VENTURE CAPITAL MARKET OVERVIEW, ISSUE 41 (JUNE, 8 – 14)
Among merger and acquisition deals – music, fashion, blogs, DIY, successful startups of the week – elite real estate, website builder, usability, VC company Menlo Ventures brings on new managing director.
M&A. Kobalt Quietly Acquired AMRA
Kobalt, the London-based startup that has built big-data technology to track and collect digital music royalties from across multiple streaming platforms, is turning up the volume on its business. The company has quietly acquired and redesigned one of the main collection agencies in the U.S. — the American Mechanical Rights Agency.
The new organization — which was “small and profitable” prior to acquisition, according to CEO Will Ahdritz — will collect royalties directly on behalf of artists, now under a slightly new title — the American Music Rights Association. And despite its geographically specific name, the AMRA will have a global remit to work across multiple markets to track plays across the disparate long tail of streaming platforms and other sources that may use digital music, which Kobalt (possibly generously) estimates to number at 900,000.
The exact terms of the acquisition, which Kobalt says closed last year, are not being disclosed. The acquisition makes use of some $116 million that the startup has raised in venture funding, most recently a $60 million round led by Google Ventures earlier this year — the first investment made out of GV’s new London-based outpost. Other investors include Michael Dell’s fund and Balderton Capital.
M&A. Bloglovin’ Acquires Finale And Hires Its CEO
Bloglovin’ has brought on Giordano Bruno Contestabile as its new CEO.
With a background in video games (he was executive producer of PopCap Games’ Bejeweled franchise), Contestabile isn’t the most obvious choice for a fashion- and lifestyle-focused blog aggregator. However, he said he was looking to get out of the gaming business, and he was already working on a social shopping startup called Finale.
Bloglovin’, meanwhile, was looking to move into e-commerce, so it acquired Finale, brought on its three-person team and elevated Contestabile to the CEO role. And it will be using Finale’s technology, too, he said.
Adding commerce to Bloglovin’ seems like an obvious next step — as Contestabile put it, the service’s users “love fashion and beauty and home decor and food and travel,” so it’s “a natural connection” to help those users actually the products that they discover on the site. Plus, it’s a way to “compensate the influencers” who are driving these purchases.
Both Pinterest and Instagram announced last week that they’re adding the ability to buy products.
It will be a gradual rollout, Contestabile said, with Bloglovin’ experimenting with different features.
Contestabile is replacing Joy Marcus in the CEO role. (Marcus joined Bloglovin’ last year but recently departed for Condé Nast.) Co-founder and former CEO Mattias Swenson remains at the company as chief product officer.
M&A. Brit+Co Acquires How-To App Snapguide
Big news for Brit + Co., the lifestyle media and e-commerce business aimed at people interested in crafty projects. The startup has confirmed that it’s raised $20 million in funding, and it has acquired user-generated DIY app Snapguide to add more media to its platform — or, as CEO and founder Brit Morin told TechCrunch, “to build out our community with more content.”
snapguide-by-britcoThe terms of the Snapguide deal — which is Brit + Co’s first acquisition — have not been disclosed but we understand it is an asset sale, covering the company’s website and app (now renamed “Snapguide by Brit + Co”), its network of users, its trove of DIY guides numbering 100,000, and the technology platform to create more. Only one employee is coming over with the deal, Snapguide’s community manager.
Brit + Co says it now has 12 million monthly unique users, growing threefold year-over-year. That number includes not just visitors to the main Brit + Co site but also social followers. Indeed, the brand has become something of a buzzy and credible fixture on social sites that share similar demographics around the coveted, tech-friendly, 20-30-something female demographic. Morin says that its Pinterest posts are on average repinned 50,000 times daily.
STARTUP. Uber Is Raising $1B To Crack China
Uber may be on the wrong end of a 95 percent-plus marketshare that its chief rival Didi Kuaidi enjoys in China, but the country is on track to overtake the U.S. and become the U.S. firm’s largest market before the end of 2015.
In a letter reportedly send to investors ahead of a planned funding raise of $1 billion for China — to help Uber expand into 50 new cities there; it currently operates in 11 — Uber CEO Travis Kalanick provided surprising nuggets of how the U.S. firm is performing in China. Kalanick’s information is at odds with how Uber is perceived in the country, where it is seen as an outsider struggling for marketshare.
Kalanick claimed that Uber is logging nearly one million trips per day across China. If true — there have been suggestions that its generous subsidies are being abused by drivers who log fake rides — that’s quite astonishing since Uber hit one million daily rides worldwide as recently as December 2014.
The Uber CEO also said that four of the company’s largest cities worldwide, based on rides per day, are in China. That’s despite Uber China — the company’s business in the country — being far younger than its U.S.-based operations.
STARTUP. WalkMe Raises Another $25M For Its Platform
Confusing or complicated website and software design can cost companies a lot in lost traffic and business, but for one startup, it’s a problem that is proving to be lucrative. WalkMe, which has developed a platform that integrates with existing software and sites to help guide people through using them — used by companies like eBay, Salesforce and Expedia — has raised another $25 million in an oversubscribed round of funding.
