Category: VC

iovation secures $15 million

Portland-based iovation, the company with whom I hate to start sentences, has announced the closing of its latest round of funding. The round contains an additional $5 million follow-on from SAP Ventures and the brothers Samwer’s European Founders. The round is, well, rounded out by a promised $10 million from Intel Capital that was announced last November.

Mike Rogoway at The Oregonian‘s Silicon Forest blog reports:

SAP and European Founders both have good ties abroad, which Iovation [sic] is counting on to help the Portland Web security firm expand overseas.

iovation (argh!) says they “pioneered the use of device reputation for managing online fraud, abusive behavior and multi-factor authentication.” I say, they have stuff that helps online companies prove you are who you say you are and not some bot. But, easily the best description? “iovation exposes known fraudsters and abusers.”

One of Portland’s new breed of startup success stories, iovation been especially successful in areas where high traffic and small amounts of cash are in play, like online gaming and ecommerce, areas where spoofing and bots can result in millions of dollars of lost revenues.

Or, as I like to think of it: with iovation, the plots of Hackers and Office Space become completely implausible. (Please note: I refuse to listen to any comments that claim the plots of those movies were implausible prior to iovation.)

For more information, visit iovation.

(Hat tip Lisa MacKenzie)

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.

Silicon Forest claims two of the largest Web 2.0 investments in 2007

Earlier this week, I tried to shoot a hole in news that the “Web 2.0 sky is falling” by highlighting that Web 2.0 investments may be down in the Silicon Valley and Texas—but Web 2.0 venture amounts are up practically everywhere else, including the Silicon Forest.

Today, TechCrunch continued to take a look at the slowing:

In 2007, the median deal size was $5 million, up 22 percent. And the median pre-money valuation was $10 million, up 66 percent (from $6 million in 2006). Both deal size and valuation for Web 2.0 companies remained below the average VC deal across all industries ($7.6 million and $16 million, respectively)

But again, there’s a silver lining to this Silicon-Valley cloud. For us, at least.

Take a look at where the top investments landed. Lo and behold, there are two Silicon Forest companies on the list. Corvallis-based MyStrands appears on the list twice with nearly $50 million combined investment, and Portland-based Jive Software appears courtesy of their $15 million round, last year.

This is the kind of news that begins to put Portland and the entire Silicon Forest on the map. It’s news that, hopefully, makes the venture capital community take notice. And maybe, just maybe, the type of news that motivates those investors to take a second look at the Rose City technology scene.

I can’t wait to see what 2008 holds for our local companies. But the bar has been set. And I hope to see more than two of our companies on the list, next year.

(Hat tip Jeff the Great)

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?

OEN announces the winner of Angel Oregon (and it’s not a tech company)

I just received the official announcement from Oregon Entrepreneurs Network (OEN) naming the winner of the Angel Oregon competition. [Update: Who won the elevator pitch competition? Steve Morris has your answer over on Oregon Startups.]

And unfortunately, for me, the winner is an apparel company. (Upside? They have a blog.)

Well, that doesn’t really fit the Web startup flavor of Silicon Florist, so I’m going to cover the runners-up, instead. Because, honestly, these two finalists have the most potential of becoming regulars here on the Silicon Florist:

  • OsoEco, the first online community that allows consumers to shop and research green products and services with friends, interests groups and consumers
  • Revelation, a software company that optimizes qualitative market research, enabling companies to develop and harness rich understanding of customer experiences, behaviors and needs at a fraction of the time and cost of traditional research techniques

OsoEco and Revelation each received $57,500 investment awards for winning the Sustainability Investment and Technology/Biotech tracks, respectively.

“The entrepreneurs participation in the investor presentation coaching and exhaustive due diligence process really helped them to articulate their business plan and demonstrate the potential return for investors,” said, Bob Ward, Angel Oregon chair. “Angel Oregon is attracting really high caliber companies. Couple that with value of the exposure and the experience that competing companies get, and the value proposition of the event is pretty compelling for Oregon’s economy.”

