VENTURE CAPITAL MARKET REVIEW, ISSUE 21 (JANUARY 19-25)
“Blue chips” entered venture capital market: newsmakers of the last month are Dropbox, Microsoft, Apple, and Pinterest. Also much attention was paid to state initiatives in venture capital sphere
M&A. Dropbox Buys Mobile Productivity Startup CloudOn
Dropbox is beefing up its team once again after it acquired mobile productivity startup CloudOn. The Israel-based startup confirmed the news in a note on its website.
CloudOn claims to have nine million registered users of its service, which allows users to edit, create and share files from Microsoft Office and others online. CloudOn has ceased allowing new user sign-ups today, and it confirmed that its products will shut for good on March 2015 as its 30-person team transitions to working for Dropbox.
In addition to adding the experience and expertise of the CloudOn team, Dropbox told TechCrunch that CloudOn’s base in Herzliya will become Dropbox’s first office in Israel. The company opened its first office in Europe — located in Dublin, Ireland — two years ago, and the CloudOn deal signals its intent to grow its footprint and business in the region.
No price has been disclosed for the deal, but the Journal reported that it is Dropbox’s largest acquisition in terms of staff numbers.
CloudOn has raised over $25 million in funding, with early investor The Social+Capital Partnership among its venture capitalist backers.
Dropbox said it has over 300 million users, 70 percent of whom are located outside of the U.S.. The company has taken an acquisition-led approach to growing its team and expertise.
M&A. Pinterest Acquires Commerce Recommendation Engine Kosei
For an undisclosed figure, Pinterest gets Kosei’s tech that understands 400 million relationships between 30 million products, and the majority of its 10 person team including its co-founders. Pinterest’s head of engineering Michael Lopp says the Kosei team will spend their first 90 days figuring out where to apply themselves across black ops spam deterrence, product discovery and recommendations, visual object recognition, ad click prediction for monetization, growth analytics, and building a machine learning system on spark for Pinterest’s data team.
Pinterest’s Lopp says its unclear exactly what they’ll work on as “they’re not really filling any gaps”. Instead, their goal is to help the company “hit internal metrics faster”. The company explains in an engineering blog post about the acquisition that “With the addition of the Kosei team, we can supercharge our existing graph to help brands reach people at the right moments, and improve content for Pinners.”
Kosei’s product allowed customers to make better product recommendations on their sites, apps, and in ads. By looking at what the user had browsed or purchased previously, Kosei’s machine learning engine could compare that against commerce data sets, and predict what someone was most likely to want to buy next.
Kosei’s co-founder and CEO Lance Reidel had sold his recommendation engine Proximal Labs to Jive, and worked as the CTO of big data incubation studio The Hive. His fellow co-founder Jure Leskovec was an assistant professor of computer science at Stanford with a PhD in machine learning from Carnegie Mellon. He researched modeling of large information and social networks, as well as artificial intelligence. Kosei had raised an undisclosed-sized seed round in June 2014.
M&A. Microsoft Acquires Text Analysis Service Equivio
Microsoft announced that it has acquired Equivio, a text analytics service for legal and compliance that uses machine-learning techniques to identify documents relevant to their legal and compliance needs. Microsoft plans to use Equivio’s eDiscover and information governance tools to improve Office 365’s offerings in these areas.
Neither Microsoft nor Equivio disclosed the financial details of the transaction, but early rumors pegged the price at around $200 million.
Equivio’s line of Zoom products help businesses better manage their documents by applying machine learning techniques to automatically cluster documents into relevant groups and to identify unique documents. Once trained, Equivio’s information governance tools can then classify records according to their retention needs.
The service also offers a number of search tools to help its users quickly find documents relevant to a specific subjects — something that’s especially useful in legal cases and investigations. Equivio’s customers include the U.S. Department of Justice and Federal Trade Commission, as well as “hundreds of law firms, corporations and other organizations.”
There are no immediate changes to Equivio’s offerings, but Microsoft’s future plans for the Equivio’s stand-alone services remain unclear.
M&A. Apple Buys UK Startup Behind Musicmetric
Apple appears ready to add more analytics and analysis to Beats, the streaming service it bought for $3 billion last year, after news surfaced that the U.S. giant has bought the British company behind Musicmetric.
The Guardian reports that Semetric was quietly acquired by the U.S. phone maker last year. That’s according to filings with Company House which show that Semetric changed its registered address to that of Apple’s legal partner in the UK, while it added a senior Apple lawyer to its board of directors in October 2014.
Apple provided its standard response as confirmation, but the price has not been disclosed at this point.
Six-year-old Musicmetric is a service that helps record labels, artists and others track the digital consumption of their music, whether it be sales on iTunes, BitTorrent downloads, views on YouTube, or streams on Spotify. There’s also a product that enables brands and agencies to mine social networks for mentions of artists, albums and tracks and general sentiment/feedback.
Musicmetric has partnerships with Spotify and Last.fm, but it isn’t clear whether the service will remain open following the deal. The service is well established, having raised more than $5 million from investors — including a $4.7 million round in 2013 — but Apple could limit the service to working with Beats, or close it down and have the staff work on its own, internal solution for Beats.
The service did also branch out to provide analytics for e-books, films, games and TV shows, so Apple may have other plans beyond just music streaming.
M&A. Twitter Confirms Acquisition Of India’s Platform ZipDial
Last week media reported Twitter was in final talks to acquire ZipDial for between $30 million and $40 million, and few days later the company announced the deal has closed.
ZipDial allows people to call a special phone number for a business, hang up before they incur a charge, and then receive a phone call or SMS with information about the business. This “missed call” marketing platform allows people to access content for free, which is especially useful in the developing world where many can’t afford data plans.
Twitter said about the deal “For many, their first online experience will be on a mobile device – but the cost of data may prevent them from experiencing the true power of the Internet. Twitter, in partnership with ZipDial, can make great content more accessible to everyone.” When asked about the acquisition price, Twitter told “We aren’t disclosing financial terms of the deal” but did say “The majority of ZipDial’s team will be joining us.”
Founded in 2010, ZipDial did not disclose the volume of its funding, but had taken three significant rounds from Mumbai Angels, 500 Startups, Times Internet, and Jungle Ventures.
STARTUP. SpaceX Raises $1 Billion In New Funding
SpaceX, the space exploration startup helmed by ex-PayPal founder Elon Musk, has confirmed that it has raised $1 billion in new funding, in a round including Google and Fidelity, who join existing investors Founders Fund, Draper Fisher Jurvetson, Valor Equity Partners and Capricorn. Google and Fidelity get an ownership stake just shy of 10 percent in exchange for their investment.
A report from the WSJ broke yesterday that Google was considering a sizeable investment in SpaceX, with a valuation of more than $10 billion (which is in keeping with Google and Fidelity getting less than 10 percent ownership for their combined $1 billion contribution). The investment was said to be aligned with Google’s plans to make Internet connectivity more accessible on a global scale.
The Information originally reported that Google was investing in SpaceX in order to support a satellite project specifically aimed at broadening Internet availability. Musk has discussed the project, which is being run out of a newly opened Seattle office, as involving hundreds of micro-satellites that will operate in very low orbit, offering faster communication vs. traditional satellites, and helping to pave the way for future Mars missions.
STARTUP. French Startup Dataiku Grabs $3.6M To Continue Developing Big Data Software
Dataiku, a French startup that makes software to help teams of data scientists process and make sense of big data, announced €3.2M in Series A funding today — that’s approximately $3.6M USD.
Alven Capital and Serena Capital jointly led the round.
The company’s product is called Data Science Studio, which provides soup-to-nuts services for data science teams. The software can work with so-called dirty data, clean it up, then process it using the data and algorithms, the data scientists select, and finally present visualizations of the resulting data sets.
The startup has been around since February, 2013, and CEO Florian Douetteau says they were able to bootstrap for the first couple of years because they began selling the software and were profitable early on, which is certainly refreshing.
INVESTMENT. Enterprise Incubator Alchemist Lands $2.1M Fund
The Alchemist Accelerator started two years ago with the goal of creating a platform to help promising enterprise seed-stage startups. Today, it announced $2.1M in funding that should provide enough capital keep the company going through the first quarter of 2018.
The round is led by Mayfield with help from Tyco and previous investor Cisco Investments. Other investors include Draper Fisher Jurvetson, Foundation Capital, Khosla Ventures, Salesforce.com, SAP Ventures, Siemens and US Venture Partners.
Ravi Belani, managing partner at Alchemist says before his company came along, accelerators tended to be focused on consumer companies. He created this company to give promising enterprise startups a bit of money, access to mentors and some serious training in how to generate sales and raise funds to keep the company going.
Participating companies get $30,000 for six months, but they get trained on customer development, sales and fund raising. They get to test and refine their ideas with real companies like Procter and Gamble, Siemens and Samsung. They can meet with these companies and drive their proofs of concepts, get meaningful critiques and help them focus their ideas.
The proof is in the results and so far, they’ve been impressive. The company launched in January, 2013 and have three acquisitions already including Cisco grabbing Assemblage and Dropbox acquiring Mobilespan, both in June last year.
INVESTS. Amazon Invests In 150MW Indiana Wind Farm To Power Its Data Centers
Amazon announced that it is working with the Pattern Energy Group to construct and operate a 150 megawatt wind farm in Benton County, Indiana.
The new wind farm will go online in about a year and the expectation is that it will supply at least 500,000 megawatt hours of wind power annually. That’s enough to power about 46,000 U.S. homes, but the “Amazon Web Services Wind Farm (Fowler Ridge)” will only be used to power Amazon’s AWS data centers. Amazon is not disclosing the financial details of this project, but Pattern Energy notes that this is a 13-year agreement.
As Amazon announced last November, its long-term goal is “to achieve 100 percent renewable energy usage for the global AWS infrastructure footprint.”
While Google has made various wind energy investments over the last few years, this is Amazon’s first.
INVESTMENT. Singapore Launches Program To Attract More U.S. Startups
Singapore is already one of the most developed startup hubs in Asia. Now its government wants to bring more U.S. startups to the city-nation.
The Infocomm Development Authority Of Singapore, a government organization focused on growing the country’s tech industry, opened a new office for Infocomm Investments in co-working space Block 71 San Francisco, which was originally set up by NUS Enterprise, an entrepreneur program run by the National University of Singapore, and SingTel Innov8, the telecom’s investment arm.
While Block 71 San Francisco was first launched to help Singaporean companies break into the U.S. market, Infocomm Investments’ new office will help U.S. startups that want to expand into Asia. Resources founders can tap into include Singapore-based accelerator programs and potential funding from Infocomm.
Infocomm Investments and Block 71 San Francisco are part of a larger initiative by Singapore called Smart Nation, which launched in December with the aim of growing the city-nation’s tech industry.
While Singapore itself is a tiny market with a population of just 5.4 million, it is a base for some of the region’s most prolific investors, including Rakuten Ventures and Gree Ventures.
INVESTMENT. Alibaba Invests In Israeli Startup Visualead
To many U.S. consumers, QR codes already seem like a quaint tech relic, but they continue to be popular in China. In fact, over the past two years, QR codes have become increasingly ubiquitous thanks to Weixin, the country’s top mobile messenger, and shopping apps.
So it’s not a huge surprise that Visualead, an Israeli startup that specializes in QR code technology, announced that it has raised Series B funding from Alibaba Group, the owner of China’s largest e-commerce businesses. The round is a multi-million dollar investment, but Visualead did not disclose an exact amount.
The funding is the first time that Alibaba has invested in an Israeli company (it has already made overseas investments in India, Southeast Asia, and the U.S.). Previously, Visualead had raised a total of $2.4 million in two rounds, including a $1.6 million Series A and $750,000 in seed funding.
INVESTMENT. Orange Launches A $23M Early-Stage Fund
Orange, the big French carrier with 240 million customers formerly known as France Telecom, is unveiling its latest bid to get closer to little startups, and appear a little cooler in the process. It has unveiled a new fund called Digital Ventures, with the aim of finding, strategically funding and then working with early-stage tech businesses. Orange says that Digital Ventures will start out initially with a budget of $23 million.
This is not Orange’s first moves in the area of venture funding, nor will it be the first time it has worked with startups.
In 2012, the company started a $400 million fund in partnership with advertising giant Publicis and French investment manager Iris. Prior to that, it backed individual sites like music streaming site Deezer and online video company DailyMotion. And it’s also partnered with gas company Total and train company SNCF to launch Ecomobilité Ventures, a €30 million investment company “specifically to promote sustainable mobility.”