Moonfruit Finally Exits...

In the white heat of the current tech market it’s sometimes easy to forget that some companies, although taking their time, simply become viable businesses – instead of waiting for a call from Facebook or Twitter that may never come. I’ve been covering web site and shop builder Moonfruit for longer than I care to remember (they launched in 2000), but along the way husband and wife team Joe and Wendy White kept on pushing the company until it was one of the most innovative of its kind out there. Today that hard work is rewarded in Moonfruit’s acquisition by directories giant Yell for $29 million (£18m) in cash. Unusually for a UK acquisition announcement, Yell has also made the golden hand-cuffs explicit for the founders. Retention bonuses of £5.2m (£2.7m grossed up) will be paid to Moonfruit’s executive management team of Joe White, Eirik Pettersen and Wendy Tan-White after two years, provided that they remain exclusively employed by Yell. Most people know Yell as a yellow pages directory for its 1.3 million SME customers. Clearly what it must become to survive in the era of Google is a online marketplace providing not just listings but business tools for that market. Over 5 million sites and 230,000 shops have been built using Moonfruit, which is now the no. 1 hosted site builder in the UK, and has seen over 1.5 million sites built in the US. It’s also build a very sticky Facebook integration . While the competition includes Weebly and Yola (rebranded from Synthasite) in the US Moonfruit has been profitable on a subscription model, these competitors have entered the market more recently and are focused on a free, no ads model. There is also the German-born Jimdo which has since concentrated on Asia. Moonfruit has moved towards a freemium model, with a premium upgrade path for users, but with a new advanced HTML5 engine that build not just sites but shops and mobile versions. Moonfruit’s engine will be a key component of Yell’s new “eMarketplace” strategy comprising a platform and portal where consumers and SMEs can connect and transact. Yell already has an enterprise commerce solution in the form of Znode, an Ohio company it acquired last year for $19.2 million (£12 million). What Yell did not have however was the ability for customer to create “light” commerce and web presence services in the way Moonfruit had. Both parties seem to win out of this deal. Yell gets a much better offering for SMEs which pulls them out of the pit of just being a classifieds provider, while it accelerates Moonfruit’s own expansion worldwide, building on its growth in the UK and US. Mike Pocock, Chief Executive Officer of Yell, said: “The addition of Moonfruit’s services and team helps us provide competitive advantage to our global SME customers in connecting with consumers through digital, mobile and social.” Moonfruit took £1.57 million in funding in 2010 from US investment bank Stephens and Silicon Valley based angels including Dave McClure of 500 Startups, Robbie Van-Adibe and Theorem. The value of the assets, which are the subject of the transaction, as reflected on Moonfruit’s balance sheet as at 31 December 2011, is £4.88 million. For the year ended 31 December 2011, Sitemaker Software Limited, Moonfruit’s wholly-owned subsidiary, made a loss before tax of £1.26 million. As Wendy Tan White told us: “All the partnership conversations we had in the US became acquisition conversations, we had several players on the table but Yell’s offer was the best, all cash, clean exit for all our investors and they’ve incentivised us to stay and help them turn a very cash generative, global directory and print business into a global digital services player. “Basically it seemed like a fun, challenge for at least the next 2 years. They feel like a ‘corporate startup’, lot’s of resources but taking the risks to turnaround their business. They feel in a similar space to Prudential which disrupted UK retail banking with Egg, the first UK internet bank – that was my first taste of a startup project.” “We were also swayed by the fact they are British headquartered but 50% of their customers are in the US. I felt like we weren’t selling out to the US but we will get the US and global distribution we were looking for. We like a challenge! We may well be hanging out in Seattle for a while so we’ll get more US tech experience. And who knows what we’ll do next!” Last year Yell had had 1.3m SME customers, £2bn in revenue, £500m EBITDA and £250m free cash flow on top of £200m reserves. But they need to move from their old directory and print business to digital services like Moonfruit’s. Yell now has a new Chief Digital Officer who was ex-president of MSN and Yahoo Media based in Seattle, where the Whites will report into. It’s all a long way from giving away MacBooks Airs on Twitter in 2009, but it looks like the plan came together in the end.

