monetisation] allows it to invest hundreds of millions more than Yahoo in infrastructure and R&D,” said Henry Blodget, an analyst at Cherry Hill Research.
Yahoo took the early lead in social networking last year with the acquisition of Flickr, a popular photo-sharing site. In May, Yahoo said Flickr and its other social sites would form the basis of a new search strategy. Since then, however, Yahoo’s efforts have been overshadowed by a number of high-profile deals by rivals, including Google’s $900m search advertising deal with MySpace in August and the $1.65bn acquisition of YouTube this month. Microsoft also joined the fray by inking an advertising deal with Facebook.
Although Yahoo and Facebook have been reported to be in buy-out talks, Yahoo executives say the company does not feel under pressure to do a big social media deal. Bradley Horowitz, Yahoo’s vice-president of product strategy, said the company has the ability to grow its audience by driving new users to its existing social sites. “When we look at what we need to acquire, we look at what we have in our pocket.”
Copyright The Financial Times Limited 2006
Q3 2006 VC - US activity seems to suggest that venture is back...the key question for us now is - where are we in the cycle...near top, peak etc. I think we have another solid year and a half before things start looking bleak. But, am conscience that one should never claim to be able to forecast into the future, as one always gets it wrong. So, am going to admit to the above being a 100% guess.
For the third quarter in a row, U.S. venture capital investing outpaced last year's activity, with $6.36 billion directed to 611 deals in the third quarter, according to a report Monday from Dow Jones VentureOne and Ernst & Young LLP. The overall deal count increased 2 percent from the third quarter of 2005, but the capital invested was 5 percent higher than a year ago, the report says. After the first three quarters, year-to-date investment has reached $19.45 billion in 1,851 deals. "This is the first time since 2001 that we have seen three consecutive quarters in which investments exceeded $6 billion. For the nine months ended September 30, capital investment is up 10 percent from where it was a year ago and deal flow is tracking 5 percent ahead of 2005 levels," says Joseph Muscat, Americas director of the Ernst & Young Venture Capital Advisory Group. "Factors contributing to this trend include an improved liquidity environment based on the robust merger and acquisition market and the positive reaction of the capital markets to recent technology IPOs,” he says. “We also continue to see venture capital investors focusing on emerging sectors like alternative energy, which saw deal flow more than triple from a year ago, and the Internet-dominated information services segment -- home to many of the Web 2.0 companies -- which saw 41 percent more deals than in the third quarter of 2005."
Increased early stage financings are another positive sign for the market, likely driven by the more than $35 billion in new funds raised over the past 18 months, the report says. In the third quarter, 38 percent of all venture capital rounds went to seed- and first-round deals, the highest allocation percentage this year. In fact, this was the first quarter of this year that more seed and first round deals were completed than later round deals. In addition, the $1.49 billion invested in early stage financings was the most capital invested to these rounds in a single quarter this year and was 13 percent higher than similar round investments last year. "It's a positive sign for the future of the venture capital market to see a solid pipeline of early stage investment, although this activity is stronger in healthcare, where 44 percent of the rounds were early stage, than in the information technology segment, where only 32 percent of the rounds were early stage," says Steve Harmston, director of global research at VentureOne. "These early stage financings are particularly taking off in some key segments such as biopharmaceuticals, where more than half the rounds are seed and first rounds, and medical devices, where 38 percent of them are concentrated in these round classes. “Also interesting is that in the aforementioned information services segment, some 61 percent of the deals in the third quarter were seed and first round deals,” he says. “The percentage allocation was even higher for the energy segment where 79 percent of the deals were early stage."
By industry, capital investment in healthcare companies increased 3 percent over the same quarter a year ago, reaching $2.05 billion in 159 rounds. The biopharmaceutical segment was the major focus, with 72 deals and $1.27 billion invested, an increase of seven deals and 9 percent more capital than last year. In addition, the median size of a biopharmaceutical deal was $14 million in the third quarter, the highest median on record. The median size of an overall healthcare deal was $7.5 million, down slightly from $8 million a year ago. The information technology (IT) industry also posted significant activity in key areas. Overall deal count was up by nine deals to 365 and investment increased 4 percent over a year ago to $3.56 billion. Within the category, investment in software companies rose 8 percent to $1.47 billion from a year ago, although 28 fewer software deals were completed. The information services segment posted 82 deals (a 41 percent increase in deal flow) although capital declined 9 percent. In communications, $861.6 million was invested, a 10 percent increase, plus there were six more communications deals completed. The largest deal of the quarter was an IT deal -- the $132 million later stage round in telecommunications semiconductor company Cortina Systems of Sunnyvale. The median size of an IT deal was $7 million, up from $6.6 million a year ago. Strong interest continued in the third quarter in alternative energy and energy conservation products. There were 14 deals in these segments and $110.2 million invested, about 2 1/2 times more than was invested here a year ago.
Source: Dow Jones VentureOne and Ernst & Young LLP and Central Valley Business Times - Stockton,CA,USA
We can all learn a few lessons from Mark Zuckerberg,Facebook's 22-year-old founder, or maybe not?!?
Facebook playing hard to get with Yahoo!
San Jose Mercury News
SAN JOSE, Calif. — While YouTube and Google got hitched after a quick flurry of negotiations, Facebook is going through a more agonizing courtship.
Search giant Google and online video upstart YouTube agreed recently to a $1.65 billion union after a week of talks. But Facebook, the popular social-networking site, is apparently nowhere close to an agreement with Yahoo!, despite monthslong talks and widespread anticipation about the pairing. Negotiations first stumbled when Yahoo!'s falling stock made it harder for the search giant and Facebook to agree on a price Yahoo! could afford, reportedly between $800 million and $1 billion.
But another obstacle, say people familiar with the situation, has been Mark Zuckerberg, Facebook's 22-year-old founder, chairman and chief executive, who has already rebuffed several suitors and isn't prepared to sell the Palo Alto, Calif.-based company unless some conditions are met, including price and control after a sale.
One of the most widely watched young entrepreneurs since Marc Andreessen co-founded Netscape Communications in 1994 at age 22, Zuckerberg exerts a remarkable amount of control over the company, which sources say is "fundamentally pretty far apart" from Yahoo! at this point. He is still Facebook's largest shareholder despite two rounds of venture capital, and is, according to associates, very much calling the shots. PayPal co-founder Peter Thiel, a Facebook board member and its first investor, said: "Mark is not focused on selling quickly. Some people get nervous about the boom and the bust and maybe the boom again; not him." "People like to characterize Mark as nonchalant," added Facebook's 36-year-old chief operating officer, Owen Van Natta. "I've never known him to be inaccessible." "He works very hard. Sometimes I have to step back from him and remind myself that he's not a 45-year-old."
However the Yahoo! talks turn out, Zuckerberg's trajectory is already reminiscent of another tech star.
Echoes of Gates
Like Bill Gates, Zuckerberg enjoyed a privileged upbringing and became interested in computers early on. Raised in Westchester County, N.Y., the son of a dentist and a psychologist, he began programming at 10. Later, at the elite prep school Phillips Exeter Academy, he began writing code, including a computer version of the board game Risk. His next step was Harvard, where he promptly transformed his dorm room into a start-p incubator, enlisting roommates Dustin Moskovitz and Chris Hughes to help. His first project allowed students to see who had enrolled in a given class; his second let them rate one another's class pictures on the Web. (School officials forced him to pull the site almost immediately.) The third was Facebook.
Campus sensation
What followed changed Zuckerberg's life. Facebook — an online directory of Harvard students that restricted anyone outside of the college from contacting users, and that let users be visible only to those they chose — became a sensation. Within weeks of its February 2004 launch, three-quarters of Harvard's undergraduates had signed up. By that fall, the site, launched at other campuses across the country, had 250,000 registered users. The experience is addictive, says Danny Shea, a senior at Princeton. "If you overhear someone talking about so-and-so, you look them up on Facebook. Before you know it, 15 minutes have passed." It didn't take long for Zuckerberg to drop out of Harvard (like Gates), move West with Moskovitz and, later, Hughes (now Facebook's chief technology officer and lead spokesman, respectively).
Fast-forward two years. Facebook, which has since opened its doors to high-school students, has $38 million in venture funding, 150 employees and a $200 million advertising deal with Microsoft. The company won't disclose revenues or profits, but sources say numerous media companies have come knocking, interested in Facebook's 9.5 million registered users.
Baptism by fire?
Recently, Facebook introduced a new feature that automatically distributed updates to members about the activities of their peers. Although the information had always been available on profile pages, users protested the move as an invasion of privacy. Within days, the company apologized and agreed to turn it off. Facebook's former president, Sean Parker, who had co-founded startups Napster and Plaxo, also quietly left the company this year, for undisclosed reasons. Said Van Natta of the split: "Sean continues to be a shareholder." "It's literally baptism by fire," said angel investor and Facebook shareholder Ron Conway of Zuckerberg's past two years. "You have to figure out who you are going to take your advice from because you can't take it from everybody," he said. If you listen to "the wrong ones, you're dead."
Charting the course
So far, Zuckerberg has managed to chart his own course. "Many people recognize Zuck for being a technology 'boy genius,' but I think what makes him more unique is his conviction," said Hadi Partovi, who first crossed paths with Zuckerberg in 2004. "I've seen Mark make unpopular decisions in hiring and firing and in product design, but he pushes for what he wants." Zuckerberg's convictions extend to treating his employees well. For example, despite Van Natta's protests, Zuckerberg pays a monthly stipend to employees who move to within a mile of Facebook's offices, where apartment rents are often high. Catered food is brought in offices daily. And in September, Zuckerberg rented a tent at Shoreline Amphitheatre, providing tickets and food to anyone wanting to see the Dave Matthews Band.
Whether Zuckerberg is able to hang on to Facebook's audience should the site sell to another company remains to be seen. So does how long he has a choice about selling. Facebook has acknowledged its hypergrowth has slowed, and high-school students haven't taken to the site as expected. The company also plans to open its doors to anyone with a valid e-mail address, which may turn off loyalists. Perhaps the biggest question, however, is whether Zuckerberg can work for someone else.
That Facebook still reads "A Mark Zuckerberg Production" on each of its pages hints at more than the founder's sense of humor.
Copyright © 2006 The Seattle Times Company
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