Dan Adika, CEO of WalkMe, says the Israeli-founded startup will be using the funds to expand its operations in the U.S., as well as for acquisitions in areas like analytics to build out more aspects of its platform.
This Series D was led by Greenspring Associates — the group that invests in other VC funds like Accel, CRV, NEA and Scale Venture Partners; as well as directly in a range of cloud-based businesses like Alibaba, JW Player, Cloudflare and more. Others in this round included existing investors Scale Venture Partners, Giza Venture Capital and Gemini Israel Ventures.
The funding brings the total raised by WalkMe to $42.5 million, at a valuation that is believed to be in the lower hundreds of millions, specifically under $500 million. The company is not yet profitable, intentionally so as it continues to go forward in “growth mode,” Adika tells.
There have been some acquisition approaches, but the plan for now is to keep WalkMe independent and take it public in about two years’ time. “We are not going to stay private for more than a year or two,” Adika says.
STARTUP. Long-time Site Builder Jimdo Raises €25M
Remember website builders? Well, they are still around and still raising money.
Jimdo, which was originally from Germany but grew most in Asia, has today raised a €25 million minority investment from Spectrum Equity, a growth equity firm. Prior to today it had only raised €500,000 of outside capital.
Since starting in 2007, Jimdo has done well to scale globally, going cross-platform across iOS and Android from 2013, launching in eight languages, with offices in Hamburg, San Francisco, and Tokyo and enabling users to create over 15 million websites.
Founded in Germany in 2007, and still run by Christian Springub, Fridtjof Detzner and Matthias Henze, the company claims to have been profitable since 2009. It now has a team of 200 people across Hamburg, San Francisco, and Tokyo.
Jimdo says they declined to raise funding when it was offered in the past, and it took getting to know Spectrum Equity more than four years to finally take investment.
Back in 2008 German internet services company United Internet acquired a 30% stake in Jimdo, but Jimdo bought back its shares a year later.
It’s a classic move which many entrepreneurs could learn from: Building a great business and raising money on terms most favourable to them at the right time.
STARTUP. Luxury Retreats, An Airbnb For High-End Homes, Raises $11M
As Airbnb continues to add more features to its online accommodation rental marketplace to meet demands both from regulators and its growing audience of hosts and guests, a startup in the same space but focusing exclusively on high-end properties has raised funding. Luxury Retreats, a Montreal-based marketplace for people to list and find super fancy homes for short-term rentals, has raised $11 million in a Series B round, led by another Canada-based firm, iNovia Capital.
The company is not publicly disclosing its valuation in this round, but founder and CEO Joe Poulin did tell me a few other details: Luxury Retreats — where typical prices are between $1,500-$2,500/night for a 3-5 bedroom home — has already been profitable “for years,” (a detail we don’t know definitively for its much larger counterpart Airbnb), and it wasn’t out looking for funding but decided to take the money anyway to help expand in a couple of different areas.
One is geographical footprint — there are now 2,800 homes in 90 locations on the platform, and Luxury Retreats is now expanding in Miami, New York City, Paris and LA, which Poulin says is “growing like crazy.”
And the other is building out its concierge and home management services — respectively catering to guests and hosts.
INVESTMENT. Menlo Ventures Brings On Matt Murphy
Matt Murphy, who left his role as a general partner at Kleiner Perkins Caufield & Byers earlier this year, is joining Menlo Ventures as a managing director.
Murphy will be focusing on enterprise infrastructure and mobile first apps that apply to either consumer or the enterprise. In terms of the “mobile first apps” part, he pointed to applications like Slack and DocuSign as some examples of enterprise apps that center around bringing an employee’s workflow to mobile devices that fit that description, as well as Shazam on the consumer side.
That focus is an area where Murphy has some experience. At Kleiner Perkins, he led the firm’s iFund, which started in 2007 and became a $200 million fund. During that time Kleiner Perkins invested in companies like Shazam and Shopkick, which was acquired for $200 million by SK Telecom in September last year. Murphy also made investments in several companies that have gone public, like AutoNavi and Aerohive Networks.
INVESTMENT. Sweden’s Telia Sonera Confirms $115M Investment In Spotify
Timed to offset the big Apple Music launch, popular music streaming service Spotify has finally closed its latest financing round. Among the investors is Sweden’s main carrier, Telia Sonera, which announced that it is investing $115 million for a 1.4 percent stake in the company.
Telia Sonera is the only company making a public confirmation of investment at this point. Prior to the carrier’s announcement, the Wall Street Journal reported, citing sources, that the full round is worth $526 million at an $8.53 valuation. While Telia Sonera’s stake values Spotify at around $8.2 billion, sources tell that the higher valuation and total round size are both accurate.
British asset managers Baillie Gifford, Landsdowne Partners and Rinkelberg Capital; Canadian hedge funds Senvest Capital and Discovery Capital Management are also in the round; as are Halcyon Asset Management, GSV Capital, D.E. Shaw & Co., Technology Crossover Ventures, Northzone, P. Schoenfeld Asset Management and Goldman Sachs.