Advertisements

Category: Funding

Understanding the venture capitalist

One of the most enigmatic components of any startup’s life is “funding.” Do I need capital? Should I pursue capital? How do I approach venture capitalists? Should I avoid venture capitalists? What are the benefits? What are the drawbacks? Necessary evil or rite of passage?

There are a ton of questions.

And unless you’ve been fortunate enough to learn the funding mating dance as part of another company, it’s a completely foreign—and intimidating—proposition.

Well, have heart Web-app-mogul-to-be. CenterNetworks is running a series on venture capitalists that may help inform your understanding of this strange and elusive beast.

The topic? How VCs get their money:

NYC Venture Capitalist Mark Davis is authoring a four-part series on how a VC is funded. Davis notes the four methods are: diverse limited partners, family office, government or public capital. Today, Davis looks at diverse limited partners. The other three methods will follow throughout the week.

I highly recommend you follow the series. Not only will this provide a great vantage point for helping you understand the motivations for the venture capitalist, it may just help demystify the whole venture capital question for you and your startup.

Advertisements

SplashCast “social advertising” tees up $4 million

Man oh man. With all of these Silicon Forest startups attracting funding, it’s about time I establish a “graduating class.” And here’s one of those startups that’s definitely in the running for Salutatorian, if not Valedictorian: Portland-based SplashCast.

First, the funding. Because that’s the real news here.

SplashCast announced today that it has secured $4 million dollars in Series A funding, led by Mark Bayliss, an Australian (remember the Australia trip not too long ago?) media and advertising executive veteran of some of the world’s largest advertising and media companies who runs in the same circles as fellow Aussie and media mogul Rupert Murdoch. Emergent, an emerging growth investment fund also with strong ties to advertising and consumer brands, was a follow-on to the round.

I asked Mike Berkley, SplashCast’s CEO, to put this funding—and the organizations providing it—in perspective for me.

“What does this mean for the company?” said Berkley. “The relationships that Bayliss and his partners bring to SplashCast gives the company a monumental step-up in social marketing.”

Which bring us to my second point. I’m a marketing geek. So, let’s talk about SplashCast’s newest take on their positioning. Or better yet, let’s not use some stupid buzzword. Let’s talk about how SplashCast is describing their product as of late.

If you haven’t been watching SplashCast, this probably would fly right by, unnoticed. But, I’ve been watching these guys ratchet down on the language they’re using and their efforts to make the product more attractive to a broader big-media advertising market. They continue to make definitive changes in describing what they do. And they seem to be honing in on something new.

SplashCast started in user-generated content. Then they moved to more of a “branded content” sort of play, building custom apps for big names like Justin Timberlake, Britney, and Hillary Clinton. Now, they’re directly positioning themselves as an alternative to what—as silly as it sounds for me to describe it this way—can only be referred to “traditional” online advertising models.

SplashCast calls this new focus “social advertisments.” I call it “advertisements that actually do something.” But regardless of what you call it, they’re pushing this message very strongly as of late:

[SplashCast’s] New Social Marketing Solution Viewed As Breakthrough For Advertisers Looking To Reach Users On MySpace, Facebook & Other Social Networking Sites

And:

Splashcasting represents a new form of online marketing called social advertisements – tools marketers use to reach the growing demographic of social network site users. SplashCast’s video-based social advertisements on average receive click-through-rates that are about 75 times higher than typical banner advertisements used on MySpace, Facebook or other social network sites.

This seems to be their new home: taking on traditional online advertising. And that puts them directly in the sites of some very big players.

Now, some may look at these recent changes and cast aspersions. Claiming that this belies a lack of focus.

In my opinion, these changes don’t seem to be wishy-washy or “searching for a problem to solve.” These are simply the pains that any growing company goes through as it works to figure out where its true market lies.

And there’s a very clear reason that the messages have been moving in that direction.

You build a product based on your ideas and passion. You tend to build a company based on what people will buy.

And given that SplashCast is securing funding and landing customers with this new positioning, it only makes sense—from a business perspective—that they continue pursuing this stance.

I, for one, will be continuing to watch them.

For more information on the funding and social advertising, visit SplashCast.

Confidence in Web 2.0 isn’t waning, but confidence in the Valley may be

There’s a great deal of Chicken Little reporting occurring today about how the Web 2.0 sky is falling. Why? Because apparently, according the Dow Jones, the investments in Web 2.0 technology in the Silicon Valley are down, year over year.

