November 14, 2007
Domain Manager Hecta Media Floats IPO On London's AIM
British Virgin Islands-based Hecta Media raised approximately $9.5M and
went public today on the London AIM exchange. the company acquires niche content websites and domain portfolios. It is led by CEO Clark Landry who previously founded Euroclick (Adconian), Tagworld, LibraMedia and others. The company's executive chairman is serial entrepreneur Fred Krueger.
Just last week we reported that domain giant Name Media had filed for a $175M IPO. Hecta appears to be a bit different as it is essentially by-passing the venture capital and private equity channel that Name Media passed through to raise cash on the public markets with which to acquire sites and domains. To date, Hecta does not own any sites or domains but now that it has raised cash it will start.
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PayByTouch Investors Forgot Part About Due Diligence
We posted on biometrics payment firm PayByTouch back in 2004:
"Something doesn't feel right about this one. Of primary concern to us is the general assumption this company is making: that the world actually needs this type of system. The problem with companies like Pay By Touch is that they (a) rely on major behavioral shifts in the way people buy things and (b) need to build and then push lots of hardware on merchants. Capital intensive businesses addressing speculative markets are SO 1998."
This week, news about PayByTouch is emerging to show not only that the firm was built on a poor business model but that its management and investors were horribly off.
+ PayByTouch had raised $190M from investors plus more in debt that brought its total raised to $275M.
+ Investors included: Mobius Venture Capital, the Getty family, Och-Ziff Capital Management, Farallon Capital Management, Plainfield Asset Management, Ron Burkle, Rembrandt Ventures and Hockey great Mario Lemieux (say it ain't so Super Mario!).
+ Despite this massive funding, CEO John Rogers was able to retain 2/3rds of the company and dominates voting rights.
+ Rogers has declared personal bankruptcy. It has also come out that he is a convicted felon.
+ Four employees are seeking $60,000 or more in back pay and vendors have not been paid. The employees filed a petition for involuntary bankruptcy against Solidus Networks, which does business as Pay By Touch, on Oct. 31. The company has until next week to decide what do do. Either the company's cash management is awful or they have spent the treasure chest.
+ Former EVP at Pay By Touch Jon Siegel is suing Rogers for "concealing facts regarding an unsavor background from both investors and employees." Siege's filings points to records showing that Rogers had been busted for not paying taxes and was issues a restraining order after trashing his then girlfriend's apartment.
+ More mayhem: Former PayByTouch HR VP Bernadette Robertson filed a lawsuit alleging that she was fired for investing multiple claims of sexual harassment against Rogers. She was apparently replaced by Rogers' mother.
If you are wondering how a startup could have spent so much so quickly, PayByTouch had a 750+ person headcount, plus it was buying companies, had 10 offices including a massive and spendy one in downtown SF and it appears nobody wanted the product so there was little revenue coming in.
We realize that the board did not have controlling interest in the company, but come on people couldn't you have done more for the 750 employees of PayByTouch? Sure you have lost a considerable amount of money but surely you could have done more jaw-boning of CEO Rogers to get him to see the light and resign before the money was spent.
Read - Valleywag
Read - VentureBeat post
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White Fence Buys Rival GetConnected
Houston's WhiteFence has bought rival GetConnected. No financial terms were disclosed. Reading between the lines, it appears that GetConnected had became a failed company. Both companies operate online comparison-shopping marketplaces for residential home services. So if you are moving, they will help you to price your Internet connectivity options. On the back end they get a spiff from the service providers.
They key for these businesses is how to cost effectively market to new movers. This strikes us as a business that sounded great on a business plan - 110M households, people moving houses frequently and making key decisions. The problem is again how to get in front of them at that moment. It's not easy.
WhiteFence has raised around $29M in VC funding from firms like Adams Street Partners and Internet Capital Group, while GetConnected had raised around $25M from Vantage Partners, VantagePoint Venture Partners, Atlas Venture and Asset Management Company Venture Capital.
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Simple Promo Widget Maker Gydget Raises First Round
It doesn't get much more simple than this. Gydget has created a widget maker that music stars, sports teams, etc. can use to promote their game days or concert dates. Fans then place the widgets on their MySpace pages. The San Francisco-based startup just announced that it had closed an undisclosed amount of Series A financing from SunBridge Partners with Felicis Ventures. Some source have put the amount of funding at $1M, indicating that the financing actually closed last August.
Gygdet competes with rivals Clearspring and RockYou!
Gydget is led by Gerardo Capiel, Founder and CEO. He had co-founded Digital Impact in 1997 and was the company's CTO. He had launched Attendio.com., a city events info provider that shuttered and morphed into Gydget.
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November 13, 2007
Food Delivery Online's GrubHub Raises $1.1M
Staying on the subject of food, Lake View, IL-based GrubHub has raised $1.1M in first-round funding led by Origin Ventures. The startup had won a$25K award from the University of Chicago New Venture Challenge. The company was founded by a couple of guys who are getting their MBAs there at the university and who have been writing software at Classified Ventures.
