This Week in VC with Om Malik & Paul Jozefak

Posted on Jun 18, 2010 | 2 comments


To see the video of This Week in VC click on this link.

What a pleasure that I got to spend an hour talking with both Om Malik (whom I’ve always respected for his views) and Paul Jozefak, a venture capital partner at Neuhaus Partners in Germany (and formerly the head of Europe for SAP Ventures).  We spent the first 45 minutes or so talking about industry trends (in this order):

  1. The history and background of True Ventures, one of my favorite early-stage VC’s (and the one with whom Om is a venture partner)
  2. The strategy of GigaOm and where they differentiate in the market
  3. Venture Capital funds: the different between “closed funds” (which typically have a 10-year time horizon) and “evergreen funds” which re-invest profits back into the fund
  4. Are “strategic investors” (e.g. industry investors rather than VCs) a good idea for entrepreneurs.  Paul discussed his perspective having been at SAP Ventures.  His view: sometimes entrepreneurs expect too much value from the partner.  An investment doesn’t guarantee your product will suddenly be on the investor’s price sheet.  But he also says that it wasn’t a negative regarding M&A activities with competitors – this is sometimes seen as one of the pitfalls of strategic money.
  5. We discussed European VC, which is rumored to be down by up to 82%.  Paul talked about Neuhaus Partners, a 65 million Euro fund with the remit to invest in German-speaking countries. We talked about who the great firms in Europe are (Index, Accel) as well as the hottest seed investors: Robin & Saul Klein.
  6. We had a long discussion about Apple and in particular the OS4 release.  I made the point (not widely publicized) that OS4 is currently “breaking” many applications that use ad networks that are not Apples (most notably AdMob, owned by Google).  I sure hope that Apple is working with Google to make this work.  Releasing without making sure others are integrated and working would be in poor taste (but obviously legal).  We talked about the negative effect of Apple’s closed system attitude but how that will be a gift to the market because Apple’s cracking of the operator hegemony has forced the industry to innovate.  Thus we see lots of movement from Google, Verizon, HTC, Dell, HP and others.
  7. We talked about Facebook.  In particular we talked about how 3rd-party apps have a lot more access to your personal information than you think – especially if a friend of yours gives access to an app it can inadvertently give that app access to your details, too!  We also talked about how brands are increasing driving much of their traffic to Facebook and away from their own web pages.  This is astounding and myopic in my view.  But it’s a real phenomenon.  You can listen to Om, Paul & I debate the topic in the video.

We then went through the week’s VC deals:

DEAL OF THE WEEK:

Collecta

-Real-time search engine

-Search leverages selective filtering via XMPP versus site indexing; only real-time search player to do so

-Diverse search results include stream updates, blog posts, news articles, photos, videos (versus Twitter/FaceBook only)

-Competitors: OneRiotTopsyCrowdeyeTwitter Summize

-Founded in November 2008 by Jack Moffitt and Patrick Mahoney; CEO is Gerry Campbell (ex-AOL, ex-Reuters/OpenCalais)

Current round: $4.7mm extension to Series A ($4.7mm+previous $1.85mm=$6.55mm) Total raised: $6.55mm

Read more: PaidContent

OTHER DEALS:

1. Zynga

-Online social game network; make their own games (FarmVille, Mafia Wars, FrontierVille) in addition to allowing third-party developers to access network

-Self-reported 60mm daily unique as of Dec 2009, games played by 250mm people a month (AppData)

-Pincus said FrontierVille is most successful launch (1mm+ daily users in < 1 week)

-DST invested $180mm last fall

-Valued at $4bn in April according to filings (SAI)

-Reportedly, Softbank and Zynga have discussed jointly distributing games through Softbank’s mobile-phone service in Japan and other countries

-Competitors: Playdom, Social Gaming Network

-Founded in July 2007 by Mark Pincus, Michael Luxton, Eric Schiermeyer, Justin Waldron, Andrew Trader, and Steve Schoettler.

Current round: $150mm in Series D from Softbank. Total Raised: $366mm

Read more: TechCrunch

 

2. BeachMint

-Preliminary details:  Social e-commerce site, based around celebrity and influencer-curated recommendations

-Founded in April/May 2010 by Diego Berdakin (Ex-Slingshot Labs) and Josh Berman (Ex-Slingshot Labs, MySpace Co-founder) in Santa Monica, CA

-Network of vertical focused sites: BeachMint, WineMint, etc.; first vertical to launch by 2010 Holiday Season

-Potential competitors: Gilt Groupe, ShoeDazzle

Current round: $5.0mm in Series A by NEA and Anthem Venture Partners.  Total raised: $5.0mm

Read more: TechCrunch

3. TRUSTe

-Online service offering privacy certification for web sites

-TRUSTe claims that 82% of all users recognize the meaning of a TRUSTe seal on a web site, resulting in increased conversion rates, order values and engagement

-Maintains a “Trusted Directory” of TRUSTe certified companies

-TRUSTe serves consumer end-users, small-to-medium sized businesses and large enterprises

-Similar service to Verisign for SSL certificates and e-commerce transactions and McAfee SECURE (HackerSafe) for online retailers

-Competes with McAfee, Thawte

Current round: $12.0mm led by Jafco Ventures, DAG Ventures, Accel, Baseline Ventures.  Total raised: $22.0mm

Read more: TechCrunch

4. Connotate

-Software provides intelligent, real-time data analytics across a wide variety of disparate, unstructured enterprise content types

-Software Helps companies rapidly convert unstructured online data and content into structured data assets that can be used to create new products, revenue Streams, and enhance current online data sets

-Structured data asset creation works in on demand in real-time across multiple data sets Including web, e-mail, internal databases, documents, and media

-Customers Include: Reuters, Associated Press, , Dow Jones, Ask.com, healthcare companies, and major investment banks and hedge funds

-Competitors: InformationBuilders, DataWatch

-Founded in 2000 in New Brunswick, NJ

Current round: $5.25mm in Series A from .406 Ventures. Total raised; $5.25mm plus undisclosed seed

Read more: TechCrunch

 

M&A

Coremetrics (acquired by IBM)

-Offers cloud-based web analytics software provider.

-Providing web abalytics to 2,100+ brands (including: BofA, Office Depot)

-Will expand IBM’s business analytics capabilities and become part of IBM’s application and integration middleware portfolio

No Financial details disclosed

Read More: TechCrunch

 

Other

Apple TOS update restricts non-independent ad networks from serving ads to iPhone or iPad

-iAd platform was formally launches in July 2010 as part of iOS 4

-Enforcement of policy is uncertain and widely debated as many suspect that Apple is just looking to limit Google/AdMob’s presence on Apple devices

-FTC is considering an investigation into Apple’s anti-competitive practices

-Potentially limits acquisition opportunities for independent ad networks

-Independents:

Millennial MediaGreystripe, Medialets, JumpTap, Mojiva

-Non-independents:

AdMob/Google, Quattro/Apple, ThirdScreenMedia/AOL

Read more: ReutersWSJ, TechCrunch

  • http://twitter.com/jckhewitt JC Hewitt

    Thanks, I'm really enjoying these posts and videos.

    A lot of negative buzz has gone around Zynga as if they're “new” to the business. You can't get much more veteran than Brian Reynolds. The success of this company is built on almost 20 years of learning from this growing industry and the multitude of failures incurred along the way.

    It's like… “what happens when you put together a dream team?” They clean house.

  • http://twitter.com/neoganda Neoganda

    This show is a fantastic service. Thanks for all the hard work.