Jason Ball's TechBytes

Normally, I can’t post regarding companies I’ve met with. However, since this post is out in the wild on alarm:clock, I’ll make a few observations.

Flirtomatic approached London Seed Capital and London Business Angels earlier in the summer looking for a different sum than what they raised in the end from Doughty Hanson. Unfortunately, DH offered more money at a higher valuation that what we were considering, and the company made an understandable choice to go with the larger funding round. I’m not convinced they need what they raised since their marketing spend should be limited to an initial London-based splash and then feed on the viral aspect of the business and I doubt the ownership structure varies significantly from what we were proposing.

The team have an excellent skill set and represent the type of company you long to see in early stage VC: experienced management, with directly relevant skills starting a business with explosive growth potential.

The company has approached their business model in a novel way compared to previous mobile companies, and it’s one that I’m seeing more frequently: they are effectively cutting the network operators out of the value chain. Because their app runs on data transmission, and not premium SMS, they hold on to the lions share of the revenue. Plus, because it’s subscription based- there’s a nice recurring revenue stream.

Congratulations Mark and Avi on successfully launching the service.

(And a tip of the hat to Alarm:clock for covering London-based start-ups.)

Filed under: Mobile, Venture Capital