Grubhub just does business in Chicago and San Francisco. It provides an online delivery service and local search engine for restaurants in Chicago and San Francisco. The premise is that there is not a central place on the net to read menus and have food delivered to you. There are, however, several competitors, at least in San Francisco, that include Eat247Hours.com and Delivery.com
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Update On AmeriTV's Suspicious $45M Round
UPDATE: Is there anything worse than International Internet scam artists? Yes, amateur International Internet scam artists.
+ Silicon Alley Insider connects some dots to "nearly early identical fund-raising announcements for pretend companies HRF Chemicals and MHNZ Biosciences via phony press releases on Nov. 2."
+ The company that distributed the releases, PR Leap, has taken down the releases.
+ Silicon Alley Insider currently casts First Mutual Credit as a potential victim, however, we have still not yet heard back from people there and suspect that they are in on this scam.
+ PaidContent heard back from Shaun Morgan, who is listed as First Mutual's CEO on the press release, who denies that they made the investment. Was CEO Stan Rosiak confused when we talked with him briefly and he acknowledged the investment and said he would call us back to discuss? Silicon Alley Insider had a similar experience with another contact at First Mutual Jay Leisenberg who told the Insider that AmeriTV is indeed a real company. Still more questions than answers.
+ As do we, Silicon Alley Insider wonders why people would do something like this? Our assumption would be that conmen are looking to raise funding from novice investors and want to people to direct them to evidence that the company exists. But who knows with this story.
+ One other strike against First Mutual's credibility is this: the 'firm' told PaidContent that they had participated in a $20M funding round in Zip Trade Technologies. We saw this announcement last week and investigated ZipTrade. It was the same story. No Web site, and no prior mentions using any manner of search. Obviously a company that raises $20M in series D would have left some footprints on the net. As with the AmeriTV announcement, Zip Trade's funding press release was written by some hack as it makes no sense (not that all press releases make sense but this is a joke.) PaidContent notes that the AmeriTV release was copied and pasted from a Joost release and that the Zip Trade release was copied from a Zend release (nice sleuthing there.)
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Having seen a press release this morning that two named financial firms, plus 3 un-named firms, had put $45M into an outfit called AmeriTV we were puzzled that any number of searches produced nothing on the company and its CEO. Moreover, AmeriTV has no Web site, even though VentureBeat indicates AmeriTV is three years old, has earned $20M in revenue and is profitable. Silicon Alley Insider joins in our state of confusion, speculating that this was a fake press release.
We called Dr. Stan Rosiak, the CEO of one of AmeriTV's stated investors, First Mutual Credit, who told us briefly that indeed AmeriTV is for real and that he would cal us back after he emerged from a meeting. We will of course update when he does.
AmeriTV calls itself the world’s first broadcast-quality Internet TV service and says it is based in New York City. We look forward to getting to the bottom of this.
Read - PEHub
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White Man's Burden: 'Burrito' Chain Boloco Raises $10M
We have been prompted for another chapter in our pro-burrito/anti-wrap rants. We wouldn't mind wraps so much if their makers didn't insist on calling them burritos. Sorry but something that includes teriyaki sauce, caramelized onions, broccoli, carrots and brown rice, kept together by a pinkish wrap has no relation to the august burrito. The burrito was pioneered by Mexican Americans who knew we wanted to be filled up for $3.50, while the wrap was launched by suburbanites who watch too much FoodTV.
Our rant was brought on as Boston-based wraps and smoothie maker Boloco (aka Stellar Restaurant Group) has raised $10M in funding from Winona Capital Management. The company has about 12 stores around Boston. We learn that the company was founded in 1997 as "The Wrap." But it rebranded to Boloco, adding the tag 'Inspired Burritos' "to better reflect its focus on burritos that are more than Mexican in origin."
One of the company's founders notes "We like to think of them more as 'Irreverent Burritos.' These burritos want to be a little bit different." Give us a break.
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Vivox: "Never Die While Typing Again!"
Vivox sells a voice interaction platform so that when you are blasting away at some terrorists you have trapped in a cave you can trash talk them. The firm's value prop to gamers is "Never Die While Typing Again!"
Social networks and other communities can also use Vivox. You can see Vivox at work in the game PokerManager as well as in Pixel Mine's FireTeam: Reloaded, Wizards of the Coast and in Second Life.
Founded by VoIP omni-presence Jeff Pulver, Framingham, MA-based Vivox has just closed $7.8M in Series B funding led by Benchmark Capital and joined by return backers Canaan Partners and GrandBanks Capital.
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PickPackGo Goes For The Jugular With King VRBO
Ask anyone to tell you were to land a vacation rental home and 9 times out of ten they will tell you to go VRBO. The site is the Craig's List of the vacation rental market. It's bare bones, it hasn't changed in years and nothing touches its inventory of homes.
PickPackGo gets in touch again, this time to let us know that PickPackGo has won the Interactive Media Awards' Outstanding Achievement Award under the 'Travel/Tourism' category.
As it happens, we have been booking trips to Hawaii and Tahoe and have spent umpteen hours on VRBO. Indeed, the site has an amazing number of listings, its easy to navigate, and there are no glaring shortcomings.
