Jason Ball's TechBytes

Technology & Venture Capital. Early stage venture capital news mixed with personal views and comments

Flock- the VC-backed Browser

I’ve been using Flock a lot lately. I’m a software junkie and love testing new apps and services. Flock takes a different approach to the browser by integrating “tools that make it easier to blog, publish your photos and share and discover things that are interesting to you.”

What has surprised me most is that it is a venture backed company. Both Bessemer Venture Partners and Catamount Ventures are backing the business. There’s an interesting twist on their business model:

Flock includes a nod to Google text typed in the URL bar performs an automatic Google search and points the browser to the top result. There’s also a Yahoo component, with a search box that defaults to Yahoo built into the top right corner.

Those functions generate revenue based on users clicking on the search engines’ contextual ads. Flock will also earn money from directing its users to partner services, for example Flickr or Six Apart’s blogging service TypePad, or through affiliate programs like Amazon.com’s.

And those relationships are enough to be a viable business model, contended Mr. Decrem.

I was very pleased to see their approach to the browser- as a blogger Safari is 1000 miles away from my needs. Even rich text editing in Typepad doesn’t work. I’m equally pleased to see their fresh approach to a business model around the browser.

Best of luck to you guys.

Filed under: Software, Venture Capital

The Venture Capital Squeeze?

Paul Graham suggests in his essay on venture capital that the industry is in a dire state of affairs. There is little doubt that software has been the growth engine of the VC industry over the past 10 years and it has centered on Silicon Valley. However, most VCs have figured out that there’s a world of opportunity out there outside of the valley- and they’re off to find it (Skype immediately comes to mind). They have also discovered that other sectors are equally, if not more attractive, than software.

As a contrast, I’d like to review the problems listed in the article and see how that compares to the early-stage market in London:

1. “Too much money chasing too few deals.”

No, not a problem here. There is too little money available for early stage companies. Most Private Equity professionals have never worked in a start-up. They have real issues with the risk involved- so the goverment is providing the cash to kick-start things. The UK government is the largest venture capitalist in the UK- it has set aside hundreds of millions to encourage early stage investing because UK Private Equity houses want to focus on Buy-ins, Buy-outs, MBOs, BIMBOs, etc.

2. “Those few deals now want less and less money, because it’s getting so cheap to start a startup”

No, not really the case here either. Most of the companies I’m seeing are University spinouts heavily steeped in scientific innovation. They require significant funds to reach market – their IP protection alone is in the hundreds of thousands and will only increase. These are cash-hungry early stage companies.

3. “Because starting a startup is so cheap, venture capitalists now often want to give startups more money than the startups want to take.”

We still have a problem with over-funding startups here.

4. “Sarbanes-Oxley.”

Doesn’t apply to AIM, OFEX or the FTSE.

5. “The acquirers have begun to realize they can buy wholesale.”

We’re definitely seeing this accross a range of sectors. However, becuase their is a higher risk-aversion profile in the UK, early-stage VC money is still required to develop the companies enough to warrant interest from the acquirer.

Over and above these points, there are tax-incentives to angel investors and tax-free capital gains on options granted to management.

I’d be interested in knowing what’s happing in other parts of the world as well.

Filed under: Venture Capital

Investor Allstar Awards- London Business Angels Wins Best Investor Network

Last night was the annual awards ceremony for early-stage UK investors.

London Business Angels won the Best Investor Network this year. I’m delighted. We’ve really been working hard over the past 12 months and it’s good to see that’s recognized. We’ve launched two funds and have significantly increased the success rate for companies getting funding and like for like the amount of funding is up 50%.

MTI won Best Venture Fund and Intel Capital won best Corporate Venture Fund.

It’s great to see the entire early-stage community under one roof- but I can’t understand for the life of me WHY it was held on a Monday night….

Filed under: Events, Conferences and Panels, Venture Capital

50 UK Mobile Companies to Watch

160Characters lists 50 up-and-coming UK mobile companies here.

They’ve got Cognima on the list- I saw them at the Symbian Smartphone Show a few weeks back. I specifically remember them not having a business model though.

Filed under: Mobile

Blogging – a broken paradigm?

I’ve been running a website since 1999. I’ve hand coded the html, used Dreamweaver, Flash and coded xml and css. Finally I decided I was wasting my time maintaining a site and shifted to Typepad because it made my life simple and met my needs.

However, it seems time for another shift.

Blogs suck for conversations. One of my most active posts is from over a year ago. Good luck finding it unless you grab the link externally and delve deep into my archives. Why don’t active posts “float” to the top? New is good, but blogs are supposed to be about conversations.

Jeff over at Venture Chronicles picked up on my comments on media pricing and added his own comments. In turn, one of his readers commented and I’m tempted to go back and comment because it picks up on an article I wrote 5 years ago, which I could roll into the conversation. But all of this will be lost shortly as it moves off the front page…

The static website, even with trackbacks and comments isn’t working.

Is anyone working on solving this problem? Is there something I’ve missed?

Filed under: Other, Software, Technology

Future Boy :: The Empire Strikes Back

Future Boy sheds light on a new media business model startup:

…a startup
called Navio that wants to help shift the balance of power back to the
media companies. How? Imagine if you went to a music site to buy a
single download for 99 cents, but instead you were offered the option
to purchase the perpetual right to that song. With this right, you
could download the song to your PC, your iPod, or your cell phone in whatever format was appropriate.

The key here is how MUCH for those perpetual rights? I bet $1 million it isn’t $0.99. I’ve long thought that Apple should offer a "future proof" version of iTunes downloads (Higer bit rates and "loss protection"). They could charge slightly more for these versions… In this sense, Navio’s approach is the correct one- however I do not believe reverse engineering Apple’s DRM is the way to solve the problem and I don’t belive they will be price competitive.

Apple has used its power to keep songs at $0.99 in the face of the music industry trying to raise prices.  The music industry trys to extract extra revenue from its customers without providing extra benefits. If Navio is successful, this truly will have moved the elephant.

Link: Business 2.0 :: Online Article :: Future Boy :: The Empire Strikes Back.

Filed under: Technology

European Early Stage Venture Capital Deals – Back from the dead

EuropeanTechwire reports on the Q3 VentureOne statistics:

… seed and first-round deals (86) made up 38% of total deal flow, its largest percentage since the fourth quarter of 2001. “This renewed interest (in early stage activity), coupled with the larger capital directed toward later stage companies that may be preparing for exit, is a function of the positive opportunities we have noticed in the liquidity market in Europe, particularly for IPOs,” said Ernst & Young’s Gil Forer.

London Seed Capital’s activity certainly reflects these stats- and our investment pace is accelerating. The quality of deals we’re seeing is constantly increasing and I’m having more meetings with seasoned entrepreneurs- most of them avoiding the bigger VCs.

Filed under: Venture Capital

The Future of Media

Channelfrederator
Business Week reports that Kleiner Perkins Caufield and Byers have invested $10 million in Adam Curry’s podcast network:

This month, pioneer Adam Curry is launching a podcast network, with 30 to 50 shows that will split ad revenues. The concept won Curry a $9.8 million investment from Kleiner Perkins Caufield & Byers and Sequoia Capital, two top venture firms in Silicon Valley. "We saw the amazing adoption across the Net, and it was obvious that there was a big opportunity," says Mark Kvamme, a partner at Sequoia.

After spending 5 minutes with my 5G iPod (VidPod, VodPod?) the killer app is the video- not the voice. I already have several Podcasts (Vodcasts?) that are video-based. Jamming advertising into those podcasts would be a piece of cake. (Check out Channel Frederator if you haven’t already)

With acquisitions like Weblogs Inc. by big media- there’s an incentive to grab viewers/listeners/readers. I’m not sure how they’re going to spend that $10 million, but I’m sure they’ll find a way to do it. Will it give KPCB 50x their money in a (few) year’s time? Doubtful, but they have the connections to sell the network on at a healthy return.

Filed under: iPod, Mergers and Acquisitions, Venture Capital

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