TechJournal South Header

Archive for the ‘venture capital report’ Category

Silicon Valley deals show Q1 weakness in venture environment

Friday, May 24th, 2013

Fenwick signFenwick & West , a law firm providing comprehensive legal services to high technology and life science clients, in its First Quarter 2013 Silicon Valley Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 118 technology and life science companies headquartered in the Silicon Valley that raised capital in the first quarter of 2013.

“During the first quarter of 2013, up rounds exceeded down rounds 68% to 11%, with 21% flat.  This was a slight decline from the fourth quarter of 2012, when up rounds exceeded down rounds 71% to 8%, with 21% flat,” said Barry Kramer, partner in the Corporate Group of Fenwick & West and co-author of the survey.

An up round is one in which the price per share at which a company sells its stock has increased since its prior financing round. Conversely, a down round is one in which the price per share has declined since a company’s prior financing round.

However, the Fenwick & West Venture Capital Barometer – which measures the percentage change in share price of companies funded during the quarter compared with the share price of their previous financing round – showed a 57% average price increase for the quarter, a noticeable decline from the 85% reported in the fourth quarter of 2012.

Similarly, the median price increase of those financings was only 14%, a significant decrease from the 41% recorded in the fourth quarter.

“The Barometer results showed some valuation softening this quarter,” said Kramer.  “We will need to see next quarter if this is an anomaly or a trend.”

“The best performing industries in the quarter from a valuation perspective were internet/digital media and software, but hardware and cleantech did reasonably well, with only life science performing poorly,” added Michael Patrick, partner in the Corporate Groupof Fenwick & West and co-author of the survey.

“At the big picture level, it was a tough quarter for the venture environment, with venture investing, acquisitions and IPOs all down compared to the last quarter of 2012.  And while valuations were reasonably healthy this quarter, they declined from last quarter.

But with the macro environment appearing to stabilize, and Nasdaq up both in the first quarter and second quarter to date, there is reason to believe that the venture environment will improve,” added Patrick.

Complete results of the survey with related discussion are posted on Fenwick & West’s website at www.fenwick.com/vcsurvey.

Grotech raises new $225M fund for early stage tech

Monday, May 13th, 2013

Grotech VenturesVienna, VA-based Grotech Ventures, which invests in early stage tech firms, has raised a new $225 million fund. The fund was oversubscribed by more than 10 percent, and was raised from both existing and new investors. GV II bringsGrotech’s total capital under management to $1.3B across all funds.

Frank Adams, the firm’s managing general partner, told PE Hub that raising the fund took 20 months because institutional investors were “slow and methodical in their due diligence process, more so than in the 29 years we’ve been doing this.”

Grotech Partner Don Rainey tells the TechJournal that the company is investing in Mid-Atlantic and Mid-West early stage IT firms in Enterprise and infrastructure software, social and cloud computing, security tech, consumer Internet, ecommerce, and energy and healthcare It.

Includes Charlotte, Atlanta, RTP

For Grotech, Mid-Atlantic includes the Carolinas and Atlanta, Rainey notes. Adams told PE Hub the company is spending a good deal of time in Atlanta and Charlotte, NC, for instance, developing deep relationships.

Rainey says that while parts of the social sector are crowded and the opportunity has passed, “There is still a lot of greenfield in it.”

Grotech typically invests the first institutional money a startup raises and continues to invest as the firm grows. Its strategy includes forming top-tier industry syndicates with other investors. It generally invests from $200,000 to $20 million in startups, although initial investments tend to be smaller.

Grotech, which has offices in Virginia, Maryland and Colorado, has already made 12 investmetns from the new fund and continues to invest from its current fund, which has performed well.

We asked Rainey if its harder for tech startups to get that first investment these days.

Don Rainey

Don Rainey

“For top tier entrepreneurs its about the same,” he says. “For the next tier that isn’t as obvious as a backable startup, it’s tougher. If you’re the guy or gal who sold your last company for $500 million and you’re doing another raise for a new company, you can expect the processs to be about the same as it was two, five, or ten years ago.”

Successful exits

It recently secured a major exit with NexGen Storage, which Fusion-lo Inc. acquired in April for about $119 million in cash and stock.

It’s largest exit so far was from the DC-based daily deals site LivingSocial. It led the company’s $5 million Series A round and has since sold chunks of its stake to Amazon, Lightspeed Venture Partners, T. Rowe Price and other buyers for more than $200 million.

Overall, Grotech’s last $109 million fund, which closed in 2009, has a current IRR of 70 percent. — Allan Maurer

SJF Ventures triples size of previous fund

Friday, May 3rd, 2013

SJF VenturesSJF Ventures, which has offices in Durham, NC as well as in New York and San Francisco, conducted the final closing on its third fund with more than $90MM in capital commitments, tripling the size of the previous $28MM second fund.

The target for SJF Ventures III was $75MM and the fund was substantially oversubscribed at its final April closing.   “We are honored that so many investors choose to join our partnership,” said David Kirkpatrick, SJF Managing Director and Co-Founder.

“We are particularly excited that a wide variety of bank, insurance, foundation, family office, pension, mutual fund, and individual investors have recognized that SJF’s impact investing strategy can yield above market financial and mission results.”   SJF’s current, second fund is performing in the top quartile all US venture capital funds of its vintage year.

Invests in high growth companies

SJF Ventures invests in high growth, positive impact companies seeking expansion capital rounds of $1 million to $10 million.

SJF has invested in 36 portfolio companies over the last decade.   “We realize SJF’s success is due to the exceptional results achieved by our portfolio companies such as Aseptia, BioSurplus, CleanScapes, Community Energy, eRecyclingCorps, Fieldview, Optoro, MediaMath, MedPage Today, and ServiceChannel,” said David Griest, SJF Managing Director.   “We are eager to find the next set of great entrepreneurs for our third fund.”

SJF Ventures has a team of six senior investment professionals, based in offices in Durham, NC, New York and San Francisco, and invests nationwide. SJF has particular expertise and focus on the asset recovery, recycling & reverse logistics, energy & resource efficiency, intelligent infrastructure, sustainable agriculture and food, education, health and wellness sectors.

 

Michigan touts itself as a hub for venture investments (infographic)

Tuesday, April 30th, 2013

MGCSAlthough well-established venture capital hubs like California and New England are leaders in venture capital, regional hubs are playing an increasingly critical role as consistent drivers of venture-backed companies. In the Midwest,Michigan is on the rise as an investment hot spot and this infographic details the impact such activity will continue to have on job creation, revenue growth and industry development.

Organizers of the Michigan Growth Capital Symposium (MGCS) unveiled a new infographic that demonstrates the factors driving Michigan’s growth as an investment hub.

You can view the infographic here: http://michigan-gcs.com/files/mgcs-infographic-2013.pdf

Crowdtilt nabs $12M for group funding platform

Friday, April 19th, 2013

CrowdtiltHere’s yet another way to raise money via the crowdfunding meme.

Crowdtilt , the simple-to-use platform to pool money online,has closed a$12 million Series A funding. Launched in February 2012, San Francisco-based Crowdtilt is a simple way for groups to pool money online.

The round was led by Andreessen Horowitz, with participation from Sean Parker, SV Angel, DCM, as well as CrunchFund, Alexis Ohanian, Elad Gil, Naval Ravikant, Sam Altman, Matt Mullenweg, Dave Morin and Justin Kan. Also joining Crowdtilt’s board of directors is Jeff Jordan, partner at Andreessen Horowitz and former CEO of OpenTable.

The investment will support the explosive growth of the company, while further improving the product and user experience.

Fantasy football to community fund-raisers

Crowdtilt is being used for everything from collecting money for a fantasy football league among friends, all the way to an entire community rallying together to save their iconic toy store from closure.

Crowdtilt’s API, currently in closed beta, also allows anyone to create their own crowdfunding application, such as group payments, pre-sales commerce options, complete standalone crowdfunding applications or even social fundraising sites.

“Manual processes for coordinating payments across groups is inefficient and increasingly obsolete. Crowdtilt has built a highly efficient platform that is being used by all kinds of groups for all kinds of use cases — buying movie or concert tickets, collaborating on gift or travel spending, even funding school programs or public works projects. It is a robust collaborative payments platform for an increasingly collaborative web,” said Jeff Jordan, partner at Andreessen Horowitz.

 

Expectations rise for venture capital in 2013

Thursday, April 4th, 2013

Ernst & YoungDespite a challenging year for venture capital investment in 2012, the U.S. VC-backed industry remains substantial. Better portfolio company exits and returns suggest the slump in fundraising could be over in 2013, according to Ernst & Young’s tenth annual Venture Capital Insights and Trends Report.

According to the report, there is evidence of money flowing into companies that are perceived as lower risk. For example, there is a shift away from social media towards enterprise– the companies that are attracting greater VC interest are those that provide a service and are getting paid for it, rather than those that have a good idea, but have difficulty monetizing it.

Historically, the U.S. venture industry has been dominated by investments in technology and healthcare since in the U.S. more than half of the VC pool consists of companies in these two sectors.

Healthy exit environment crucial

Though U.S. VC investment activity overall declined by 15 percent to $29.7 billion in 2012 compared with 2011, and the number of investment rounds also fell, the drop was not as pronounced, declining by only four percent to 3,363. These U.S. numbers compare to global VC declines at 20 percent in amount invested and eight percent in deals.

“While 2012 was a tough year for global venture capital, the U.S. held relatively steady,” said Bryan Pearce , Director, Venture Capital Advisory Group, Ernst & Young LLP. “However, a healthy environment for venture backed company exits will be crucial for the U.S. VC industry outlook in 2013. Equity markets have started the year positively, which suggests these better exit prospects may materialize.”

Exit activity is also an important pre-condition for an uptick in fund-raising by VC firms.  While global exits of VC backed companies declined by 27 percent in terms of amount raised and by 30percent based on the number of IPOs, the number of VC-backed IPO exits and the capital raised in the U.S. were relatively stable, after adjusting for the Facebook IPO proceeds of $6.8 billion.

Companies exiting via IPO are typically more advanced than those exiting via M&A. The median amount raised prior to IPO of$78.4 million and time to exit of 7.4 years, far exceeds the respective figures of $16.7 million and 5.1 years for M&A exits.

A number of venture capitalists who participated in the recent Southeast Venture Conference (SEVC) in Charlotte, NC, noted that most firms today are going to exit via M&A and should consider that from the very beginning.

VC model is realigning
VC firms are rethinking their investing strategies favoring investing smaller investments, at a later stage and on tougher terms.

This shift reflects two trends – the substitution for VC fund money in early stage companies by Angel investors, incubators/accelerators and corporate initiatives as well as a need to demonstrate a shorter time to exit in order to return capital to their investors, show a track record of success and, thus, start the process of opening and raising a new fund.

“The flow of capital being returned to LP investors has slowed significantly, which in turn has restricted investors’ ability to re-invest in new funds,” added Pearce. “Therefore, investors are showing a preference for the most successful ‘brand’ name funds, seeking out depth of experience and track record. They are also demanding better terms from VC funds, while the funds are requiring portfolio companies to meet stricter milestones and meet tighter time frames.”

Increasing role of corporate venture
Corporate venture investing is on the rise surpassing pre-dotcom levels in 2012. Corporate venture activity is especially strong in the IT sector and being driven by a combination of healthy corporate cash balances and corporate seeking external innovation due to the rapid pace of technological change as the rise of mobile, big data and cloud computing has created a disruptive business environment.

Corporations are eager to invest in venture-backed companies that can help them fill the innovation deficit in their strategy and innovation capabilities. The link between corporate investment and ultimate acquisition, however, is not always present in the U.S. In all sectors in the US only 2 percent of companies were acquired by an existing corporate investor in 2011 and 2012.

“In 2012, corporates cemented their important role in the VC ecosystem,” continued Pearce. “Where they choose to make an investment, typically in the later stage in the U.S., the valuation of the business in that round was usually greater than in companies at a similar stage with no corporate investor.”

U.S. Regional Outlook
As of January 2013, $167.9 billion was invested in 8,288 companies. Investment remains heavily weighted towards Silicon Valley –since 2000, cumulative equity raised in the Bay Area of $62.2 billion exceeds the total raised in New York, New England and Southern California - the next largest hotbeds – combined.

These same areas also ranked top five globally in terms of number of deals. New York witnessed the largest increase of active VC investors, approximately 150 percent in 2012 compared to 2006.

At the SEVC in March, one VC noted that it took substantially more investment dollars to get those West Coast firms to an exit. East Coast firms, he noted, used their capital more efficiently. A number of VCs at the event said they were actively seeking to diversify geographically and specifically interested in regions such as the Mid-Atlantic and the Southeast.

The data in our Turning the corner: Global venture capital insights and trends 2013 report has been sourced from Dow Jones VentureSource.

Web deals fall 45 percent, Enterprise deals up

Friday, March 15th, 2013

big data groupA new analysis, published by The Big Data Group and powered by SiSense’s Prism technology, unveils venture capital trends that challenge common beliefs.

“The data points to a Series B crunch, rather than a Series A crunch,” explains David Feinleib , Managing Director of the Big Data Group.

“Venture Capital is a hot topic. Yet, Venture Capital data is hard to come by and is difficult to analyze,”

The study analyzes ten years of startup data on 100,000 companies from a variety of sources, including Crunchbase, Wikibon and NASDAQ, and is available at http://www.bigdatalandscape.com/news/100k-company-venture-capital-study.

Key findings:

  • Less is More: Fewer startups received funding in 2012 but the ones who did, raised 22% more capital on average.
  • “Series A crunch” doubtful: There were more Series A deals done in 2012 and they closed on average 2 months faster in 2012 than in 2011.
  • “Series B crunch” possible: There were fewer Series B deals done in 2012 and they took on average 45 days more to close in 2012 than in 2011.
  • Enterprise deals are back:  Enterprise deals increased in 2012 and gathered on average 40% more capital in 2012 than in 2011.
  • Web deals are cooling off: Web deal volume dropped in 2012 and the average amount raised per company shrunk by close to 45% in 2012.

Former Flickr, Yahool, AOL execs land seed funding for Tomfoolery

Wednesday, January 30th, 2013

TomfooleryFormer Flickr, Yahoo, and AOL executives have landed a seed round for what it says is a new kind of mobile collaboration tool for the enterprise.

San Francisco-based Tomfoolery Inc. has raised a $1.7M round of seed funding.

Led by CEO Kakul Srivastava, former GM of Flickr & VP at Yahoo! and CPO Sol Lipman, serial entrepreneur and former VP of Mobile First at AOL, Tomfoolery is developing consumer-quality, mobile focused software for work.

The funding was led by Morado Ventures and Sam Pullara, Twitter & Yahoo veteran, now a Managing Director at Sutter Hill Ventures. Investors include Andreessen Horowitz, Jerry Yang of AME Cloud Ventures, Brad Garlinghouse, CEO of YouSendIt, David Tisch, co-founder of TechStars NYC, and other leading angel investors.

“In your personal life, social mobile applications are beautiful, their functionality is meaningful, and they let you to make real, human connections. At work, today’s enterprise software makes us feel about as close to our coworkers as strapping spreadsheets to carrier pigeons,” said Kakul Srivastava, Tomfoolery CEO.

“People at work aren’t robots – they’re consumers who expect great software. At Tomfoolery, we’re creating an entirely new kind of collaboration toolset, built from the ground up, for the modern worker.”

“The opportunity for mobile to continue to disrupt the workplace is tremendous – Tomfoolery is poised to capitalize on this trend,” said Jerry Yang, Co-Founder of Yahoo! and Tomfoolery investor.

Venture funding fell 10 percent, number of deals declined in 2012

Friday, January 18th, 2013

NVCAIf it seemed harder to raise money last year, it was. Venture capitalists invested less money in 2012 than in 2011, the first such decline in three years, according to the National Venture Capital Association (NVCA) and PricewaterhousCoopers MoneyTree report.

In the Research Triangle, NC, which has bustling startup hubs in Durham, Raleigh, and Cary, companies raised less money than in any year since 1997, despite something of a rebound in the second half of the year.

Analysts say economic uncertainty and volatility as well as Facebook’s less than stellar IPO performance contributed to the caution on the part of VCs.

Venture funds invested $26.5 billion in 3,698 deals in 2012, a 10 percent decline in dollars and 6 percent drop in the number of deals.

Mark Heesen, president of the NVCA, however, looked on the bright side, saying that fewer funds and deals will lead to “a more disciplined environment,” in which better companies will get funded and many “me-too” firms copying other successful companies will not.

The full set of statistics are on the NVCA web site.

 

Conductor optimizes with $20M for Enterprise SEO platform

Tuesday, October 30th, 2012

ConductorInternet companies have an advantage many traditional ones do not: they can pivot and change gears rapidly. New York-based Conductor, for instance, started out helping companies boost their search traffic via link-building, a strategy Google now frowns upon, but just raised $20 million in a third round of financing to further develop its Searchlight SEO platform.

The company says it is the largest investment in an SEO technology company ever.

Investor Growth Capital led the round and existing investors FirstMark Capital and Matrix Partners participated. Conductor has raised a total of $35 million.