Silicon Valley remains the hotbed of Web 2.0 activity, but the hipness of start-ups with goofy names is starting to cool in the face of economic reality.

Not shocking news, I realize. But I think they buried the lead.

Even the venerable Wall Street Journal puts the news in the very last sentence of their piece:

“It’s clear that the real growth in the Web 2.0 sector is happening outside of the (San Francisco) Bay Area,” says Jessica Canning, director of global research for Dow Jones VentureSource.

And there’s the real story. That’s the real news. Not that the investments in the Valley are down, but rather, that the investments elsewhere are up. In some cases, way up.

In our own Pacific Northwest, for example, the number of Web 2.0 oriented deals more than doubled. And the amount of the investment? It’s up 400% from $35 million in 2006 to $140 million in 2007.

That’s about as opposite of “waning” as I can come up with.

And we’re not alone.

Investment amounts in New England doubled, Southern California nearly tripled, New York metro nearly tripled, Southeast doubled, Mountain more than quadrupled, and North Carolina, alone, tripled.

In fact, the only area besides the Valley that went down was Texas.

So has Web 2.0 peaked? I honestly don’t know.

From what I’ve seen, it’s going pretty strong here in the Silicon Forest. And it’s clearly picking up speed in other sectors.

Maybe the better question is: Has Silicon Valley peaked?

MyStrands wants to invest $100,000 in your startup

Corvallis-based MyStrands has just announced a program designed to find the best early-stage startup focused on “recommendation” technologies. And, once found, to fund that startup to the tune of 6-figures of investment.

The $100,000 investment prize will be awarded to:

[T]he best early-stage project in the area of recommendation technologies, considering the technology, business opportunity and team behind the project (without limitations as to which field the technology is applied).

This is a worldwide competition, but I’m confident that some of you Portland and Silicon Forest types—side project or otherwise—have got some cool technology that has a chance of winning this thing.

Why not give it a shot?

All Proposals will be judged using the following judging criteria: (a) implementation and integration of recommendation technologies, (b) originality and creativity, (c) likelihood of long-term success and scalability, (d) effectiveness in addressing a need in the marketplace, and (e) team bios.

Get into the finals and you’re off to Switzerland to present.

Five Finalists will be invited to present their projects during the ACM Conference on Recommender Systems (RecSys08) next October 23rd to 25th, 2008 in Lausanne, Switzerland. Finalists will be announced on October 6th.

So what are you waiting for? I think you can win this. And I’m sure the investment would help make your dream a reality. And if you’re not going to do it, then maybe our idea for Portland Startup Weekend should be based on recommendation technology.

Entries will be accepted until September 15, 2008.

For more information on the contest and requirements, see MyStrands’ post on the contest.

[Update: I just noticed that ReadWrite Web has posted on the contest, as well, encouraging MyStrands to continue its work in implementing open data standards.]

MyStrands lands $24 million in funding

Yesterday, Corvallis, Oregon, based MyStrands announced that they have secured an additional $24 million in funding, increasing the total capital raised by the company to $55 million. The round, led by Spanish bank Grupo BBVA, is slated primarily for continued research & development and product development.

This round of funding has been covered by TechCrunch and Profy, among others. [Update] And I’ll sheepishly add Portland’s Marshall Kirkpatrick’s coverage of the MyStrands’ funding from Read/Write Web. (I didn’t see it in the trackbacks, I swear! And, seriously, have you ever seen that many possessives in one sentence? I mean, really?)

MyStrands develops technologies to better understand people’s taste and help them discover things they like and didn’t know about. MyStrands has created a social recommender engine that is able to provide real-time recommendations of products and services through computers, mobile phones and other Internet-connected devices. For more information, see MyStrands.

(Hat tip Brooks Jordan)

iovation lands $10 million from Intel Capital

iovation, a Portland-based startup that focuses on combating online fraud—and which also allows you to begin sentences with a lower-case letter—has announced a new round of funding, led by a $10 million investment from Intel Capital. The total round sits at $15 million.

iovation, headquartered in Portland, Oregon pioneered the use of device reputation for managing online fraud, abusive behavior and multi-factor authentication. Today, iovation manages the reputation of millions of Internet-enabled devices worldwide, allowing its customers to control online fraud and abuse while benefiting from sharing device reputation intelligence. For more information on iovation and the company’s products, visit www.iovation.com.

(Hat tip Silicon Forest)

%d bloggers like this: