Archive of thenextweb.com
Written on 28th January 2009
0 COMMENTS 
Ernst-Jan Pfauth, editor in chief
As a startup in a problematic economy, we have been often asked, “Are you guys going to be around in 12 months?” It’s a reasonable question that usually comes from users who have come to depend on our software as part of their core reporting. I am pleased to provide some good news on that front today.
That’s how Keith McSpurren, president of CoveritLive, started an email to all CoveritLive members this afternoon.
“Good” is an understatement, as the liveblogging platform has raised $1.2 million investment. Flagstone Capital – their current investor – gives the service a financial injection so that CoveritLive can continue to develop their customer base and business model. McSpurren is “very grateful” and feels fortunate that he has the right kind of investors behind him.
I can only agreed with him. It’s good news that Flagstone Capital, despite the financial crises, decides to increase support in a rather successful start-up.
CoveritLive has welcomed another investor: Paul Kedrosky, angel investor, well-known CNBC analyst, and the editor of a popular financial blog, Infectious Greed. His goal? To bring a new technology to the traditional media.
Written on 20th January 2009
1 COMMENT
Mircea Goia, Next Web US Webtipr
Now, there are many bad news out there regarding this crappy economy (there are also some good news too: here and there).
This is another one on top of the bad news list and regards to “oil” which makes up part of the economies function (at least in US): venture capital.
National Venture Capital Association reports (according to Reuters) that in Q4 the fundraising dropped about 71% from the same period in 2007 (3.8 billion vs. 11.7 billion in Q4 2007) and a substantial decline comparing with Q3 2008.
For the whole year 2008 the funds raised were in amount of $28 billion comparing with the year prior ($35 billion).
The champions of venture capital funds in 2008 are Sequoia Capital ($929 million raised), Austin Ventures ($900 million raised), Essex Woodlands Health Ventures Fund ($892 million raised). There were 18 funds that raised worth $500 million or more.
There were only six IPO exits last year (the worst in 30 years), 260 M & A transactions (the worst in 5 years).
The largest IPO of 2008 was Rackspace Hosting ($187 million). All but one of 2008 IPOs are trading below their offering price.
The largest M & A transaction of the year 2008 was EqualLogic, Inc, a developer of storage area network solutions, which was purchased by Dell, for $1.4 billion in January (the largest of the Q4 was the purchaing of Bill Me Later, online payment solutions provider, by eBay – $945 million).
“The most significant impact of the US financial crisis on the venture capital industry has clearly taken place in the exit markets,” said Mark Heesen, president of the NVCA.
As it looks now, the trend could continue in 2009 also until the exit markets re-open and the pipeline is cleared. Let’s hope that pipeline is cleared sooner rather than later.
How are the things in Europe?
Written on 23rd December 2008
2 COMMENTS
Ernst-Jan Pfauth, editor in chief
It’s the most wonderful time of the year, especially when you’re a web professional. Not reindeers, but lists keep flying around your head. On The Next Web, we already presented the Five Favorite Apps – now it’s time to be more specific.
We have an international focus at this blog. When The Next Web launched on January 7th, we told you we wouldn’t limit our coverage just to the Valley. I think it’s safe to say we’ve kept that promise. Also when it comes to Russia. With the help of Yakov Sadchikov, we’ve covered almost every million euro deal, emerging trends, and cool start-ups coming from Europe’s largest Internet market.
Let’s celebrate that with a list of Russian start-ups that rocked the web in 2008. It’s compiled by Yakov, whose blog you should definitely check out. He’s the CEO of visual search engine Quintura and managed to get articles from his corporate blog on Techmeme, TechCrunch, and The Next Web on a monthly basis. How’s that for a successful blogger? Alright, here we go:
List by Yakov Sadchikov
- WomanJournal.ru, leading women-centric online site, raised €6 million from Ventech Capital, XAnge Capital and AGF Private Equity.
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KupiVIP.ru, online shopping club, raised several million dollars from Mangrove Capital Partners, ABRT Fund and Arlan.
- Tvigo (Tvigle.ru), online TV community and content production, raised $8 million from Moscow Venture Fund (Allianz Rosno Asset Management).
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EZtalk, mobile call-back service operator, raised $4 million from VTB Venture Fund.
- Mobile Direct, mobile internet advertising solution provider, raised several million dollars from Ru-Net II.
- MoySklad (LogneX), online inventory management solution provider, raised seed round from Ambient Sound Investments.
- MirTesen.ru, location-based social network, raised $5 million from Finam.
- JS-Kit, social application widget provider, raised $3.6 million from Altos Ventures and TEF3.
- EnterMedia, in-game advertising solution provider, raised first found from Mangrove Capital Partners and ABRT Fund.
- Evernote, provider of electronic note applications, raised $5 million from Troika Venture Fund.
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Written on 13th November 2008
3 COMMENTS
Boris Veldhuijzen van Zanten, Serial Internet Entrepreneur
I just received an email from Tom Batten (at London and Palo Alto based) DN Capital with some good news!
“DN Capital recently had the first close of its second fund GVC II and is actively seeking investments in European software and digital media companies requiring growth capital.”
In other words: we have money and want to give it to you. Tom is looking for profitable companies with quarterly revenues of at least €750k who are growing 30%+ pa.
That rules most of us out unfortunately.
If your company is doing well and you are seeking capital for growth, founder liquidity, or change of control, don’t hesitate to contact the kind people at DM Capital!
I wish I would get more of these emails!
Here are two examples of investments that highlight DN Capitals growth strategy:
Written on 29th October 2008
5 COMMENTS
Ernst-Jan Pfauth, editor in chief
In an upcoming Internet market like Russia, it pays of to choose for the infamous European copy-cat approach (once invented by the Samwer brothers, had Freundefeed as the absolute peak). Yakov from Quintura reports that a Russian Vente-privee.com rip-off has raised a multi-million dollars round of funding from Mangrove Capital Partners and ABRT Fund.
KupiVIP.ru copied the shopping club idea of Vente-privee.com, : which has proven to be a success in several European markets. According to Wikipedia, the French company has around 5.7 million members. Award-winning eCommerce man, Founder and CEO Jacques-Antoine Granjon, employs 750 people and probably welcomed 2007’s year report with a smile (€0.5 billion turnover).
“What’s this unique shopping concept?”, I hear you ask. For starters, it’s an invite only store. If you want to join Vente-privee.com and KupiVIP.ru, you’ll have to ask an existing member for an invite. As soon as you’re among the club of happy spenders, a world of designer brand sales opens up for you. From grand cru wines to a Hermes bag, you can get it for a bargain.
So yes, consider it to be a safe choice for Russian industrial investment group Arlan to bring this unique shopping concept to a country which has fallen in love with consuming. The first round of funding is just the beginning.
Written on 24th October 2008
0 COMMENTS
Mircea Goia, Next Web US Webtipr
The Israeli graphic processor startup company LucidLogix Technologies raised a third round financing valued at $18 million.
The round was led by Rho Ventures together with Genesis Partners and Giza Venture Capital (Intel Capital didn’t participate this time as they did the last time). The company has raised $35 million to date.
About LucidLogix
LucidLogix president and VP business development Offir Remez, CTO Dr. Reuven Bakalash, and 3D graphics technology expert Efi Fogel founded the company at technology incubator Maayan Ventures Ltd. George Haber (from Romanian origins) joined soon after as chairman.
George Haber is a well known tech entrepreneur in this field.
Do you remember CompCore (acquired by Zoran) and Gigapixel (acquired by 3Dfx)? Gigapixel, especially, was a company which revolutionized the 3D graphic processing technologies. That made 3Dfx (the company which started the 3D craze) to buy Gigapixel back in 2000 and incorporate into its products (the company was eventually bought by nVidia and then dismissed).
Now, with LucidLogix, he’s back with a vengeance. The company designed a new approach to boost the performance of a graphic chip by creating The HYDRA Engine.
In their words:
The HYDRA Engine by Lucid is a patented system-on-a-chip designed to boost graphics performance in any multi-GPU environment, from mainstream to the most complex. Placed between a PC’s chipset and GPUs, the HYDRA Engine smartly directs graphics processing traffic between the GPUs, using several intelligent parallelization algorithms.
The result? Lower costs, better graphics, more responsiveness, and more power and fun for you – even with the most complex 3D scenes, animations or car chases frenetically flashing across your screen. The HYDRA Engine is the first solution that “plays well with others.” Unlike other technologies, it is completely compatible with all gaming applications, chipsets and GPUs from any vendor, so you can develop a totally customizable PC solution.
Our goal is to make photorealistic graphics mainstream and affordable for everyone on graphics-enabled platforms, including PCs, notebooks and gaming consoles. Consumers and manufacturers can deploy the HYDRA Engine:
* On motherboards
* As an add-in board
Being just a casual intensive 3D gamer (not much free time) I can’t wait to see this technology implemented in future computers (it could help when you have 3D intensive applications also).
The chip is expected to be available in the first half of 2009.
Written on 13th October 2008
3 COMMENTS
Ayelet Noff, Next Web WebTipr Israel
During these times we are all somewhat paranoid about what the future will bring and whether we are entering a startup depression. In his newsletter dated September 27th, Jason Calacanis writes:
“It’s my belief that the economic downturn will be much worse than it is today, and that 50-80% of the venture-backed startups currently operating will shut down or go on life-support (i.e. 3-4 folks working on them) within the next 18 months.”
Jason gives startups a few pointers on how to survive the upcoming days and advises them to get focused, get leaner, and ultimately get profitable.
R.I.P Good Times
Om Malik had written last week that Sequoia held a meeting of all the entrepreneuers/CEOs of its portfolio companies and advised them to tighten their fiscal belts. Attendees were greeted with an image of a Grave Stone, with the following message: “R.I.P.: Good Times“.
According to The Marker, Other VCs such as Benchmark and Carmel Ventures in Israel have not only asked their portfolio companies to make budget cuts but have also taken their own advice and fired a few employees of their own.
So you may ask, is all this paranoia justified?
Some people in the industry think differently and much more optimistically about to the situation. Fred Wilson, of Union Square Ventures, an early stage venture capital fund in New York City, writes:
“But I do think Jason’s missing one important point in his email. It’s not the venture backed startups that are going to struggle the most…All startups are going to have to batten down the hatches, get leaner, and work to get profitable, but the venture backed startups are going to get more time to get through this process than those that are not venture backed. Here’s why.
Venture capital firms are largely flush with capital from sources that are mostly rock solid. If you look back at the last market downturn, most venture capital firms did not lose their funding sources (we did at Flatiron but that’s a different story). If you are an entrepreneur that is backed by a well established venture capital firm, or ideally a syndicate of well established venture capital firms, then you have investors who have the capacity to support your business for at least 3-5 years (for most companies).
Venture capital firms will get more conservative and they will urge their portfolio companies to do everything Jason suggests (and more), but they will also be there with additional capital infusions when and if the companies are making good progress toward a growing profitable business.”
Lack of IPO’s
According to VentureBeat, Mark Heesen, president of the National Venture Capital Association, believes there is an economic crisis in the lack of IPOs. but he doesn’t agree that so many start-ups are going to close. He believes there are still many angels who will continue to finance innovation among the seed-stage companies.
Mike Kwatinetz, founder and partner at Azure Capital Partners who invested in Bill Me Later during the post-bubble period and sold it recently to Ebay for $945 million, believes that this is exactly the time when investors should look for and target good business opportunities that they could profit from when the market revives.
He raises five good points:
- Since there’s less competition between the VCs, deals are priced more reasonably.
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Entrepreneurs have a better understanding of how much funds they really need in order to build their business and will stop asking for $40 million.
- The entrepreneurs who will stay in the game are those that really have a passion about building their company and not those adventurous entrepreneurs who come to Silicon Valley to make a few easy millions.
- There’s less competition between companies and there are less startups doing the same thing.
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One can hire a more skilled staff. Since the last bubble it’s been quite hard to find good people. Now this will change.
Flush out the doomed start-ups
So what do I think? In all honesty, nobody really knows what will happen as the startup world has never had to deal with such economic uncertainty in the past. However, it is my belief that the current situation will only do us good and allow those startups that have a unique offering to survive while flushing out those startups that were doomed to failure from the beginning. As Calacanis writes, companies now need to get better, more efficient, deliver more value, and use more cost-effective means to develop and promote their offerings. But this is not a bad thing. It just means that those entrepreneurs who really believe in their ideas need to find new ways to adapt to the current situation.
As Fred writes:
“I don’t think we are in a “depression” in startup land. We are in a down cycle driven by a bad global economy. I think the web and information technology is one of the few bright spots in an overall gloomy economic outlook. So if you are working on a web technology company, be happy that you aren’t working for a bank, a brokerage firm, an automobile company, or in many other industries. The tools and services that are made in the web technology business are only going to increase in demand over the next five years. But we are going to have to service that growing demand with leaner and more focused businesses and it’s time to start thinking more about profitability and how you are going to get there.”
Survival of the fittest
About a year and a half ago I wrote about the fact that we have too many startups offering us too many of the same things and that it may be time for Darwin’s survival of the fittest to take its place in the dotcom world. I mean, how many social networks do we really need?
As Stowe Boyd, writes:
“How many social bookmarking apps do we need? Is there really a place for seventeen social aggregators, or eleven blog comment plug-ins? Attention to hard numbers and real growth rates might lead hopeful entrepreneurs and investors to get smart fast and drop experiments that aren’t working, and to go back and dream something up that is really innovative instead of just-another-fill-in-the-blank application.”
Get funded one way or another
It’s time to get innovative people. It’s time to make changes. And if you’ve got a good, unique concept, I don’t think you need to be worried. You will get funded one way or another by VCs who still have plenty of dow or an angel who rather keep his money away from the Stock Market these days. Those companies that need to be worried are the ones that offer too much of the same and too little of the extraordinary. Sure, most startups will need to cut their budgets, but what doesn’t kill us, makes us stronger and the extraordinary will thrive. So stop getting depressed. Stop panicking. Depression and panic will lead us no where. Get inspired. This is your time to shine.
Written on 5th September 2008
2 COMMENTS
Ernst-Jan Pfauth, editor in chief
Quintura’s blog often features in stories all over the blogosphere (read about their secret here), but now their product, the visual search engine, will be the talk of the day. CEO Yakov Sadchikov has just mailed me that his company has received several million dollars in bridge funding from leading European early-stage venture capital investor Mangrove Capital Partners as a part of new financing round.
The funding will help to scale the site search platform and grow monthly audience of Quintura Site Search from its current 8 million to 50 million in 2009. That’s quite an ambition, but the search engine is doing a good job already. Quintura offers its services to men’s magazine Maxim as well as tech blog ReadWriteWeb (talking about a diverse group of customers). But further growth is needed anyhow. In order to achieve this, Russian-based Quintura has hired Dennis Szerszen as US-based Chief Marketing Officer.
When I interviewed Sadchikov a while ago, he told me he aims for his product to be the “iPhone of search“. The search results already look quite good, but it isn’t such a visual spectacle as the famous shiny object yet. Sadchikov will need more money for that, that’s why he will use Mangrove’s capital for bringing in new venture capital investors as well.
Written on 27th August 2008
1 COMMENT
Ernst-Jan Pfauth, editor in chief
A report by Dow Jones VentureSource has a pessimistic conclusion: venture capital firms have invested significantly less money in European start-ups during Q2 than during the same period last year – the amount declined with 35 percent, to $1.3 billion. They’ve invested in 167 young companies, which is 42 percent fewer than last year. This year’s Q2 was the worst since at least 2000, when VentureSource started tracking European data.
The worst sector of all? Information technology. I assume that concerns our beloved Internet industry as well. The British IT industry, former leader, had to take the hardest punch, venture investment declined with a stunning percentage of 49.
Ram Srinivasan, a venture partner with European firm Wellington Partners explained to The New York Times what’s causing the slowdown in funding: “Europeans are wary of investing in start-ups until the United States markets stabilize and economic and political uncertainty recedes”.
The US venture investment also declined, yet not as sensationally as in Europe. The investments fell with 19 percent.
Written on 2nd August 2008
3 COMMENTS
Boris Veldhuijzen van Zanten, Serial Internet Entrepreneur
There are several ways to get your start-up funded and one of them is the so called Triple F Fund. The 3 F’s stand for friends, family and of course: fools. The FFF fund is often overlooked as a viable option for getting funding. There are some drawbacks to getting money from these groups of people and one of them is getting everybody organized.
Now there is a service which plans to organize this unorganized group of individuals and make it easier for you to get your first round completed. As Cornelius Colin McNab, Founder of 40billion.com explains:
“We are addressing a $40 billion gap in funding for small businesses, and our goal is to help all those hardworking entrepreneurs that have good ideas but don’t have the money or resources to get started”
So, instead of focusing solely on professional VCs you might want to consider using 40billion.com to get started.
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