Fellody And Tastebuds A...

This post is written by our regular contributor Natasha Starkell , the CEO of GoalEurope , the outsourcing advisory firm and a publication about outsourcing, innovation and startups in Central and Eastern Europe. Twitter @NatashaStarkell . Gplus.to/natashastarkell .† There are some of us who believe that having matching tastes in music is an essential for a relationship. Now two Spotify apps are setting out to prove it. The German founders of Fellody , Robin Simon and Thomas Vatter created an online flirting website where top matches are identified based on users’ music preferences. And they weren’t the only ones. Today Fellody and Spotify are launching Fellody music flirting app, available in English and German languages. At the same time Tastebuds.fm is launching it’s own Spotify app. Tastebuds.fm helps you ‘meet people who share your love for music’. The startup has been making waves with users, especially in the UK (lots of dates and at least one wedding so far). The site was founded by two musicians from London: Alex Parish and Julian Keenaghan. Both founders are members of the band Years Of Rice And Salt. The app integrates with Spotify, scanning a user’s most played music and instantly showing people near to them who have similar tastes. Users can browse prospective dates, listen to their matches’ favourite music and send them a quick message if they catch their eye. The app also allows users to share mixtapes with each other using Spotify’s in-built playlists. Some 48% of Tastebuds.fm’s users have never used a dating site before so it’s reaching a new audience. With the Fellody app users drag and drop their Spotify playlists into the Fellody app. Then Fellody compares the songs on the playlists and offers top matches, which users can engage with by sending flirts and messages directly via the app. Users can also sign up via the Fellody website and add your music history from Last.fm or iTunes. Windows Media Player can also be used to establish music preferences. Fellody is essentially a social network based on musical tastes, where flirtatious behavior is acceptable and encouraged. Its community shares music in a public feed and cheers with a “this rocks!” button for good finds. Fellody “friends” are called “Groupies” and the whole look and feel of the website is rather fun and cool. Unlike its competitor, Tastebuds , Fellody might be considered quite purist. You can only upload those music titles you have actually played on your computer, listened to on Last.fm or added to the Spotify playlist. It goes as far as taking into account music genres and play count. This, according to founder Robin Simon, is to prevent someone pretending they like a band only to get attention. Both founders spend most of their free time with music, and the idea of Fellody was born at one of the music concerts they attended. Simon is a serial entrepreneur, whose previous businesses include Sodatech and Sodapix . He is a lead singer in his band Grant Lassie . His co-founder Thomas Vatter worked for several years as a product manager at German ProSiebenSat.1 Media AG .

MoviePilot Seals $7M Se...

It’s easy to miss the launch of the latest movies. You get a week of marketing and by the time you’ve figured out if you want to see it or not, it’s moved off the theatre and you’re waiting for the DVD release. Most movie marketing dollars are spent in these first few days. So MoviePilot, launched out of Berlin, brings upcoming films to fans based on their taste, turning the marketing model on its head and making better use of budgets. It focuses solely on upcoming movie projects and TV shows so that fans are less likely to miss new releases. This gives them a place to gather often long before official homepages are created, finding the right film for its natural audience and the right audience for a film. Today it’s sealed a $7 million Series B financing, led by leading venture capital firm DFJ Esprit, and continued participation from existing VC funds T-Venture, Grazia Equity and VC Fund Creative Industries Berlin. This will be used to expand in the US and develop the platform. Tobi Bauckhage, MoviePilot CEO and co-founder says “The campaigns we have already run on behalf of the world’s biggest studios have given us a fantastic base to further develop our brand of social marketing services for movies.” So far MoviePilot worked with studios like Twentieth Century Fox, Universal, Disney and Paramount in the US and worldwide on movies such as “Chronicle”. Moviepilot.com and sister site Moviepilot.de have a combined Facebook fanbase of 5.4 million. Disney, Universal and Paramount have been working with the German version of Moviepilot.de since its launch in 2007. MoviePilot was founded by filmmakers Tobias Bauckhage and Jon Handschin (CPO), as well as former OMDB founder Benjamin Krause (CTO). The company has previously received funding from Grazia Equity, Passion Capital’s Stefan Glanzer and Deutsche Telekom Ventures, as well as Peter Read, who previously ran Nielsen Entertainment for the movie studios in Los Angeles. I interviewed Bauckhage in Berlin:

International Galaxy No...

Samsung has been teasing Galaxy Note users with the promise of Ice Cream Sandwich for months, but now it seems like the consumer electronics giant has finally come through for their phablet fans. Multiple reports from European Note owners confirm that the long-awaited software update is hitting devices, though how users actually install it seems to depend on their locale. Dutch Galaxy Note owner Devin Balentina reported that his device received the update over-the-air for instance, while a report from SammyHub points out that German users can nab the update from Samsung’s Kies updater. Not every market has gotten their taste of Ice Cream Sandwich though — I have yet to see any reports from the U.K. for instance, and CNET UK’s Crave blog reports that Samsung is being characteristically quiet on the issue. Sorry AT&T users, you’ll still have to wait your turn, The new OTA update is only for the international-spec Galaxy Note, and it’ll likely be a while before AT&T finally approves the new software build for mass consumption. But hey, you can always take solace in the fact that your devices have those snappy LTE radios — hopefully you’ve got the coverage to back it up. Despite a company announcement pointing to a release in during the first quarter of 2012, Samsung pointed out last March that the update would end up going live later than everyone had hoped. To help soften the blow, Samsung also introduced their so-called Premium Suite of Galaxy Note apps like S Note and My Story — rather than spell out what they do I’ll just let you see for yourself:

One Year On Passion Cap...

