Hi. While this blog is a part of Seed Catalyst’s website, I realised over the initial few weeks that a lot of you are first introduced to the firm via the blog rather than our home page.
So to introduce myself - I’m a business consultant working with early stage technology firms to help streamline their strategy and go-to-market approach and support them for fund raising.
With this blog, I aim to capture key market trends that I see in the industry, the ecosystem and cross-plays in some of the more interesting and upcoming sectors, as well as cover interesting companies that I meet.
I will also be addressing vexing and interesting valuation and deal/term-sheet structures that would be of interest to technology start-ups at various stages of their growth.
A blog post by Fred Wilson from Union Square Ventures this morning spoke about their investments in Europe. ‘We have sourced investments in London, Berlin, Holland, Israel, and Slovenia. I know that Israel is not technically in Europe but I put it there anyway. Of the six investments we have sourced in Europe, three are now headquarted in NYC and one other has significant operations in NYC. We like finding great teams in Europe and helping them set up the headquarters in NYC. I expect we will do more of that as well as more investments headquartered in Europe.’
My initial reaction was huge surprise – I’d hardly thought of USV as having that kind of geographical range in their investments. The second reaction was to focus on the companies that have opened offices in the US. It does seem like a pre-requisite for US investments – not that I blame them at all. The key benefits of US investment (other than the money) is to piggy-back on the VC’s network and also learn from their experience on setting up camp across the pond. Curiosity made me go over their portfolio and check out the European investments:
AMEE– A very interesting investment along with Aquarius Capital, Amadeus and O’Reilly Alpha Tech Ventures who together have ploughed in over $5.5 million. AMEE’s aim is to map, track and connect all the carbon data on the planet. They provide a SAAS based platform which aggregates and maintains carbon accounting mechanisms allowing users to understand and calculate their carbon footprint.
On a side note, one of the firms I am currently working with has expanded their solution along similar lines. They currently provide prediction and performance monitoring solutions for active components at solar and wind power stations. One of the advantages of the predictive element is that the model also enables provisioning of data for insurers, accountants and other service agencies in the clean-tech space – a growing market.
Shapeways – These are the Dutch guys mentioned by Fred – providers of high quality, 3D printing and manufacturing with a range of materials and goods with the final aim of becoming a custom manufacturing juggernaut. They were incubated within Philips but have gone on to raise $5.5 million from USV and Index Ventures. Upload a 3D image of any product and they will manufacture and ship it for you. They’ve moved HQ to NY – logical move me says – bigger market.
Zemanta – USV invested in 2008 along with Eden Ventures and The Accelerator Group – a total of $2.2 million. I like these guys – the pictures they provide are quite useless to be honest but the article links are invariably spot on – thumbs up for their semantic search model. They are currently catering to almost 30% of the blogosphere and this in two years. But then we come to the business model – revenue for highlighting links with increased priority, affiliate links, tie-ups with Amazon for product recommendations and sales – wait and watch.
Soundcloud – At first glance they seemed like another web based music streaming website. They raised $3.3 million from Doughty Hanson Technology Ventures in 2009 and as of last week have USV and Index Ventures breaking down their door cheque books in hand. So what’s the rush? Well, for starters, the company doesn’t need to sign deals with the music majors. The holy grail! Professional and amateur musicians can load their music on Soundcloud’s cloud based servers and share them with each other and the public. As a next step they are also in discussions with fingerprinting expert Audible Magic to enable copyright owners to pull their content when they so desire. Business model – freemium with charge for storage and other additionals.
All in all a very diverse range of European investments! What are the elements which stand out:
- They have an existing market in the US. This applies more for the push based services and products. For example, in the case of Shapeways while manufacturing is still based in Europe, a much larger part of their customer base was American.
- They have a ubiquitous addressable market. Both Zemanta and AMEE are solving a problem which creates a viral pickup. Ditto for Soundcloud
- Recognition from local VCs – be it Amadeus, Index, Doughty Hanson, Eden
- Highly experienced teams – AMEE has an ex-Virgin founder with multiple start-ups under his belt, for Zemanta the proving point was Seedcamp....
In recent times we’ve had Huddle and Skimlinks as two of the high profile names moving across the ocean for larger markets and deeper pockets. Would be nice to see the reverse flow get stronger.