The company is certainly in a hot space. Forrester Research expects the SEO technology market to exceed $600 million by 2016 in the United States.

According to HubSpot’s State of Inbound Marketing 2012 report, SEO outperforms paid search 2:1 and social media by as much as four times.

Growing at 300 percent year-over-year

The company introduced its Searchlight product in 2010 and is used by the top four big agency holding companies, more than half of the top 20 Internet Retailers and more than 100 of the Fortune 500.

It has had 300 percent revenue growth year-over-year and expects to repeat at that level in 2012. It added 45 employees this year, bringing its total to 85.

It sells Searchlight, which provides customers with a dashboard and analytics, as software-as-a-service. It sells only search engine optimization and analytics services and does not do search engine marketing such as buying Google Adwords.

Conductor says its customers, including companies like FedEx, BestBuy, Siemens and General Electric (GE), report up to six times more traffic and 15 times more conversions from natural search.

Noah Walley, Managing Director at Investor Growth Capital, said in a statement that “The Searchlight platform is a staple inside many of the world’s most revered brands. The company’s superior technology offering and demonstrated market demand embody what we look for in our portfolio companies as they move from an early stage company into the expansion stage, ready to scale operations and enter new markets.”

Showing up in search more important than ever

“Showing up in search engine results is more important than ever before — with Google making changes every day, it’s getting harder for companies to stay at the top of the search results,” said Seth Besmertnik, CEO of Conductor.

“Marketers want to ensure page-one results, while also being able to run their SEO programs with the same level of accountability and predictability as paid search. Conductor Searchlight has risen to the occasion, becoming the must-have technology for businesses that rely on the Internet to acquire customers.”

Global investor puts $20M in Mobli, backed by movie & sports stars

Wednesday, September 19th, 2012
Leonardo DiCaprio

Leonardo DiCaprio is an investor in Mobli.

So, does the world need another photo and video sharing app? Global investor Kenges Rakishev, who just invested $20 million in the firm Mobli, thinks so and he’s in prominent company. Other investors in the company include  Leonardo DiCaprio, Tobey Maguire, Serena Williams and Lance Armstrong.

Mobli, a photo and video sharing app built to connect content with captive audiences, has raised a $20 million Series B round of financing provided by  Rakishev, a well-known global investor,  and an additional $2 million from previous investors.

Rakishev has some prominent company as an investor in the firm.

For Rakishev, this is part of a series of recent strategic investments in innovative mobile and multimedia technology players. Late last month, he invested $5 million into TriPlay, a global provider of cross-platform cloud services and the developer of MyMusicCloud and MyDigipack.

Prior to this, he announced his acquisition of $32 million in stock of Net Element (OTCQB:NETE), a global technology and publishing company that operates in mobile commerce and payment processing, and also publishes popular entertainment portals and destinations.

On Mobli, users follow and engage with individuals, as well as subject-based channels they find interesting. Posting photos and videos to relevant Mobli channels ensures content creators receive the feedback they deserve.

The company, which has now raised a total of $28 million, plans to use the financing to continue development and expand its audience base.

“Mobli has tremendous potential because it enables people to do something very powerful – to see the world through other people’s eyes – in a simple, easy to use, and highly engaging format,” said Rakishev, chairman of numerous boards in private and public sector companies worldwide, listed by Forbes as one of the 50 most influential people in Kazakhstan.

“Mobli leverages social media to meet a very real human need to visually share experiences, thoughts and ideas with other people in real-time.”

The Mobli app is available free for iPhone, Android and the Web.
For iPhone: http://itunes.apple.com/us/app/mobli-share-photos-videos!/id426679976?mt=8
For Android: https://play.google.com/store/apps/details?id=com.mobli&hl=en

Quirky wraps up $68M funding for online product development platform

Friday, September 7th, 2012

QuirkyNew York-based Quirky, a company that helps people bring their product ideas to market, has wrapped up a $68 million in Series C funding led by Andreessen Horowitz, with significant participation from new investor Kleiner Perkins Caufield & Byers (KPCB).

The funding round also included existing investors Norwest Venture Partners and RRE Ventures. Quirky has raised $97 million to date.

Quirky has built a platform that facilitates invention and pairs its online community of creative people with an expert in-house team of product designers, engineers, and manufacturing and retail specialists.

The process allows Quirky to develop two new and innovative products each week. Since its launch in 2009, Quirky has collaboratively developed hundreds of new products, many of which can be found in Target, Staples, OfficeMax and Bed Bath & Beyond. The revenue from all these products is shared with those who created and collaborated on them.

Quirky speeds up the product development process. “It took one year and 45 days to build the Empire State Building,” noted Ben Kaufman, founder and CEO of Quirky. “It takes most consumer product companies 18 to 24 months to launch a new vegetable peeler. Something is wrong here.”

Quirky will use the new funding to grow the company’s capacity to produce products across an increasing number of verticals.

The company will also refine its community submission and contribution process and grow its product development and community engagement teams. Additionally, Quirky will seek to involve community members at the retail level through a new distribution program.

Anyone can participate on Quirky.com either by submitting their own product idea for $10, or by voting, determining pricing and influencing other people’s product ideas. Thirty cents of every dollar generated from the direct sale of a product on Quirky.com goes back to these influencers.

Scott Weiss, general partner of Andreessen Horowitz, and Mary Meeker, general partner at Kleiner Perkins, will join Quirky’s Board of Directors.

Most exciting retail concept since the Apple store?

“Offline retail and product development are well overdue for innovation and Quirky is the most exciting new retail concept we’ve seen since the Apple store opened over a decade ago,” said Scott Weiss. “Ben Kaufman had the vision to democratize product development. Quirky has taken the speed and best practices of online software development and brought it to bear in developing offline consumer products.”

Read more about Quirky on Scott Weiss’ blog here.

Mary Meeker said, “Quirky’s social design platform is reinventing consumer product R&D with materially faster time from product conceptualization, to design and manufacturing and, ultimately, to retail sale. Since its founding in 2009, Quirky has launched more than 200 innovative products — including top-sellers Pivot Power, Cordies and Crates — and has paid out over $2 million to its inventors and contributors. The pace of Quirky product launches and number of contributors, now at 260,000 online users, is rapidly accelerating.”

Austin-based Bigcommerce nabs $20M round for SMB ecommerce platform

Wednesday, September 5th, 2012
bigcommerce

The Bigcommerce app makes it even easier for SMBs to set up their online stores quickly and sell more (Graphic: Business Wire)

Austin, Texas-based Bigcommerce, an e-commerce platform for SMBs,  has secured $20 million in Series B funding led by existing investorsGeneral Catalyst Partners and joined by new strategic investor, Mike Maples of FLOODGATE, bringing the company’s total venture capital funding to $35 million.

Bigcommerce says it is the fastest-growing e-commerce platform in the world with over 1,000 percent growth in SaaS revenue since launching in 2009.

“E-commerce is already booming and we’re really focusing on how to help our clients sell more while leveraging affordable online channels that drive qualified traffic,” said Eddie Machaalani, co-founder of Bigcommerce.

“Small and medium businesses shouldn’t need a degree in design and web development to run a successful online store. They want it to be easy and intuitive. We’re radically simplifying the e-commerce experience, enabling the small business not just to compete with larger competitors, but win.”

Significantly expanding sales and marketing staff

The company says it will use the funding to significantly expand its sales and marketing teams, increasing headcount by 70 percent over the next two years. It Doubled its number of employees in 2012.

Bigcommerce also says it is overhauling it brand centered around “making it easier for online retailers to sell more,” by simplifying the process.

“Bigcommerce has surpassed ‘startup success story’ status in the immense, fast-growing e-commerce solutions market,” said Larry Bohn, managing director of General Catalyst.

“Bigcommerce truly fulfills our vision of entrepreneurs helping entrepreneurs to build amazing, sustainable companies, and when you think about how far they’ve come just in the past year—approaching $1 billion in transactions—it’s really incredible to see.”

Lumosity lights up with $31.5m for brain training, Couchsurfing nabs $15m

Wednesday, August 22nd, 2012

LumosityThe IPO market may not be treating consumer Internet companies such as Facebook and Groupon very well, but venture capitalists are still putting significant amounts of money in online firms.

Some of the more interesting deals we saw today include:

San Francisco-based Lumosity, which sells online brain training programs,  has raised $31.5 million in Series D financing.

Discovery Communications (Nasdaq: DISCA, DISCB, DISCK) led this round of financing, along with participation by existing investors FirstMark Capital, Harrison Metal, Menlo Ventures and Norwest Venture Partners.

In the past year, Lumosity’s membership has doubled to over 25 million members and the Lumosity mobile app has been downloaded 10 million times since launching in 2010. The mobile app has reached the #1 spot in the overall app store and is consistently the top app in the Education category.

We’ve seen conflicting reports on the effectiveness of these digital brain-training tools. We tried the Neuro-Active Brain Fitness program from Miami-based Brain Center of America. It did sharpen our attention and seemed to help reduce uncaught typos in our copy.

Some studies have cast doubt on their effectiveness, however, suggesting that what they do best is improve your performance on brain training games and not necessarily on other tasks. Some experts think that actual physical exercise, which has proven benefits for brain health, would be better than digital exercises.

 Others suggest they do work.

Lumosity’s own games are based on the latest discoveries in neuroscience, with continuing independent third-party studies being conducted by researchers at Harvard, Stanford, UC Berkeley, and other academic institutions

The company will use the funds to continue its  research into human cognitive performance, build the leading science-based learning brand, and reach hundreds of millions of users. Lumosity has received a total of over $70 million in funding to date.

 Couchsurfing rides a $15M funding wave for social travel network

CouchSurfing logoAnother San Francisco company, CouchSurfing, a social travel network,  has closed $15 million in funding from new lead investor General Catalyst Partners, with participation by Menlo Ventures and existing investors Benchmark Capital and Omidyar Network.

The additional funding brings the company’s total funds raised in the past year to $22.6 million and will help expand product management and engineering teams to enable faster innovation across its mobile and online platforms.

CouchSurfing enables people from around the globe to discover each other online so they can share their cultures, hospitality and experiences offline.

Along with hosting travelers and staying with locals, there are thousands of activities hosted by more than 40,000 interest groups on CouchSurfing, including language exchanges, bicycle tours, museum visits and volunteer opportunities.

In the past year, CouchSurfing’s nearly 5 million users have shared more than 10 million face-to-face experiences. The company recently released an infographic highlighting the diversity of its users and their experiences.

Atlanta’s Social123 funded, provides tangible ROI from social media

Thursday, August 16th, 2012

By Allan Maurer

Social123Atlanta-based Social123, a social media management and lead generation company, has received $500,000 in Series A funding, led by  Linch Capital. Its CEO and founder says it provides that actual tangible return on investment businesses want from their social media activities.

“The amount of data and content that Internet users are creating and sharing through social media is expanding exponentially―by the hour,” says Aaron Biddar, chairman and CEO at Social123.

“Social data is more complicated to process and analyze because it’s so unstructured. We are  providing innovative social media tools that enable sales and marketing professionals to turn this rich source of data into actionable intelligence.”

Biddar, who previously co-founded Atlanta-based Controlscan and ran sales and marketing for the CRM firm, the Port Network, started Social123 about two years ago.

Investment will fast-track the firm’s marketing

“This investment will not only allow us to scale our IT infrastructure, but also to fast-track the introduction of our Social123 family of products into a marketplace that is moving at the speed of light where gaining valuable insight from social interactions will be a key differentiator for conducting business―both online and offline.”

Social123 plans to expand marketing and sales initiatives with the funding. Biddar says the company has just hired two people in Charlotte, NC and is also hiring one in Charleston and three in Roswell, Georgia where it is based. It currently employs eight.

Social data platform connects firm with contacts

The company’s technology is a easy-to-use social data platform that offers sophisticated tools that collect, filter and analyze social data, giving sales teams an intelligent way to connect with contacts.

For years, Biddar notes, “People have been coming up with their own metrics – such as return on engagement – because they couldn’t get true ROI for their social media marketing. At some point, you have to stop making things up and analyze your true return.”

Only social influence score on the market

The  SocialData+technology provides Facebook, LinkedIn and Twitter information for companies’ contact lists. “We use their APIs and its all publicly available data, but we do it a lot faster than someone could without our technology. What might take you all day takes us 30 seconds.,” Biddar says.

Social123 screen shotWith the only customizable social influence score on the market, SocialPoints+ gives sales professionals the ability to rank their most influential contacts so they can focus on the ones who matter most. 

SocialLeads+  searches millions of records on all the major social media platforms, based upon specific search criteria.

 SocialCRM+ seamlessly integrates with popular customer relationship management systems (CRMs), such as Salesforce, so that all data is housed in one location and is accessible when companies need it most.

“Social CRM is the new frontier for organizations that want to get closer to customers,” said David Linch, managing director at Atlanta-based Linch Capital.

“Social123 is one of the first companies to develop a reliable and cost-effective means to optimize the power of social interactions and extract true value from social data specifically for sales and marketing professionals.”

We have covered hundreds of tech startups in the last decade and the ones that enjoyed the most success often did so because they solved a real problem with an elegant solution.

Linch says “The Social123 team has a customer-focused product strategy with three of the four products developed as a result of direct customer requests.”

The holy grail of social media: a tangible return on investment

Biddar says the technology, which sells for a $49 a month for a license that provides 10,000 contacts a month, works best for clients who have been using other emarketing solutions. “They get the fastest return on investment because this is the missing piece They have email and they track who opens it, who’s signing up and so forth, but haven’t had a way to see what they’re doing with social media.”

Social123 currently has approximately 25 customers, including Avectra, a developer of web-based Social Constituent Relationship Management (CRM) solutions for fundraisers, not-for-profits and associations.

Avectra, which is in the association space, resells the Social123 technology. “They’re already seeing ROI from their customers,” says Biddar. “They’re seeing an increase in membership, which is a tangible return.”

 

Netsertive closes on $10M for local digital ad tech

Tuesday, August 14th, 2012

NetsertiveLocal digital advertising has been one of major new media strategies and having technology that automates the process is paying for Durham, NC-based Netsertive.

Netsertive, a fast-growing ad tech firm specializing in localized digital advertising and channel marketing technology, has closed $10 million in a combination of a $7.3 million round of Series B equity financing and a $2.5 million credit facility.

According to the Raleigh News & Observer, the company anticipates doubling its size by adding 60 more employees over the next 12 months.

Netsertive’s proprietary platform helps local businesses, multi-location retailers and product brands reach target customers in their respective local markets with automated digital marketing.

Local digital marketing expected to double

Local marketing spending in the United States totals more than $130 billion annually. According to research firm BIA/Kelsey, about $21 billion of that has already shifted to newer forms of interactive digital marketing, and that amount is projected to double to nearly $40 billion within four years, driving a massive market opportunity.

In addition, there is over $22 billion in co-op funding made available to local retailers, though a major portion of that goes unused or is deployed inefficiently.

Netsertive brings automation and efficiency to that $22 billion in co-op to unlock the power of co-branded performance marketing at the local level, and eliminate burdensome reimbursement processes for both the brand and the retail partners.

 Standalone localized ad campaign automation

The company provides standalone localized campaign automation as well as its innovative Digital Co-Op system that combines brands and local channel partners in turnkey, cooperative online ad campaigns.

It applies its patent-pending technology in specific vertical markets including Audio/Video & Security, Home Goods, Automotive, Sports & Fitness, and Medical Practices.

“We have a simple vision: creating innovative technology to connect local consumers to products and businesses,” said Brendan Morrissey, CEO, Netsertive.

“We’ve tapped into a massive market that has gone largely unnoticed for years. Ninety percent of local purchase decisions are influenced by online experiences.”

Harbert Venture Partners, of Richmond, VA, led the equity round and was joined by existing Series A investors RRE Ventures and Greycroft Partners, both of New York City. Debt financing was completed with Square 1 Bank,Durham, N.C.

“We’ve watched Netsertive grow rapidly over the past three years, and we’re convinced that their team and technology is solidly positioned to be a market leader in the channel marketing and local digital advertising arenas, both large and growing markets,” said Wayne Hunter, managing partner with Harbert Venture Partners. Hunter, who has joined Netsertive’s board.

He added “We were particularly excited with their vertical specialization and channel marketing innovations that have attracted many notable brands to their platform.”

Moving to larger offices in the Research Triangle

“This latest round of financing enables us to continue expanding our capabilities, scale the business, and deliver more solutions for brands and local businesses that help them drive more revenue,” said Morrissey.

Netsertive secured a $4.5 million Series A round in late 2010. Since that time, revenue has increased seven-fold and they’ve hired more than 50 employees. The company expects to hire at least 60 more in the next 12 months to meet demand and extend its technology platform with more products.

As a result of its continued fast growth, Netsertive will be relocating to a larger corporate headquarters in RTP this fall.

 

Atlanta’s BrightWhistle nabs $2.05M funding for social patient acquisition platform

Friday, August 10th, 2012

 

Greg Foster

Greg Foster – CEO, co-founder, BrightWhistle

BrightWhistle Inc., a first-in-class social patient acquisition platform provider, has raised $2.05 million in Series A funding, led by Huntsville based Eastside Partners, Atlanta-based Hamilton Ventures, Atlanta angel investor Paul Iaffaldano and prominent healthcare technology focused angel investors Fred Goad and G.T. Laborde.

The company also landed several new clients including Piedmont Healthcare, Duke Raleigh Hospital and Dekalb Medical.

BrightWhistle presented at TechMedia’s 5th annual Southeast Venture Conference in 2011. The TechJournal is a TechMedia company.

The only HIPAA-compliant, healthcare-focused Facebook Ads API partner, the company will use the funding to advance the continued development of its comprehensive solution designed to empower hospitals’ efforts to engage and acquire new patients through search and social media.

“We are thrilled to have all of our investors back in this round, along with the addition of two healthcare industry veterans,  Fred Goad and G.T. Laborde,” said BrightWhistle co-founder and CEO Greg Foster.

“We have spent the last year building a world class solution, establishing strong client relationships with some of the leading hospitals in the US, and building powerful case studies that demonstrate our solution’s capacity to significantly increase return on health care marketing budgets.”

“The fact that we were able to raise more than twice the amount of capital than we originally intended is a testament to what we are building,” said Chad Mallory, co-founder and COO, BrightWhistle

“A continual development cycle keeps our platform delivering optimal results for our clients, and having additional resources to invest enables us to accelerate our product roadmap.”

First-to-market solution

“BrightWhistle is first-to-market with a solution designed to empower the health care marketer’s social and digital media strategy.  Everyone in the industry is capable of benefitting from its implementation – health care providers seeking to engage and acquire new patients, payers seeking to add customers, and other institutions focused on meeting Stage 1 and 2 Meaningful Use objectives,” said Emerson Fann, Managing Partner of Eastside Partners.

“We are excited to increase our investment in a venture that is fundamentally changing the methods employed by healthcare marketers across the country and around the world.” 

Realtime launches in U.S. with $100M investment to create the live Web 3.0

Wednesday, August 8th, 2012

By Allan Maurer

Andre Parreira

Andre Parreira, CEO, founder of Realtime.

SANTA MONICA, CA -  Realtime, creator of a global technology framework and applications to power what CEO  and founder Andre Parreira calls “The foundation of Web 3.0), has launched in the United States with a $100 million investment from BRZTech Holding, a São Paulo-based technology investment group.

Parreira tells the TechJournal the technology has the potential to change the Web by delivering real time updates of text, images, video, and advertising as well as making visiting every website a interactive, social experience. Site visitors will be able to see who else is there and interact with them in real time.

It can also make e-commerce more like an in-store experience while providing retailers and advertisers with the ability to track what users are viewing as they see it. “You can see where people are and what’s in front of them,” he says. That means advertisers will have a new metric – the time a user spends looking at or interacting with an ad. “They can charge for time spent instead of for impressions or clicks,” says Parreira.

That could put Internet advertising on more of a par with television – which currently remains the top medium for high dollar advertising.

It could revolutionize e-commerce

“This could be a great help in e-commerce, because for the first time you can see what customers are doing. You can send them a promotion or flash sale. If you see a product trending, you can adapt in real time and send offers to one person or everyone.”

It could also be a boon for publishers. “Once you deliver a real time experience, the time users spend on a site increases by several times,” he explains. That’s not just wishful thinking. “We did a test in Portugal with a leading mobile cellular operator. They increased their sales by six times that day and put the technology on all their properties. They want to sell our product as part of their cloud offering.”

You can check out some case studies here.

He says any small business or large enterprise can use the technology to have real time capabilities. “Our technology will be the foundation of the next era of the Internet,” he says.

BRZTech, which made the $100 million investment, is a three-month old investment vehicle backed by a number of private investors in Europe and South America, including Portuguese conglomerate The Ongoing Group.

Realtime was founded in 1997 as Internet Business Technologies (IBT).

Company is hiring in multiple locations

Today, Realtime has offices in Sao Paulo, Rio de Janeiro, London, Madrid, Lisbon, and its new newest offices in Santa Monica, CA, and New York and Parreira says the company is hiring.

The technical nitty-gritty

Realtime Messaging System & Framework is powered by ORTC (Open Realtime Connectivity) and the xRTML - extensive Realtime multiplatform language.

The ORTC (Open Real-time Connectivity) is a highly scalable, cloud-hosted, many-to-many messaging system for Web and mobile apps.

Due to its bidirectional permanent link between server and connected user, ORTC allows a web application to broadcast (push) data to a single user or to every connected upon demand. This is a huge improvement over needing to refresh a browser.

This important change increases the speed of message delivery (low latency) and saves bandwidth costs, allowing the development of Web applications that until now would be too slow to be effective or too expensive to operate.

A Realtime multiplatform language

xRTML is a Realtime multiplatform language that can convert existing static HTML code into Realtime “live Web” delivery – with no need to ever refresh – as well as be implemented into a wide range of APIs for NODE.JS, Javascript, ASP.net, Java, PHP and more, including the Mobiles iOS, Android and Windows Phone.

The programming environment is completely secure, featuring a broad number of languages with full control of tagging and extensibility. In its early beta release, Realtime has already signed up more than 1,000 developers to the xRTML community, and it will be shortly announcing developer conferences, incentives, hackathons and competitions for new applications.

Making the Realtime Web a reality

“Many people have talked about the coming ‘real-time Web’ in very abstract terms, and Realtime is the first company building a tangible framework that will make that abstraction a reality. We did not create a product. We created an industry,” said Parreira. “We are committing the resources to make Realtime the fluid, next-generation, truly conversational standard for the Web across the world.”

Realtime has already secured partnerships in the United States and worldwide with large-scale media publishers. In addition, Realtime has over 2,000 other existing global client relationships, delivering an average of 500,000 messages per second, with a worldwide footprint that surpasses 120 million user-connections every 24 hours.

Realtime Platform Will Create Tens of Thousands of Applications

Realtime’s sign-up of its first 1,000 developers is just the beginning of what it sees as a large-scale deployment of innovative “live Web” applications in the coming years utilizing the xRTML/ORTC platform, similar to Linux kicking off an explosion of new companies and applications based on its platform two decades ago.

The company is also developing and selling applications of its own, initially focusing on the e-commerce and advertising verticals.

Realtime will soon be demonstrating the power of its technology across the United States in the form of hosting local meetups in large web development communities, regular webinars, and other events.

Affectiva nabs funding to bring “emotional insight” to online video

Tuesday, August 7th, 2012
Affectiva

Affdex reads facial expressions using a webcam to help understand how people feel. (Graphic: Business Wire)

Are you ready to share not only videos you find interesting, but your emotional reactions to them? You may be able to do just that in the not too distant future. A company that has raised nearly $20 million in venture backing and several National Science Foundation grants is already marketing emotion-reading technologies.

Waltham, MA-based Affectiva has secured $12 million in Series C financing, backed by Hong Kong businessman Li Ka-shing’s Horizons Ventures and Kleiner Perkins Caufield & Byers (KPCB) Digital Growth Fund, with participation from existing investors.

The company’s technologies interest marketers and online video makers because it could sharpen their ability to create emotionally effective videos.

Affectiva, an MIT spin-off founded in 2009 by professor Rosalind W. Picard, Sc.D. and research scientist Rana el Kaliouby, Ph.D., has successfully commercialized emotion technologies, including Affdex, an automated facial coding platform and Q Sensor, a wearable biometric sensor.

Building on its momentum in market research, Affectiva will use the new funds to accelerate Affdex development of emotional insights for all forms of online video content, including advertisements, trailers, TV shows and movies.

Will use built-in webcams on laptops

Using the webcam found on laptops, tablets and smartphones, people will watch Affdex-enabled online videos and easily share their emotional experience with friends, family and content providers.

This accurate, scalable emotional insight will also allow content providers to optimize their content with improved relevance, engagement and viral impact, resulting in more user traffic and increased advertising revenue.

“Our goal is to make Affdex a globally ubiquitous tool that enables people to understand and share their emotional experiences online,” said David Berman, chief executive officer at Affectiva.

“While there is tremendous value for online video publishers to better understand consumer engagement with their content, we want to take this even further, so that consumers can see and share their own personal emotional scores.”

Opportunities for marketers

“Capturing and viewing online video has become mainstream. The ability to effectively measure real-time emotion while consumers are watching video has the potential to improve online engagement and satisfaction for users, in addition to creating opportunities for marketers to more effectively determine what consumers care most about,” said Mary Meeker, a partner at KPCB and Internet-industry expert.

The additional financing will also support the continued development for Q Sensor, already in use by hundreds of leading universities and corporations, to collect data and develop meaningful insights for areas such as sleep, anxiety, and stress.

Affectiva is partnering with a number of leading research and commercial institutions on healthcare applications for clinical and consumer health.

Affectiva previously raised $7.7 million from WPP, Myrian Capital and the Peder Wallenberg Charitable Trust, represented by Lingfield AB.

In addition, the company has also won several National Science Foundation (NSF) Small Business Innovation Research (SBIR) grants to further develop the cloud-based Affdex platform for brand managers seeking to optimize ad performance.

As a part of the financing, Frank Meehan at Horizons Ventures will join Affectiva’s board of directors and Mary Meeker, a partner at KPCB, will join as an Affectiva board observer.

Silicon Valley VC confidence drops in Q2, but improvement is projected

Tuesday, July 24th, 2012

USFAlthough Silicon Valley venture capitalists had a sharp rise in confidence earlier this year, it fell back in the face of headwinds such as European economic troubles, the troubled Facebook IPO, and other factors. But the rest of the year may be better.

The Silicon Valley Venture Capitalist Confidence Index for the second quarter of 2012, based on a June 2012 survey of 30 San Francisco Bay Area venture capitalists, registered 3.47 on a 5 point scale (with 5 indicating high confidence and 1 indicating low confidence) falling back from the previous quarter’s sharp rise in confidence and reading of 3.79.

Mark Cannice, professor of entrepreneurship and innovation with the University of San Francisco (USF) School of Management, authors the research study each quarter.

In the new report, Cannice states, “Macro issues such as the fate of Europe, regulatory constraints in the life science arena, and disappointment in the Facebook IPO overshadowed a steady confidence in the positive technology trends (e.g. cloud, mobile, social) that are centered in the Valley.”

For example, one of the study’s respondents, Elton Sherwin of Ridgewood Capital, asserted that as start-ups conduct business internationally more now than in years past, this slow down overseas (in Europe and China) will affect start-up firms more than previously.

With regard to the life sciences, Gerard van Hamel Platerink of Accuitive Medical Ventures indicated, “Continuing regulatory challenges along with a tough financing environment is causing investors to focus on existing deals rather than new investments.”

Disruptive trends intact around mobile, cloud, social

Meanwhile, Venky Ganesan of Globespan Capital Partners pointed out, “The Facebook IPO might have flopped, but the disruptive trends around mobile, cloud, and social remain very much intact.”

Professor Cannice concluded the report stating, “Despite the macroeconomic and regulatory constraints that ruled the day in Q2, the projection of a more welcoming exit market, and continued focus on technological, market, and business model innovation points to a brighter outcome for the balance of 2012.”

In related research on China Venture Capitalist confidence, Cannice and his co-author, Ling Ding, found confidence among VCs in China plummeted to a historic low in Q2 due in part to macro economic uncertainty and continued high valuations.