Innovate!100′s #5 ividence Closes $4.2M Series A

Who says European startups can’t raise serious venture capital?

Word came from ividence CEO Eric Didier this morning that 2-year old startup, ividence, closed a $4.2 million Series A financing with A Plus Finance, a Paris-based private equity firm.  ividence is a SaaS email ad network that generates traffic to advertisers’ Web sites by using targeted email campaigns.

The company’s proprietary algorithms and innovative email ad server belie the current thinking that email marketing is no longer effective. When we first met ividence in late 2009, the company was already generating revenues of about $100,000 per month. Since that time, Didier has guided the company’s expansion across Europe and into the U.S.  The new capital will allow him to move more aggressively to capture the market.

So why was ividence successful raising venture capital when so many European entrepreneurs (or for that matter, U.S. startups) struggle to do the same? See the previous paragraph.  ividence has focused on revenue from Day One.  The site now manages some 3,000 email campaigns a month generating thousands of leads for clients including Groupon, Citreon, and Dish Network.

ividence intends to use its new cash position to aggressively grow its team. The company expects to add 20 jobs to the business this year.

Top-of-mind thoughts on Microsoft and Powerset

There’s a reason I love emerging technology so much: over the course of one hour, the entire landscape can be turned on its head. The rumor out of VentureBeat this afternoon, that Microsoft will acquire Powerset for $100 million next month, has produced the predictable memes: Microsoft is desperate after the Yahoo debacle; Powerset overhyped itself to bankruptcy and needs a bailout; Powerset only searches Wikipedia and we like Google just fine, thanks. While neither party will confirm the rumors, it now seems likely that something significant will happen in the semantic sector over the next couple of months. Having analyzed Powerset and semantic search extensively, I think we should keep a couple of key points in mind beyond the arguments over valuation and hype machines. Continue reading

HiveLive Raises $5.6M from Grotech Capital Group

I was excited to see yesterday that HiveLive, a Colorado-based enterprise social networking platform, raised an additional $5.6M to bring its total capital raise to $7.8M. Grotech Capital Group led the round and Joseph Zell will take a seat on the company’s board.

I sat down with John Kembel and his sketch books about 18 months ago when he was first mapping out the social knowledge sharing concept that has become a premier enterprise social networking platform. John and his identical twin brother George Kembel (now the director at Standford’s dSchool) founded DoDots during the boom, and the two remain, to my way of thinking, inspired and inspiring collaborators. John, George and I sat around the table with a couple of Sharpies and sketched out ideas and patterns of information flow.

About six months later, the three of us got together again, this time on a cool but sunny Spring afternoon on the patio of Palo Alto’s Empire Grille.  Again the Sharpies came out, and we talked about how people collaborate in around projects and ideas.  I’m not sure if it was the wine or the smell of the indelible ink, but the crack was mighty and the ideas seemed to influence the transition of HiveLive from a personal knowledge manager to an enterprise customer collaboration platform.  At least I’d like to think it did.

Today, HiveLive is a rich platform that enables companies to create collaborative communities within their organizations, and extending them to include partners and customers. The early thinking about how ideas can be shared selectively is foundational to this unified environment.  And while I wanted to see HiveLive come to market as a consumer product (I’ve long believed that controls are key to creating rich collaborative environments that bridge personal and professional networks), the HiveLive team has done the right thing to take this product to the enterprise.

I do hope that at some future point, HiveLive will bring the consumer product to market. But that’s only going to happen if the company can accelerate its growth with business customers that write checks for the software that becomes critical to their business objectives.   This latest round of capital is the fuel the company needs to do that.

One More Thought on Yahoo’s Rebuff

So much has already been said and speculated about Yahoo!’s rejection of Microsoft’s $44.6 billion offer that it would be screaming in the echo chamber to add my analysis  and prognostications about the offer and its rebuff.  Except I can’t help making one (hopefully) original observation:  This episode may be the best thing to happen to Yahoo! and its employees in a very long time.

When the proposed deal was announced 11 days ago, I wrote – assuming Yahoo! to be a willing recipient of the offer – that getting the deal past regulators would be a challenge and one that could demoralize an already struggling Yahoo!

Now, Yahoo!’s decision to reject the offer could have the opposite affect on the company and it’s employees.

From the press release issued by Yahoo this morning:

After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments.

Roughly translated: “Microsoft is out of its friggin’ mind if it thinks for a minute we’re some kind of cheap date.”

And therein lies the motivation. Nothing energizes an organization and galvanizes employees quite like righteous indignation.  Now, Yahoo! has something to prove, damn it!

Sure, Yahoo! left the door ajar for counter offers and other “strategic options,”  but the Microsoft bid – and its rejection – might be the best thing to happen to Yahoo! in a very long time.

Microsoft + Yahoo: Can the Deal Get Done?

I woke this morning to the news that Microsoft has tendered a $44.6 billion ($31/share) offer to buy Yahoo in a cash and stock deal. (And here I thought I was getting up early to pack for vacation!).

The acquisition has been rumored and speculated on for a year or more, and even in the dawns early light there’s plenty of commentary on whether the deal should or should not happen, whether it makes sense, what the combined company might look like, what Microsoft ought to do with the Yahoo asset.