For more information on the Angel Oregon program, visit OEN.

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)

Jive Talks (finally) talks about $15 million round

Last week, I saw the news on Jive Software securing a $15 million round of funding from venture firm Sequoia Capital.

Being the diligent type that I am, I immediately jumped over to the Jive site to get the full story.

Only there wasn’t anything there.

No press release. No blog post. Nothing. Crickets chirping.

But I’ve diligently checked the site, time and time again, since that point, and I am now happy to report that Jive is now talking about the round in a post from the CEO, Dave Hersh, on Jive Talks.

Hersh addresses questions that plague any startup making this sort of control-wresting decision:

  • Why did we raise the money?
  • Why did Sequoia choose Jive to win the space?
  • Why Sequoia?
  • What will change?
  • Was it a hard choice?

For more, read Dave Hersh’s post on Jive Talks, “More on our $15M Funding Round with Sequoia.”

[Update] Mike Rogoway of The Oregonian provides additional coverage—and a little link love for Silicon Florist (Thanks, Mike!)—on the Silicon Forest blog.

Jive Software secures $15 million… and moves blog to Clearspace

Big news coming out of Jive Software today. The company announced that it has secured a $15 million round of funding led by Sequoia Capital.

From VentureBeat

One with considerable momentum is Jive Software, a Portland, Ore. Its product, Clearspace, doesn’t tack various software programs together. It offers it all from ground-up: It lets employees and customers collaborate on a mix of blogs, wikis, forums, chat, tagging, files and reputation systems into a single interface behind the corporate firewall (or outside it, if customers are involved, in which case it governs a publishing system that controls what gets outside the firewall). The company was bootstrapped for years, but in February, hit a vein, says chief executive Dave Hersh — demand for its product became overwhelming.

Jive will do more than $15 million in sales this year, with the second quarter revenue almost double what it was the same quarter of last year. It has more than 2,000 customers, says Hersh, mentioning names like IBM, Sun and BEA. So it has taken $15 million from Silicon Valley venture firm Sequoia Capital, to handle the growth.

Mike Rogoway of The Oregonian also covered this round:

Jive said it plans to use the money to continue developing its software and to market its products. Jive is the latest company to benefit from a surge in venture capital backing Oregon businesses. Venture capitalists invested $173 million in Oregon companies during the first six months of the year, up from $76 million in the first half last year.

Mashable covered the funding, as well.

Still no post on the Jive blog or in the Jive newsroom, so I’ll provide other details as they become available.

[UPDATE] As of Monday morning, still nothing from the horse’s mouth, but Om Malik is reporting that the funding will be used to “push sales and marketing of its Clearspace line-up of products,” while Portland station KGW has pulled an AP story that states, “The company said it will be scaling up operations, development and setting up international offices as a result of the investment.”

In related news, when I headed over to the Jive blog to see if they had posted anything, I was happy to see that they had ported their blog to their own Clearspace product. “Eating their own dogfood” as it were.

Although, Clearspace appears to be mighty tasty dogfood.

VC Thunderdome: Seed Oregon

You’ve got good ideas. You’ve got elegant code. And you’ve got the next killer app. But what you could really use is some capital to make a real go of it.

That’s where funding comes into play. Oregon Entrepreneur Network understands.

So rather than make you come right out and beg, they have their own little Thunderdome for funding called Seed Oregon:

Nine presenting companies will be selected to compete in the Seed Oregon tournament. Each will have 10 minutes to present their concept to the PubTalk audience, followed by a 10 minute Q&A session. Three companies will compete at each of the the preliminary rounds, with the audience voting for the winning presentations to move to the championship round. The Angel Oregon Selection Committee will serve as judges for the championship round.

The competition is restricted to companies in the Portland metropolitan area who are currently seeking a seed round that is less than $2 million.

If you match those requirements and you’re interested in a little “two man enter one man leave,” consider sending in an application. The first round entry deadline is August 31, 2007.

%d bloggers like this: