alarm:clock euro: April 2006 Archives

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April 29, 2006

Euro Tech Investment Up - Record Year Expected, CalibreOne

For the first time in many months the a:c euro can report good news about the amount of money flowing into European tech ventures. The numbers are up, with almost a billion US dollars worth of deals disclosed.

According to Trans-Atlantic executive search firm, CalibreOne, first quarter investment figures for European venture-backed tech firms achieved the highest quarter since the firm started tracking deals back in 1Q04. We've posted the analysis and a breakdown by country, sourcing CalibreOne Index below.

A couple of things that we note: as usual the UK is at the top in terms of capital raised, but new is that France is catching up. France is out-punching all other countries in Europe, as well as Israel. We believe that one reason for the improving French performance is the strong flow of repeat entrepreneurs and VC's willingness to back them, as well as the willingness to invest in telecoms infrastructure again. Ireland raised more capital than the Nordic region this quarter, also mainly due to telecoms deals.

Fortunately, the predictions of a very significant turnaround in investment levels this quarter proved true. Q1 2006 saw record levels of tech investment in Europe with a total of $910M deployed across the region – compared with a previous high of $748M in Q3 2005. All countries in the region performed well, with the UK, France and Benelux countries all showing the highest levels of tech investment since the Calibre One Index started in Q1 2004. It is clear that the UK and Israel see the majority of tech investment in the region. However, other countries are also growing strongly. The general trend in France is very positive, although investment levels have historically been erratic. It is also interesting to note that the German-speaking countries showed a small resurgence in activity. The widely held view is that there is huge value waiting to be unlocked in Germany. Is this process starting now? 2006 has started very well for the firm and, with investment levels holding up as they are, I fully expect this to be a record year.

Country / total raised $
Largest Deal

UK/ 308,521,790
Mar-15 Icera 40,000,000 Amadeus Capital Partners (Lead), Accel Partners, Atlas Capital,
Benchmark Capital (fabless semiconductor)

France / 128,467,920
Feb-06 Erenis 27,065,700 AGF Private Equity (Lead), Credit Agricole, Net Partners (fiber optic network services)

Israel / 123,390,000
Jan-23 Wisair 20,000,000 Apax Partners (Lead), Bynet Ventures, Intel Capital,
Vertex Venture Capital Israel
Feb-03 Siano Mobile Silicon 20,000,000 Jerusalem Venture Partners (Lead), Star Ventures Management,
Walden Israel Funds

Germany, Austria Switzerland - DACH / 96,908,070
Jan-03 Webpay 23,705,600 3i Group (Lead)
Feb-14 Dialog Imaging Systems 26,476,390 3i Group (Lead), Doughty Hanson Technology Ventures,
GIMV, Individuals, L-EA

Ireland / 78,202,000
Jan-15 Irish Broadband 30,000,000 NTR

Nordic / 67,381,100
Feb-13 MySQL 18,500,000 Institutional Venture Partners (IVP) (Lead), Intel Capital,
Presidio STX, Red Hat, SAP Ventures

Benelux / 58,656,000
Jan-16 Metris International 42,456,000 GIMV (Lead), KBC, Quest for Growth

Southern Europe/ 33,600,000
Feb-06 FON 21,700,000 Index Ventures (Lead), Google, Skype
Link – CalibreOne Index (PDF file)

Posted at 06:52 AM | Posted to News And Updates | TrackBack | Permalink

Upcoming Events For Euro Entrepreneurs

Munich - Semiconductor and Venture Capital Confab
9-10 May 2006
Meet execs from some of the best funded European chip startups, Icera Semiconductor, Dibcom, Innovative Silicon, and Chipidea, for example, along with Broadcom, Infineon, ST Microelectronics. Some VCs such as Amadeus, Baytech, Atlas Venture, and Pond Ventures are on hand. Event is organized by IET/FSA.

Paris - Red Herring Venture Market Europe 2006 May 8 to 10
Speakers include execs from Index Ventures, Opera Software, Lastminute.com and Business Objects.

Zarazoga - Innovate!Europe 2006
Meet Mangrove Capital, Accel Partners, eBay chief Europe, Atlas Ventures, Yahoo Europe, Skype's Zennstrom, and Symbian.

London - Cleantech Venture Forum X
June 7 to 9
The Cleantech Venture Forum originated in the US but it is now starting to run events in Europe. They are for VCs and venture-grade, emerging clean technology companies. Organizer says that presenting companies have raised over $425 million in the past three years.

Posted at 05:57 AM | Posted to News And Updates | TrackBack | Permalink

April 28, 2006

BT Buys Major UK eTailer Dabs.com

It not stated how much BT paid for online retailer Dabs.com but in the year ended March 2005, dabs.com revenues were £180m with gross assets valued at £42m. The online retailer has close to 1M consumer and business customers across the UK and France and processes 75K orders each month.

Dabs began as Dabs Press, a publisher of technology books.

Posted at 06:31 PM | Posted to eCommerce | TrackBack | Permalink

Paris Startups With Winning Ways

We spied the list of the most innovative IT firms chosen to receive awards at this year's Capital IT forum in Paris this week on the Altaide blog. Except for Vpod.tv, they are all new names to us.

Here's our translation of the award winners (our comments are in brackets).

Best demo: VpodTV award from Ernst & Young. (content distribution network and video blogging)

Most innovative: Mobile Signal award from OSEO (social and biz networking on mobilephones - check out the slick and informative online demo)

Best Potential Wanimo from Ministère de l'Industrie. (pet supplies shop online - we like the animal logos)

Friday Ingénierie editors award from CIO magazine (contract management back office software)

Read - Capital IT 2006 - les trophees (altaide blog)

Posted at 11:51 AM | Posted to News And Updates | TrackBack | Permalink

April 27, 2006

Banexi Backs An Interactive TV Rollup

Banexi Ventures in Paris is backing a low-budget rollup of interactive video and TV startups by the founders of Pulsevision, now called Kewego. The startup announced raising €5M in a second round from Banexi Ventures this week, the acquisiton of one year old Pooxi.com, a French video sharing and aggregator, and in the process it changed its name to Kewego (via Kelblog).