Although it’s a year this week since Passion Capital appeared on the tech scene in London, it feels like they have been around a lot longer. It was in July 2009 I sat on the sun-kissed roof of what became known as their White Bear Yard base in London’s Clerkenwell, having had a tour of a vast empty warehouse space which three noted tech angels planned to fill with their invested startups. Unlike on or two other tech angels I knew, these guys were something of a breed apart. A laid-back German ex-DJ who had killed it in ecommerce, a cool-calm-collected Brit veteran of the Internet and a former Valley maven who had seen the early days of Skype. We expected interesting things form these three musketeers and we got it. Many of their early investments are now seen as Passion Capital portfolio companies, but in truth, whatever the brand they work under, the special sauce that Eileen, Robert and Stefan brings to the party is the essential ingredient. I mean, how often do you see an investor actually publishing the average founder salary of their invested startups? (BTW the answer is £32,767 per annum up to £54,000). For those unaware, this is Passion Capital: Stefan Glaenzer (founder of Ricardo.de and first investor/Exec Chairman at last.fm, PhD in derivatives and options trading); Eileen Burbidge (former products director at Yahoo! and Skype, 10 years in silicon valley before that, Computer Science degree from Univ Illinois); Robert Dighero (former CFO of QXL Tradus (publicly listed), acquired in 2007 for £1 billion, Mechanical Engineering MS from Cambridge). Where veteran angel and seed funder Robin Klein once saw all the seed deals in London (and, to be frank, the consensus is amongst VCs I know that he still does), he now has competition and ‘co-optation’ (for often these guys co-invest) in the shape of Passion, which has established itself as one of the “go to” early-stage/seed stage VC in London. Eden and Octopus and others have lately punched a lot higher too, but Passion’s vibe can’t be denied. If there is scrappy competition at the Seed funding stage in London, it’s often between US Angels / VCs like Dave McClure and Fred Wilson versus the locals – Passion Capital. And increasingly they are influential in a Pan-European sense as entrepreneurs flock to London from the continent looking for London’s more liquid and Valley-style investors. Certainly I’ve found them to be similar in tone to Valley VCs: accessible, pretty transparent and former entrepreneurs/operators themselves. To that end, their term sheet is publicly available/downloadable and – if you believe the entrepreneurs I’ve spoken to – pretty founder friendly. You also get the feeling they back people/founders more than ideas. As one-woman-startup ecosystem Eileen Burbidge tells me: “We like investing in early stage because it’s what we wish to do with our time. We love working with early stage teams and helping to build/up. When a company is at a point where it’s looking to optimize profit margins, it’s less interesting to us. We don’t fly business class.” But based on the data they have produced for their anniversary, is Passion Capital really the 3rd most active early stage fund in the world? Could that have happened? Normally you would assume the top 3 (or even 5) most active seed stage funds were all based in Silicon Valley. But it seems that based on the number of investments made over the last 12 months (Passion has made 20), they were third only to SV Angels (Ron Conway’s fund) and First Round Capital. However you need to factor in that this does not include batch/accelerator programs such as Seedcamp, Springboard, 500 Startups, YCombinator, TechStars, etc. It also does not include slightly “pray and spray” investment teams such as Kima Ventures who make the same size investments for all deals (regardless of valuation) and often don’t even see/meet with the teams they invest in. Kima is astoundingly active for a reason – they invest A LOT. But you don’t get the feeling they are as super hands on as Passion. Passion also seems to be ‘on trend’ in terms of government/state investment in (and subsidization of) venture capital funds, GigaOm recently noted . Of Passion’s £37.5 million, £25 million is from the UK government – but it’s hard to see how this cash could be invested more efficiently. It’s in the hands of three amazing experts who can kick the tyres on startups down to the tiniest detail. Imagine if some terrible government ‘board’ had to deploy this money. Disaster. Other firms are also getting these government funds like Notion Capital (which just announced their first $100 million closing 2 weeks ago), Dawn Capital, Eden Ventures, and Amadeus previous funds. The UK government has done well to secure these guys and the rumblings I hear from Number 10 are that this can only improve. This government-backed funding really works. The Israeli’s proved it in the 1990s with the Yozma programme which at one point made Tel Aviv produce more tech startups than Siliocn Valley. Passion is also on trend in terms of the “new/next generation” of venture capital funds being established not by financial/investment managers but by former entrepreneurs and operators. It’s a positive trend and particularly for early stage one that will generate better returns. In this camp there is Notion Capital, Atomico, PROfounders (all here in the UK) and quite a lot more in the US including. First Round Capital , Lowercase Capital , True Ventures , Felicis Ventures . As part of their one year anniversary Passion has produced a couple of interesting info graphics from data they’ve collected. I dare say we could get some nice stats from other players, but it’s one of the first times I’ve seen this done in Europe. Data points from Passion Capital: 1 year on (Apr 2011 – Mar 2012): • 1532 business plans received/reviewed • 652 through our website • 444 conferences and events • 436 through personal referrals/introductions through our website • 20 investments made (18 seed investments, 2 Series A rounds) • average seed round check size £189,936, smallest £15,000, largest £355,000 • £37.5 million / € 50 million / $60 million size of fund • 3 partners • 1 associate • 1 accountant • 20 investments • 42 founders backed • 2% female (1 of 42) • 29 average age (oldest was 39, youngest were 19) • 8 nationalities (40% British, 29% German, 14% Swedish,…) • 17 English • 12 German • 3 American • 1 Welsh • 1 Polish • 1 South African • 6 Swedish • 1 Canadian-Jamaican • 209 employees across all 20 companies. (Average company size is 10 people; largest is 19 people; smallest is 3 people.) Other data points: • Average founder salary is £32,767 per annum, lowest is £7,200 per annum; highest is £54,000 per annum • 7 companies have already gone on to raise follow-on financings at higher valuations w/new investors