When rumors of a possible merger circulated last May, Om Malik called a Microsoft-Yahoo merger a “bad idea.” He wrote:

Marrying a company with Internet DNA (Yahoo) with another who can’t take a step forward without turning its neck twice (looking back at the PC) is not that easy. Will this deal become the 21st century version of AOL-Time Warner merger, and a high-water mark for the current boom?

One-time Wall Street wonder-analyst Henry Blodget called a potential merger a “smart strategic move” but advised Microsoft to create a new company Internet company in the process.

Would it be a smart strategic move for Microsoft and Yahoo to combine forces? Absolutely. Is the best way to do this to have Microsoft suck Yahoo into the massive Windows/Office empire? Absolutely not. If Microsoft buys Yahoo, Microsoft should immediately spin the Yahoo-MSN business out as a separate company. If it doesn’t, both Yahoo and MSN will die

Now that the deal has gone from rumor to announcement, there’ll be plenty of jockeying around these two, and a myriad of other, opinions. I’ll leave that speculation to folks who are far better arm-chair quarterbacks than I. But what I will say is this:

Not so fast. Continue reading

Shutterfly Acquires Nexo Systems; Let the M&A Wave Begin

We first met Nexo Systems more than a year ago, and were so impressed by its Web creation and collaborative environment that we invited the company to make its debut at DEMO 07.  In a marketplace filling with competitors, Nexo Systems stood apart from the crowd, largely due to its intuitive interface and ease of use. In the DEMO program, we wrote:

Nexo Systems takes group collaboration one step closer to consumer-friendliness with an extremely intuitive, couldn’t-be-simpler, module-based site builder.  Nexo’s founders recognized the positive sin the current group leader, Yahoo!Groups, and worked to integrate similar technology into their product. But they removed any limitations, added all manner of fun widgets to drag and drop,. and most interestingly, game the pages an open architecture for those users with a bit of savvy.

Clearly, the company  not only stood apart, but it stood out and captured the eye of Shutterfly.  Earlier this month, the  online photo site acquired Nexo Sytems, in a cash and stock deal totaling less than $15 million.  Nexo Systems was privately funded by angel investors.

Nexo Systems’ founders Craig Jorach and Tom McGannon will join Shutterfly’s technology team, giving Shutterfly a talent-boost, as well as a “next-generation sharing platform,” according to a statement by Shutterfly CEO Jeffrey Housenbold.

By most measures, a $15 million acquisition is a modest outcome for a Silicon Valley startup, and certainly not the payday an institutional investor would want.   Still, it’s not a bad pay day for a small team.  Assuming typical seed investment and cap tables, the deal provides the capital and experience that will fuel future ambitions.

It’s also most certainly the prototype deal for the army of capital efficient Web 2.0 companies who have developed some decent technology framework, attracted a respectable user base, and who will likely run out of steam before they run into additional venture capital.   We’ll see more of these M&A deals through the remainder of the year as established companies jump start their next-generation offerings, capture Web 2.0-savvy engineering talent, and take some noise out of the market.  

Sun Acquires MySQL

We were pleased to read the news this morning that Sun Microsystems tendered a $1 billion offer to acquire open-source database provider MySQL. The deal has significance in a number of ways, not the least of which is the financial windfall to founder Marten Mickos and the company’s investors, Index, Benchmark, IVP, Intel and SAP, who put a reported total of $39million into the MySQL.

First, it’s further evidence that open source plus services business models can work, andMySQL logo that is no doubt as important to Sun as is the position MySQL gives Sun in the $15 billion enterprise database market. Sun demonstrated its commitment to free and open software when it turned the foundations of Solaris, Java, StarOffice, and other component technologies over to Open Source. But somehow, the acquisition of MySQL is a grander “money where your mouth is” gesture and solidifies Sun’s commitment to Open Source in the enterprise.

Here’s what CEO Jonathan Schwartz wrote in his blog this morning:

The good news is Sun is already committed to the business model at the heart of MySQL’s success – first investing to grow communities of users and developers, and only then creating commercial services that attract (rather than lock in) paying customers. Over the past few years, we’ve distributed hundreds of millions of licenses and invested to build some of the free software world’s largest communities. . . . Free and open software has become a way of life at Sun.

. . . With this acquisition, we will have . . . positioned Sun at the center of the web, as the definitive provider of high performance platforms for the web economy. . . This creates enormous potential for Sun, for the global free software community, and for our partners and customers across the globe. (Read the entire post here.)

There’s a second and more subtle — but extremely important — impact of the MySQL acquisition and that is the impact the announcement may have on European technology startup communities. Throughout Europe, technology entrepreneurship remains an oddity, and success stories are relatively rare. We’ve worked within the European technology community for nearly a decade and can still count on our available digits the number of grand-slam exits for tech startups there, and the social and cultural risk of entrepreneurship remains high.

Perhaps, Mårten put it best during a keynote speech at Guidewire Group’s Innovate!Europe 2005 conference, as he accepted the award as Entrepreneur of the Year. Society’s values, he said, are reflected in the heroes it chooses. “We must celebrate entrepreneurs and turn them into heroes in order to build a society that values and honors technology and business innovation.”

Mårten and MySQL have become heroes.