Pulsevision was founded in 2003 by Michel Meyer and Olivier Heckmann, two of the five founders of Multimania which was acquired by Lycos in a deal worth some €220M during the dotcom bubble. It started out developing text messaging applications for interacting with TV broadcasts and channels in France -- the same kind of applications as RedLynx in Finland and 2Way Traffic in Netherlands offer.

It then acquired Tedisys, a developer of digital real-time displays used for advertising and information dissemination. If you live in Europe, you've seen these large plasma or LCD screens delivering ads, info, or promotions at airports, kiosks, and post offices. It's a highly fragmented market, with two or three leading suppliers in each country.

Now it has acquired Pooxi, which aggregates videos across a wide range of topics, for an undisclosed amount. Pooxi is one of three video sharing sites in France. The others are DailyMotion and vpod.tv. Each has its own strengths and weaknesses. Pooxi founded in January 2005 was the oldest, we believe.

We like the ambitious nature of Kewego.

The funding will help KEWEGO acquiring leadership in the Video, Broadcast and TV Industry and developing the next generation of products and services around the concept of TV 2.0.

It's targeting a market slated for quick growth, but it's a highly fragmented market both on the product side and on the supplier side. We believe a consolidation strategy would have plenty of potential targets and the prices are still reasonable, which should give Kewego a chance to carve out a leading place in the European interactive TV market.

You may recall that the same VC backed Kelkoo, which was acquired by Yahoo two years ago for a princely sum after building up a successful Pan European online business. (This might explain why the letters "K" and "o" are being re-used here. If you want to know more about the story of Kelkoo, it has been written up in a book by Julien Codorniou containing interesting insight into the people behind the success story.)

We know that Banexi has a flair for building Pan European ventures and finding good exits - it is one of a handful of venture funds in Europe to not only raise a new fund in the last year, but also to have more money coming at it from LPs in the US and Europe than what it targetted.

We've interviewed Michel Dahan several times and listened to him speak at confabs over here. We recall him describing Banexi's strength:

"What we can do is build companies with complex business models in a complex market," he said. "Europe is multilingual, multicultural. The business culture varies from country to country. Just try negotiating with a Dutch merchant, for example. They are tough. Or try entering the German market, where newcomers are not exactly welcomed. This is the kind of thing that we know."

Read - Pulsevision becomes Kewego (press release)
Read - Michel Meyer 2.0(kelblog)

Digital Pen Firm Taps US VCs

Pegasus Technologies, which develops digital handwriting input solutions, has closed a $4.8 million financing round from US venture capital firm Cedar Fund Cedar Fund and two existing Japanese investors, Nippon Venture Capital and the NFP fund, reports Globes.

It's not a down round, similar valuation to last round, according to the online journal, but the early Israel-based investors did not participate in the latest round. Founded in 1992, Pegasus has raised a total of $14 million.

There are only a handful of companies making a go of the digital pen business. In addition to Pegasus, Sweden's Anoto is doing it, as is Taiwann's UC Logics with its LaPazz products. Each has its own quirks, some requiring special paper, while others require special hardware or communications support.
Read - Graphics co Pegasus raises $4.8m

The Shape Of France's Software Industry

There's some newsflow this moring in the French press about the state of the country's software industry, the result of the publishing of the latest Truffle 100, which is a detailed survey of the sector. (It came out at Capital IT investor's conference underway in Paris. Red Herring was there yesterday and has a report. Link below).

The good news is that the Truffle 100 total sales grew by +28%, which is a higher growth rate than industry heavyweights Microsoft and SAP. And R&D spending by software firms in France is growing at a rapid rate, exceeding €970M in 2005, up by 24% from last year's spending.

The bad news is that you could put the entire French software industry into Symantec, which alone generates about €3B in annual sales, as L'Expansion reports, adding that SAP does more than twice that amount, Oracle three times, and Microsoft 10 times. The Truffle 100 software firms generate €3.6B per year. A good 71% of the firms on the list generate less than €15M.

Our image here and associated is last year's as the latest one is not online yet. We will try to get a copy and to get some analysis from our contacts in France. Here are a couple of numbers from this year's list.

1. Dassault €934M.
2. Business Objects € 865M
3. Cegid € 192M

Read - France’s $2.5B Tech Foray (Red Herring)

Posted at 06:29 AM | Posted to News And Updates | Software | TrackBack | Permalink

Wave Power Startup Readies 2007 Full-Scale Demo

Scotland's AWS Ocean Energy Ltd, which makes an alternative energy generator (grid-connected) that relies on wave power, has raised £2 million in equity funding from RAB Capital, after completing a trial off the coast of Portugal.

On its website, the firm said that the new funding will enable AWS to assemble a "world-class engineering and commercial team, and to complete the design of a full-scale demonstrator to be fabricated in 2007 and commissioned in 2008." An updated version of its Mark Two design will be built which will exploit lessons learned from the "successful testing off the coast of Portugal" last year.

Read - AWS Ocean Energy Press Release (Tornado Insider)

Posted at 05:26 AM | Posted to Alternative Energy | Venture Capital | TrackBack | Permalink

April 26, 2006

Streamezzo Taps VCs As Demand For Its Mobile Media Grows

Mobile media content managment system developer, Streamezzo, has raised €11M in a second round of financing, according to Neteco. Sofinnova Partners and sister company, Sofinnova Ventures in the US, participated along with earlier investors. The startup develops content managment software used by mobile network to provide access to mobile TV, radio, and video, as well as phone portal customization. The firm calls it Rich Media.

Streamezzo's software delivers a user interface that is a lot like the programming guides we're used to on Pay TV and digital TV but clearly designed for the cellular phone.

Streamezzo is hiring in the US and has established some partnerships for targeting the Asian market. According to the Neteco article, the startup is experiencing brisk demand from other cellular network operators and that is reason it raised the new capital. Its first round, of €5M, was raised in 2004

Streamezzo's software delivers a user interface that is a lot like the programming guides we're used to on Pay TV and digital TV but clearly designed for the cellular phone.

Posted at 09:06 PM | Posted to Venture Capital | TrackBack | Permalink

Lund Kenner's (Very) Early Stage Pitch

As regular readers know, from time to time the alarm:clock euro profiles early stage ventures. But we also want to cover those who work with and advise seed stage ventures, so today LundKenner is getting the treatment.

Lund Kenner was recently founded by Soren Kenner and Morten Lund, in Copenhagen. The two have put all the ventures they've supported in the past informally into one portfolio and formed a management team around themselves to take it all forward.

The biggest bragging rights the firm has is being an early investor in Skype. Lund invested before the VCs did.

LundKenner is a different animal than that what we're used to seeing coming out of the corporate finance world. And Kenner's description of what's on offer confirms it.

We asked Kenner for a quick overview of some of the more developed startups. Here is what he said:

Aresa is a biotech company that does gene-modified plants that detect landmines. Company just did IPO. We have a good stake. In China, we backed Maxthon [browser made in China] which has had 55 million downloads. Biggest damn browser in China by now. And Bullguard [personal firewall and desktop security software] 16 million downloads. Now also on preload and in retail stores. It's the number 5 brand in small office/home office market in Europe by now.

Can you describe what you offer to entrerpeneurs?

We bring to the table whatever is needed, be it money, people, access, network, distribution. This is the stuff that a venture would normally try and buy with money. We're better at sourcing third party services, so we get better pricing, better quality and usually better traction. Also we have some 40 people doing inhouse branding, web-development, design, and SEO. To my thinking we are doing what any venture-partner should be doing -- which is becoming a true partner with the venture instead of just a passive investor.

LundKenner takes an equity stake in exchange for these services, to pay for the so-called value add. What sort of value does LundKenner add?

What sort of value we add depends on the situation. It can be anything from tweaking the business model, designing the GUI, finding the right connections, doing the back-end integration, finding the CTO, the CEO, the sales force, developing the lead generation model, selling the JV-model to partners etc. No fixed approach. We try and stay loose. So far we seem to be having a very good run with that. Size of equity stake depends on what sort of value we can add.

It looks like LundKenner is out to shake things up a bit and we think that the firm is worth paying attention to for entrepreneurs looking for good advice, and for VCs looking for dealflow.

What the team has yet to prove is that such an advisory investment company can not only contribute to building viable tech businesses, but also achieve an exit that will give them a good return on the time and energy they put into their deals.

Another milestone that we'd look for is some more examples of LundKenner bringing in the big name VCs to portfolio firms at the right time. We know one thing for sure, that Index Ventures, DFJ ePlanet, Bessemer, and Mangrove Capital are well aware of LundKenner.

Read- Description of LundKenner current portfolio firms (LundKenner blog)

Posted at 06:13 AM | Posted to entrepreneurship | TrackBack | Permalink

Cameraphone Lens Innovator Brings In Third Round

France's Iris Capital has led a €16.4 million ($20M) third round for Lyon-based Varioptic, a developer and manufacturer of a new kind of lens for cameras and cameraphones.
Align image right with flowing text

The firm has been executing on its milestones, according to is steady flow of press release, and this round confirms that. It brings the total amount raised to about €28M, plus an undisclosed amount from Japan's NIFVentures. Its seed stage investor is Paris-based Sofinnova Partners

This is the second cameraphone lens deal this month. (See link to Eyesquad funding below.)

Founded in 2003, Varioptic has developed a liquid lens technology that reduces the number of moving parts, doing all the things that conventional lenses can do but consuming less power, being more robust, and lighter. Target market is cameraphones, but the tech can be used in other types of devices too, says the firm.

Varioptic has yet to sign a volume design-in win but claims more than 100 pilot projects with lens module manufacturers and mobilephone-makers.

The last time we talked to Varioptic, the firm was telling us about its sound IP and patent portfolio. That is because there had been some reports in the trade press about a dispute with Philips, which also has a lens with similar technology. We're trying to find out if it has been resolved.

Read - Varioptic Secures (press release)
Read - Eyesquad funding (a:c euro)

April 25, 2006

3i and iSource Back Screen Tonic's Mobile Internet Ads Play

Screen Tonic, a five year old French developer of software and services that enable mobilephone advertising, has just raised €5.5M. Its products are targeted at mobile network operators that run mobile portals with ads such as sponsored links, banners and video ads on their mobile website. So far it has been quite successful in the French market. The new capital will be used to go internatioanal.

The 3i partner on the deal thinks that it is just a batter of time before this becomes a lucrative ad channel.

We like the way ScreenTonic has partnered with the major mobile carriers in France offering them the dual opportunity to raise additional revenues and increase mobile internet traffic. We anticipate Mobile Internet Advertising accounting for a significant portion of mobile data business in the future. This is just the beginning for the industry.

Posted at 12:23 PM | Posted to Venture Capital | Wireless | TrackBack | Permalink

VC Firm Northzone Graduates To Top Tier

Less than two years after closing its last fund, Nordic early stage VC, Northzone Ventures, has raised a new one, on target, with a single closing at €175M.

It’s the firm's biggest ever fund, which we say puts it into the top tier of tech VCs in Europe. We know how hard it is to raise a tech VC fund in Europe, so if they’ve done it twice in recent years, without a prolonged marketing process – the performance has to be there.

Northzone V K/S (Apr 2006) €175M
Northzone IV K/S (Dec 2003) €78M
Northzone III (Dec 1999 ) €70M
Northzone II (Feb 1998) €10M
Northzone I (Feb 1997) €9M

The last fund it raised was back in 2003, when the nuclear post-bubble winter was still chilling the rest of the industry here. It was a small fund but it turns out to have been a good one.

Investments by this fund include Funcom (OSE: FUNC; a developer and publisher of massive mulitiplayer online games), PriceRunner (shopping comparison acquired by ValueClick) and MCP (mobile communication platforms for ships).

We note that Northzone can bring in the big name co-investors to its portfolio. And even its website sets it apart. It publishes stories about mistakes it made and near misses, along with the success stories. This is pretty unique in Eurpean VC circles. We particularly like the snarky interactive test for entrepreneurs.

We think that this kind of thing confirms what the a:c euro has been saying for the past couple of years (to our freelance editors that weren't interested), there is a new VC cycle underway in Europe.

And despite the difficulties certain brand-name VC funds have had raising capital in the past year, several newcomers have emerged in this cycle that present a change in the ranks here (based on their recent fundraising success): such as Eden Ventures, Baytech, Wellington, Index Ventures, and Pond Ventures, to name a few.

Link - Take the entrerpreneur test at Northzone

Posted at 07:03 AM | Posted to News And Updates | Venture Capital | TrackBack | Permalink

April 24, 2006

Startup's Cardboard Antenna Boosts WiFi

Here's something for all those Fon Foneros and muni-WiFi networkers out there: a small flat antenna, basically a piece of coated cardboard, that claims to double the range of WLANs. It's from a UK company called Tritium.

The Flatenna has been designed by engineers and tested by community wireless broadband users. The Flatenna was created by the need to connect over larger distances for very low cost. The Flatenna is styled to look good in your living room, office or on your window ledge.... The Flatenna itself is legal and does not contravene EU regulations, however the user must ensure that output from the system as a whole is within local limits. It's highly effective at extending the range of wireless networks, cutting down interference and controlling the reception area.

Link - Flatenna Products (Tritium)

Posted at 07:02 PM | Posted to Wireless | TrackBack | Permalink

VC-Backed Oplayo Acquired By Slice Wireless

Here's a trans-border deal if ever there was one: Australian Slice Wireless joined up with Prague-based U-Turn Media to acquire the Finnish mobile content platform provider Oplayo. There was no dislcosure on price paid.

U-Turn was founded in 2001 and is specialized in video delivery to mobilephones. Slice provides a publishing and payment platform for content providers targeting wireless devices.

The last time a:c euro talked Oplayo, it was reporting a million downloads of video files to mobilephones per month (last September). Shares in the startup were sold by its backers, Holtron Ventures, Zouk Ventures, Blue Run (formerly Nokia Venture Partners) and SAC Participations.

Read - Oplayo Under New Management (press release)

Posted at 02:37 PM | Posted to Wireless | TrackBack | Permalink

eBay Acquires Sweden's Tradera.com - VCs Exit

eBay said today it had acquired Tradera.com for about $48M. Launched in 1999, Tradera.com enables auction-style trading for buyers and sellers throughout Sweden. Its largest venture backers was Swedish VC firm IT Provider, which owned 48.9 percent of Tradera's share equity.

Read - eBay acquires Tradera.com (finextra)

Posted at 01:46 PM | Posted to eCommerce | TrackBack | Permalink

VCs Team Up For a Bite Of Garlik

3i and Doughty Hanson Technology Ventures have taken an early stage stake in garlik for an undisclosed amount of cash. The founders hail from Egg, one of the most successful online banks in Europe.

You may remember that some of the other Egg creators founded and launched Zopa, the eBay of personal loans, last year.

garlik is a consumer-oriented online service provider of a new kind. It is so new that we didn't quite understand what is on offer, even after reading the PR a couple of times. So we've decided to take another poke at the company at the end of May when a pilot programme is to go live. Full consumer launch is expected in the autumn 2006.

Garlik has a lot of the markings of newfangled web applications, what with the beta pre launch sign up page and its moniker. But the background color used reminds us of the FT's trademark salmon.

Posted at 10:53 AM | Posted to Online services | Venture Capital | TrackBack | Permalink

Startup Brings Robocops To Market

Berlin-based Robowatch is marketing a security robot that looks a bit like a rolling Thermos with a cherry on top, but its simple look belies the extra support that it can provide human security guards.

The indoor model (pictured right), the first that the firm brought to market, comes equipped with heat sensors, handy for detecting warm bodies when the lights go out, plus 23 other sensors (smoke, gas, movement, etc), wireless communications, video camera, optical scanner, alarms, and loudspeaker - it can demand to "see" identification in a couple of dozen languages.

The startup just won a deal with Diehl, to make a more robust model for reconaissance and situations where humans might not want to go, such as a suspected bomb location. Robowatch also is developing a desktop version for super paranoid consumers.

All its robots are designed to be mass-produced. They are modular too, so that means customers can modify based on their requirements.

Is that a robot you're carrying, or your hand-luggage?

The indoor robot costs between €500 and €1500 a month to rent, weighs 25 kg, is 116cm high (almost 4 ft). Robowatch also sells some software for communicating and managing the sensor-equipped robots.

Founded in 2000, Robowatch is based in Berlin and is backed by High Tech Private Equity (last round was in July 2003). The founders are Ulf Stremmel, an engineer with sales and marketing experience in the security sector, and Jens Hanke who heads up R&D. He's a mathematician and bio-informatics specialist. The company employs 25.

We think the firm will win sales based on the novelty factor initially, the big question is will the roster of value added reseller partners, and the Diehl deal, result in the high volume sales the firm's founders are aiming for.

Read - Robowatch and Diehl Launch (press release)

Posted at 07:09 AM | Posted to Hardware | TrackBack | Permalink

Red Herring’s List Turns Into Shopping List

Since June of last year 9 out of 25 companies identified by Red Herring as "European companies and technologies that will change our world by 2010" have been exited by their VCs. We picked up this nugget in a newsletter published by the UK's Library House, which is a new corporate finance advisory firm in London.

In total, nine of the 25 companies have exited, six since the initial HBS publication. Arakis, Kudos and Skype went for trade sales, CMR Fuel Cells had an IPO on AIM, Esmertec did its IPO on SWX, and Q-cells went for an IPO in Frankfurt. ..The largest return multiples earned were approximately 100 times for Bessemer and Index Venture's investment into Skype which was sold to Ebay, for an initial £1.4bn in September 2005. The largest capital gain was from the sale of Q-cells, Apax claims a return of £190m. Disclosed investment into the HBS companies since June 2005 exceeds £56m.

Both Red Herring and Library House, which subsequently tracked the 25 companies, were commissioned by Harvard Business School Alumni to do the work. The complete list is apparently not publicly available.

Despite the title of this post, we don’t really think that strategic buyers and capital market investors used it as a shopping list, but we do think that Red Herring's research and selection process was good.

Read - Library House March Newsletter

Posted at 06:25 AM | Posted to News And Updates | TrackBack | Permalink

April 23, 2006

London Biz Angel Network Shows Seed Investing Pays

London Business Angels, one of several active angel networks in Europe won recognition last week for achieving 17X money on an investment in contextual ads company, Vibrant Media. It sold the shares to an incoming VC firm.

LBA invested €700K in 2001after the dotcom bubble burst. The pre- money valuation was about €4M. Upon exit the firm was valued at €85M. The angel syndicate included eight LBA investors.

The company [Vibrant Media] is now generating revenues of 1.5m euro + per month and these are rapidly increasing primarily in USA... The company was valued at circa 85m Euro in June 2005 for purposes of a new money investment by a West Coast VC subscribing circa 12m euro of new money. In addition existing investors were given the opportunity of selling part of their shareholding to the VC at the same valuation.Existing investors including the founders were offered the opportunity to dispose of part of their existing shareholding to the VC at a value of circa 85m Euro representing a multiple of 17 times for the angels compared to their original investment less than five years earlier. VC Funding of 9m Euro was set aside for this purpose.

Read - Most Promising Exit (eban report)

Posted at 08:58 AM | Posted to Advertising | Venture Capital | TrackBack | Permalink

Angel/Euro VC Relationship Still Uneasy

The relationship between VCs and business angels should be a natural one: the angels work with the founders to develop the business at a very early stage, and then bring in VCs to co-invest, add value at a strategic level, and manage the exit.

When the bubble burst, the partnerships between angels and VCs went bad, particularly when VCs exercised their shareholder in the inevitable down rounds that ensued. Seed stage backers got wiped out and are naturally wary of working with VCs now.

Several presentations from a recent European business angel network conference in Prague make it clear that there is still a way to go in rebuilding the relationships. This image illustrating the sentiment, for example, is from a presentation given by venture capitalist and Europe TechTour creator Sven Lignjaerde at the conference.

VCs are often seen as competitors, not partners. Their terms and conditions, although pretty much standardized these days even in Europe, are difficult to accept for angel investors. And VCs are perceived as having an "all or nothing" attitude.

Basically, there is a distrust and a "lack of win-win thinking," according to a presentation by Tomasz Czechowicz, who is a VC in Prague. He says that the onus is on the VCs to make their case and present the benefits to angels. And he apparently is not just paying lip service too, if his list of recent deals brought to him by angels active in central Europe is anything to go by.

Link - Presentation by Tomasz Czechowicz (powerpoint)
Link - Presentation by Sven Lingjaerde (powerpoint)

Posted at 08:07 AM | Posted to News And Updates | TrackBack | Permalink

April 21, 2006

A Startup Bill Gates Would Love

UK-based Newnham Research, a rare venture-backed PC peripheral startup, has a product Bill Gates would love. It's a device that makes it possible to add a couple of extra monitors to a PC with the ease of connecting a USB device.

Apparently the world's richest man likes to work with three monitors, so we think he'd like Newnham. According to Lunch Over IP blog, Gates uses three screens synchronized to form one single desktop, due to its positive impact on personal productivity. A screen on the left is for e-mail boxes; on the center: the message he's reading; and on the right: the browser.

If you've ever tried it, hooking up more than one monitor to a standard PC requires geek savvy. The Newnham gadget, which does not seem to be on the market yet, aims to change that.

The company has some famous founders, according to a short profile in today's EETimes. Quentin Stafford-Fraser, is a pioneer of the webcam, and Martin King, apparently the inventor of predictive text messaging commonly used on mobile phones for SMS communications. Benchmark Capital and Atlas Ventures are backing the company since last year. It got its seed funding from one of the co-founders.

Read - How Bill Gates Works (Lunch over IP blog)
Read - Cambridge startup aims to change computer display (eetimes)

Posted at 03:56 PM | Posted to News And Updates | TrackBack | Permalink

Low-budget Web Wizard On Content 2.0

After posting a list of German Web 2.0 applications last month, we noticed that Sven Eppert picked up on it listing some sites that are not mere clones.

Interestingly, three of those apps highlighted on his list were developed by one individual, Munich-based software developer Hendrik Mans.We looked him up, asked him about the work, and decided to publish the discussion.

We like his bootstrapping ways, and it illustrates that the entrepreneurial Zeitgeist, what Om Malik calls the "Do It Boom", has not escaped Europe. Besides it's hard to ignore a man with a chainsaw.

Mans' last gig was at SevenOne Intermedia, which belongs to television broadcasting company ProSiebenSat.1, where he developed websites for the firm’s TV channels. He's independent now, and the Web 2.0 efforts are undertaken in his spare time.

In the Q&A we got confirmation of a few things: newfangled applications for the Web can be created rapidly using Ruby on Rails and the development can be managed with low-cost software engineering applications.

Interestingly, the development mindset as Mans, and several of his peers, practice it is more like games development, than it is like developing content for other categories, such as static websites, ecommerce, or online news.

The applications hinge on involving users or site visitors to a great extent too. Motivation for the user to participate is typically promotional, e.g. promoting a blog or yourself to find a new lover.

As a result of all this, we're categorizing this as content innovation, as opposed to a disruptive technical innovation. With that in mind, such projects are probably not in the scope of a typical VC fund, but they might be eventually be interesting for corporate VCs and media and publishing firms.

a:c euro Which sites have you developed and why?

Next to my big projects, I like building small sites with an experimental nature, like dilemma5000.de and 25peeps.com, each of which only took me a couple of days to develop. I use these mini-projects to familiarize myself with the new features that keep cropping up in my web development framework of choice, Ruby on Rails.

a:c euro: The 25peeps.com sites seems to be popular, and even influential: this week we learned that podcast promotion site, 11seconds.com was inspired by it.

The main purpose of 25peeps.com was to try and see how people would end up using it. The 25 displayed pictures are sorted by their overall popularity, which is the sum of clicks on the pictures themselves as well as referals the picture owner has generated.
So, in order to keep your picture at the top, you'd either have to upload an "interesting" picture (with the definition of "interesting" is, of course, left to the other users), or sending a large number of people from your own weblog to 25peeps.com.

It's interesting to see how differently people use the site; there are some female users who upload, let's say, pictures targeted at male users, but there are also many users uploading very creative photos, or simply sending enough people from their own sites to mine so their picture stays at the top.

My current big project, aufeinander.de, has always been intended to grow into a popular 2.0 dating/matchmaking service. It's not quite there yet -- some of the features in the current version worked well, others didn't.

So now I'm tackling a new version that will take the site into a slightly new direction, a luxury you can only afford with tools that rapidly speed up development time, and Ruby on Rails is such a tool.

a:c euro: How do you finance these projects?

I'm a freelance software developer, self-funding these projects. I'm a big fan of viral concepts, with sites feeding themselves with new content and users "automatically". It's a great starting point for bootstrapping a business with as little external funding as possible.

a:c euro: You say “bootstrapping a business”, so you believe your efforts can translate into sales. What makes you think these sites can be money-making businesses?

I look to typical web 2.0 (user-centric, networked) applications like flickr.com and del.icio.us. Sites like these don't require an editorial staff or a huge marketing budget; they merely supply a tool to the users, allowing them to go wild. It works wonderfully because it's a) a lot of fun for the users and b) very inexpensive to maintain.

It's interesting to note that the guys who made flickr.com were actually working on a web-based online game before flickr.com became so popular (flickr.com started out as a small-scale photo sharing site for the game's users).

To come back to your question, people will gladly pay for a service that is useful to them (or plain fun, or a mixture of both, see flickr.com). When it comes to making money, people seem to have finally realized that the best way to make money is to charge for good services. If all you do is produce inanimate content, you'll have a problem convincing your users to pay money for it -- and that is what almost everybody was doing back in the "1.0" days. Come up with an idea for a service that fills a niche, and people will gladly pay for it. It sounds incredibly trivial, but only few companies out there seem to get it."

a:c euro: Thanks for taking the time to talk to us.

Read - boom boom boom (gigaom)
Read - Web 2.0 applications in Germany (Sven Eppert blog)

Posted at 09:58 AM | Posted to Web 2.0 | TrackBack | Permalink

April 20, 2006

Smart Fuel Cell Taps VC On Back Of Contract Wins

Smart Fuel Cell has raised a new round of €15M, reports Tornado Insider. We note that the deal came on the back of winning several contracts for joint development in the consumer electronics sector. There was no disclosure on the names of the investors. We've been watching SFC for several years, since it launched its first prototype of a portable fuel cell targeted at constructions sites and campers (picture here).

Over that time, the management has been consistenly executiing on the business plan, which is not always the case with alt energy startups, and therefore worth noting. In prior rounds PriCap Venture Partner AG and 3i Group Ltd. were key backers since 2000.

Read - SFC Smart Fuel Cell raises €15 million for growth (tornado insider)
Read - SFC raises €15M For Growth (press release)

Posted at 02:58 PM | Posted to Alternative Energy | Venture Capital | TrackBack | Permalink

Intel Capital Goes It Alone On AdaptiveMobile Round

It's rare for Intel Capital to lead a VC deal, much less go single handedly into a new venture. But that is what it has done with Ireland's AdaptiveMobile, a mobile security and filtering software developer. Intel invested €4.6M ($5.5 million) in what looks like a first round of funding for the three year old firm. Its software products are targeted at three markets: mobile network operatrors, companies, and mobilephone subscribers. Mobile anti-virus software is not a puny little market, so where were the Irish and European VCs?

Read - AdaptiveMobile Raises (mobile europe)

Posted at 02:49 PM | Posted to Venture Capital | Wireless | TrackBack | Permalink

VCs Back Criteo's New Way To Recommend Films

Criteo, a French startup wants to make sure that users of its online video recommendation service never again pay to see a movie they won't like, or buy a DVD that's a dud. It announced today that it raised €3M in seed capital from Paris-based investors, AGF Private Equity and ELAIA.

Criteo was founded in 2005 and has been on our radar for a few months now. What made us look twice when we first heard about Criteo was its founding team.

Co-founder and CEO, Jean-Baptiste Rudelle (pictured right), had a career at Lucent and Philips before he started up a ringtone provider called K-Mobile, which he then sold to AG Interactive in 2004 for an undisclosed amount. (AG Interactive is a subsidiary of American Greetings).

Shortly afterwards, he founded Criteo, along with two former Microsoft R&D execs that returned to France after working in Redmond, namely Franck Le Ouay, who was an R&D exec at Microsoft and has patents in gaming rendering technologies, and Romain Niccoli, who led software engineering teams at the software giant

Criteo is being sold as a white label service to large portals and websites that want to improve merchandizing of their product categories, for instance films.

The idea being that they will buy DVDs and videos with more confidence, and maybe more frequently, if the recommendations are precise enough.

It will not be offering services under its own brand. Although, the founders set up criteo.com, a consumer oriented website, the site is only meant to demo the product, according to Rudelle. It launched in Beta late last year and has signed up about 180,000 users.

The firm has developed predictive algorithms and combines them with user generated profiles, to make film recommendations. It is an improvement on the recommendation engine that is built into Amazon, we believe, because it is based on what a user likes, rather than what they bought.

Another difference is that it gives weight to negative choices. Users select movies they dont like, which will then influence the film recommendations.

The founders say the technology can be applied to other types of media. They picked films as the first category.

Posted at 11:43 AM | Posted to Web 2.0 | TrackBack | Permalink

European VCs Exit Net4Call and 12Snap

Oracle paid an undisclosed amount to acquire Net4Call, which was backed by Alliance Venture. The 6 year old company sells a platform for developing telecommunications services (virtual PBX, click2dial, premium rate voice and the like), targeted at telcos.

Back in February, 12Snap was acquired for $22M. NeoMedia Technologies, Inc., has paid $22M for Germany's mobile applications firm 12Snap. We learned this week from Venture Capital Magazin (a German publication) that it was probably a disappointing exit for its founders and some of the VC-backers, which included Apax Partners, Argo Global Capital, BlueRun Ventures, as the firm raised some €44M over the years.

Read - Oracle acquires Net4Call
Read - Agreement to Buy Award-Winning Multinational Provider 12snap

Posted at 11:42 AM | Posted to News And Updates | TrackBack | Permalink

Liquavista Poised To Make Displays Brighter

New Venture Partners has spun Liquavista out of Philips with an undisclosed amount of funding from both sides. The Dutch startup is looking to market equipment used to make brighter displays for mobilephones, MP3 players, and other electronic devices. It uses a diffeerent technique and materials compared to LCD, the industry standard for displays, but the founders say that the equipment is compatible with existing LCD production lines.

This is the first startup resulting from a contract that NVP signed with the Dutch electronics company a year ago to spin out promising R&D projects.

NVP has a similar partnership with British Telecommunications plc (BT), which has resulted in the following startups: Azure Solutions Ltd., Vidus Ltd. (acquired by NASDAQ-listed @Road), Evolved Networks Ltd, Psytechnics and iO Microwave Photonics Inc.

Its claim to fame is a Lucent venture portfolio that had done well since NVP got its hands on it. Some of the spinoffs (and exits) include iBiquity Digital, Flarion (acquired by Qualcomm), Vallent (formerly Watchmark-Comnitel), LPSS (now Intrado), Celiant (now part of Andrew Corp.) and Internet Photonics (now part of Ciena).

Posted at 10:19 AM | Posted to Displays | Venture Capital | TrackBack | Permalink

Internal Round For Quick-Growing Ascade In Sweden

Sweden's second fastest growing software company has tapped existing investors,SEB Foretagsinvest and CapMan, for €2.1M.

In Sweden, Ascade, whose software is used by telcos to manage wholesale voice minutes transactions, is number two, and Patrix, a developer of intellectual property software tools, is number one, according to Deloitte, which ranks firms by rate of sales growth.

Ascade has an impressive profile. It was founded in 1997 as an IT consultancy and has managed to morph itself into a software vendor, something many here in Europe try but few execute with great success. It made the transition in 2000. Three years later, it raised its first round of financing from the same two investors. It raised a total of about €4M prior to this round.

Even more challenging was its decision to target teclos with its software - telcos do not normally like to buy from a startup. However, it has found demand in that tough market and is starting to win customers beyond Europe. The new capital will be used to boost operations and for some product development.

Read - Ascade AB Secures (press release)

Posted at 07:39 AM | Posted to Software | TrackBack | Permalink

April 19, 2006

Swiss Web 2.0 Contenders

When we published a list of German Web 2.0 firms last month, we said we'd cover other countries too. Today it's Switzerland getting the treatment. You can complain that some of them aren't Web 2.0, but we decided that if it's on the Web and new, it makes the list.

List of Web 2.0 Applications in Switzerland

ADS-Click online advertising platform that supports the latest ads models and established ones (startup)
Cocomment blog comment tracker (Swisscom R&D)
Cityguide online guides and reviews of leisure spots, hotels, restaurants, clubs grouped by cities worldwide (startup)
Golffriends book tee-off times, plus catalogue and search for golf courses (startup)
Groupville online collaboration with lots of goodies (Sendai Systems)
immo search real estate and apartment search exploiting web 2.0 tech (Die Post)
Jobwindow global job search network in development (Ardaba)
Kaywa mobile blogging platform (startup)
local.ch search engine for local phone listings, restaurants etc (PubliDirect and Swisscom Directories)
piazza.ch classifieds based on new web tech (TAMedia)
Plazes location pinpointing that integrates input from users (startup)
Sky-Click IP-telephony-based call center package that is easily integrated into web pages (Ads-Click)
WebpayClick&Buy service, a European version of PayPal (startup)
Wikio news aggregator w/ pertinence ranking driven by algorightms and user voting (project)
Bloggrr announced but not launched (project)

Posted at 04:59 PM | Posted to Web 2.0 | TrackBack | Permalink

Online Ads Tech Firm Staffing Up For VC Round

One month after selling one of its web-sites that targets consumers over 45, Utarget, a British online advertising ageny and new media company, says it has hired David Michael, a former Yell.com executive to take over business development.

The move, it said, is one of the things it is doing with an eye to raising venture capital (note that in the UK venture capital is used interchangeably with private equity).

The firm's CEO says that it wants to build partnerships to develop several recently created niche consumer-oriented sites that cover travel (Travelconnect), finance, youth, and health sectors. Its Media division created 50connect, a portal for people over 45, which was acquired in March by Opalcove in a seven-figure (British pounds) deal.

Utarget, which was founded in 1998, manages ad networks across 500 UK websites that reach more than 15 million unique users per month. It has an annual turnover of £2.5M.
Read - utarget plc strengthens strategic business development with ex Yell.com man

Posted at 04:12 PM | Posted to | TrackBack | Permalink

VC-backed Grisoft Acquires German Anti-Malware Startup

Some security software consolidation underway. Czech Republic-based Grisoft, an anti-virus software developer, has acquired Ewido Networks, a two year old anti-malware provider, based in Germany.

This looks to be the first of several acquisitions, as Grisoft recently raised $52M from Intel Capital and Enterprise Investors, a fund that targets Eastern and Central European businesses.

Read - AAnti-Viren Spezialist GRISOFT übernimmt Anti-Malware Experten ewido networks
Read - GRISOFT Acquires Anti-malware Expert Ewido Networks

Posted at 01:50 PM | Posted to Security | Software | TrackBack | Permalink

Standards Battle For Mobile TV Puts Startups In The Crossfire

Several European startups could be affected by a standards debate for mobile TV, according to a recently published research report from GP Bullhound, an investment banking boutique in the UK.

The report analyses two competing standards for delivery of mobile TV, one based on technology emerging from the broadcasting industry, and the other coming from the telecommunications industry.

GP Bullhound's analysts believe that DVB-H (the broadcasting industry's standard) will win.

That would be good news for Europe's venture-backed contenders, such as Dibcom, UDcast, and Envivio (spinoff from France Telecom). But it's bad news for IPWireless and Norway's Mobile Media Company.

For an argument against DVB-H winning, there is a paper published by The Mobile Media Company, which is the firm behind the BBC World Mobile TV service in Norway (pictured here). It is for purchase only so the a:c euro can only point you in that direction.

Read - Making Mobile TV Possible
Read - Mobile TV and Radio Report (mobile media company)

Posted at 12:36 PM | Posted to Wireless | TrackBack | Permalink

Mobeon Expands Investor Group

Mobeon, a Swedish mobile messaging software firm, raised $13 million this month from BrainHeart Capital and the Sixth Swedish National Pension Fund. The new capital injection splits the firm's shares now between Ericsson with 21 per cent, BrainHeart Capital with 49 per cent and Sixth Swedish National Pension Fund 30 per cent. Prior to this the firm was owned by BrainHeart and Ericsson only.

Mobeon sells its software to OEMs, both hardware and software firms, as well as network operators, to enable advanced messaging applications based on Internet Protocols, such as videomail, voicemail, and unified messaging services. The capital raised will be used for R&D, and some small acquisitions.

Read - Investing in Mobeon´s success (press release)

Posted at 11:55 AM | Posted to Venture Capital | Wireless | TrackBack | Permalink

April 18, 2006

The New Tightness of Euro Founders

We're noticing that European startup founders like to show off their frugality. The leaner the startup machine, the bigger the bragging rights.
On Qype's blog we found a list of the differences between startups, dotcoms era ventures, and established companies that illustrates this notion. Here's our translation below

5. Office space
Corporate: 45 m2 for middle manager and assistant.
Dotcom: 45 m2 for the foyer in from of the aluminum-clad conference room suspended from the third floor.
Startup: 45 m2 for 8 employees

6. Coffe-maker
Corporate: Automatic dispensing a watery brew
DotCom: Brand new Jura automatic (pictured right)
Startup: Jura brand bought at a bankruptcy sale

7. Management team monthly salary
Corporate: X thousand Euros
Startup: X into 4 thousand Euro

The office space description is no joke. We've been visiting startups in the region and the most extreme example was a stealth mode startup we met in Lausanne with four engineers in an office meant for a receptionist. There was just enough space for their workstations, two on each side, and a wastepaper basket.

Read - Warum Darf Man Wieder Startup Sagen (qype corporate blog)

Posted at 08:05 PM | Posted to | TrackBack | Permalink

Klicktel Completes Successful IPO on German Junior Mkt

German telephone listings and directories software publisher, Klicktel, has raised €14.4M in an IPO today on Germany's Entry Standard, the lightly regualted exchange for small and medium sized companies. Some €10M of that will flow to the firm's coffers.
The IPO share price gave it a valuation of €52.7M, which is not bad for a firm that generates annual sales of €16M (in 2005). Its main sources of sales are subscription and software licensing. The new capital will be used to expand the business in its home market, and abroad. It recently introduced navigation and mapping software.

Posted at 04:15 PM | Posted to IPO | TrackBack | Permalink

VC-backed Orthogon To Go To Motorola

Motorola said today it is acquiring Orthogon Systems, a British venture-backed wireless equipment provider for an undisclosed amount.

Orthogon, which has been shipping product since May 2003, makes point-to-point broadband wireless systems, also known as 5.8 Ghz Ethernet bridges. The equipment wirelessly connects networks between buildings, as well as connecting other types of network nodes, such as cellular phone base stations to fixed networks.

The firm raised its last round of VC in late 2004, with Motorola's venture arm leading an $8M round, along with early investors Atlas Venture and Carlyle European Partners. Part of the financing was venture debt provided by Lighthouse. At that point in time, the firm was not yet profitable. Prior to that the firm, which was founded in 2000, raised about $28M.

Eleksen Plans Reverse Merger To Go Public On AIM

UK-based Eleksen is planning a reverse merger to get a listing on the AIM in London in May. The company is expected to have a market capitalisation of approximately £20.4M. Eleksen is a venture-backed developer of electronic fabric technologies that we've written about in recent times. It's best known for a foldable fabric keyboard and providing the technology for jackets with integrated iPod controls.
Read - Eleksen to join AIM through reverse

Posted at 02:00 PM | Posted to IPO | TrackBack | Permalink

WidiWici's Social Networking For Sporty Types

Neteco, which has become a good source for getting the skinny on French startups, has an interview with the creators of Lyon-based widiwici, a recently launched sports-oriented social networking site that has about 500 members.

About 20 percent turn up as active users who arrange sports matches, tournaments, and meet-ups online. We had a look and it is a bit like an early stage OpenBC with the focus on sports, rather than business networking, but with support for photo and video sharing, particularly appropriate for team sports or competitions.

The business idea is to create a community of sporty types and then provide premium services, ads, and products to that community. Originally only in French, it is now also available in English and Spanish.

It says it won't be selling its users email addresses to third parties to make money, but it may introduce a premium service for heavy users, those what that want photo and video storage will be offered a monthly fee of two or three euros. Otherwise access is free for registered users.

There are plans afoot to run ads for sports events or announcements in the public areas and it is putting in place affiliate marketing schemes for products like sports club insurance and sports gear. A white label service is targeted at firms or organizations that want to offer a sports networking to their community of users.

Widiwici's founders are hoping for 1000 members by the end of June and 10,000 by the end of the year. The interview did not have any information on how the venture is funded.

Read - Entrepreneurs et sportifs, Benoit Mouren et Arnaud Latourrette précisent les fonctionnalités de widiwici.com, site communautaire dédié au sport et aux loisirs

Posted at 01:36 PM | Posted to Online services | TrackBack | Permalink

April 17, 2006

Otodio To Raise VC To Read You Your Paper

UK startup, Otodio, will be making its pitch for a new text to speech application in the coming months, according to its recent press releases. Its business idea is that newspaper subscribers will pay extra to be able to listen to, as well as read, their favourite broadsheet.

It is not the first firm to develop text-to-speech applications, but it is the first in recent times to try to push its tech as a new standard file format, specifically made to enable consumers to listen to the contents of a newspaper while on the move.

The Otodio files will be delivered to mobilephones, digital (or satellite) radios, portable audio players, PCs or other digital devices.

We're not sure if that is a hardware or a software upgrade that would be required. If it's a hardware change, then we wish them good luck, but if it's a simple software addition, then it sounds feasible.

Otodio's web site does not reveal much about its business or early investors, but its latest statement says it may be trying to raise $3.5M in order to "help accelerate revenue generation with and alongside its first client contracts". The first commercial trials are expected in Europe by mid-2006.

Its clear target market differentiates it from several more established rivals, such as ReadSpeaker and Svox. Founded in Sweden in 1999, ReadSpeaker went to market with its product in 2001, targeting its text to speech at websites to improve accessibility for blind or sight-impaired users. It recently announced support for reading blogs