The weakness that PickPackGo spots is that VRBO looks so 2001. PickPackGo, in contrast, has AJAX and a number of other modern touches. Moreover, PickPackGo, is aiming to develop what VRBO lacks - community and reviews of homes.
Our biggest beef with VRBO and where we think a business like PickPackGo has leverage is that when you once you have to do research off the site at places like Tripadvisor to find out which resorts rock and which units have the best location, then return to VRBO to book. That makes no sense.
Tonight, having spent some more timing looking for a place on PickPackGo, we ended up booking through VRBO. Selection trumped site attractiveness but we can imagine next year at this time that PickPackGo might earn our business.
As background, PickPackGo was founded by Felix Lin who had founded include AvantGo, a mobile data startup that was acquired by Sybase, as well as Qurb, the anti-spam software company acquired by CA.
View - PickPackGo site
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November 12, 2007
Mojo Watch: Andreesen, Developer Bribes, Pandora, Azoogle, Teqlo
Mojo Found
+ Marc Andreesen and his wife have donated $27.5M to Stanford Hospital's Emergency Care Center
+ Google is jumping on the developer bribes bandwagon by offering $10M reward to developers who who can make something for Android, its wireless platform. Salesforce.com and Facebook among others had announced similar funding schemes for developers.
+ Pandora gains partnership with AT&T for mobile music recommendation.
Mojo Lost
+ It's hard to fathom that Azoogle could fall any further but the last is that the online ad company has been ordered to pay the state of Florida $1M for its deceptive advertising practices.
+ New wave application builder Teqlo has had to shut down despite VC funding.
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Motorola Invests In Payment By Cell Phone's Vivotech
We are fairly impressed with the variety of wireless eCommerce that Vivotech deploys. Vivotech has units that can interact with your cell phone whether you are at movie theaters, restaurants, stores, gas stations, in taxis, or using a vending machines. And Vivotech has a different unit for each situation.
The startup says it has more than 330K units deployed in 27 countries.
The idea her is that rather than whip out your wallet and credit card, a consumer will use his mobile phones to make payments and redeem coupons. They just download credit, debit, or gift card and data into their cell phones.
Today VivOTech announced that Motorola had made an investment of an undisclosed amount. This may be delayed news as VivOTech has been saying for sometime that an un-named Fortune 500 company was part of its investment group. Other VivOtech investors include First Data Corporation, NCR, Nokia, Alloy Ventures, Draper Fisher Jurvetson, DFJ Gotham Ventures, and Miven Venture Partners. Last August, it raised $22.5M in series C. 
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MC Hammer's DanceJam Launches With $1M From Web 2.0 Elite Backing
DanceJam CEO Geoffrey Arone would seem to particularly enjoy multitasking. He founded and briefly ran VC-backed Flock in February 2005 and left in January 2007. He went straight to work as an
Entrepreneur in Residence at Bessemer Venture Partners. He the launched DanceJam which launched in closed beta with angel funding from none other than TechCrunch's Michael Arrington and other angels.
We suspect that DanceJam was inspired by the film Zoolander and its scene that involves break dance fighting. Dancejam has you upload videos of yourself dancing. DanceJam brought in former dance star MC Hammer to bring some dance cred and publicity to the site.
Hammer. Catch a Quicktime movie of MC Hammer discussing DanceJam here.
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AOL Buys Israeli Semantic Search Startup Yedda
Israel-based Yedda has been bought by AOL for an undisclosed amount. We had named Yedda as a runner-up in our top Israeli startups round-up. Our summary was that Yedda has solid technology but needed to learn how to market it. Indeed AOL indicates that it bought the firm for its technology, rather than its user base. Last March, the firm had raised $2.5M in a financing round led by Genesis Partners with angel investors.
Yedda's semantic search engine is capable of analyzing questions and requests and inviting users to share a subjective knowledge based on experience and opinion, and answer questions.Yedda has faced several competitors including Askville, Yahoo Answers, Ask.com, and Wondir. However, Google has dropped its Google Answers service so a big competitor is out of its face.
Read - news.com story
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Al Gore Lands A Seat At Kleiner Perkins
We thought it was a big deal when Bono teamed up with the venture capital firm Elevation Partners. But given how much the news cycles revolve around Al Gore, it might be a bigger deal that he has joined Kleiner Perkins as a partner and will spearhead the firm's green energy investments. The article hints at Gore's connections with politicians around the world who have the purse strings to make alt energy startups soar.
Fortune did a terrific piece on the news. These are some eye-opening changes: "According to Doerr, by 2009 more than a third of Kleiner's latest fund, which was raised in 2006 and totals $600 million, will be invested in technologies that aim to reduce emissions of carbon dioxide. Already Kleiner has invested more than $270 million from various funds in 26 companies that make everything from microbes that scrub old oil wells to electric cars to noncorn ethanol. Twelve of Kleiner's 22 partners now spend some or all of their time on green investments."
The other news that Fortune breaks is that Doerr will join the exclusive advisory board of Generation Investment Management - a $1B investment company Gore launched with David Blood, the former head of Goldman Sachs Asset Management, to analyze and invest in publicly traded green energy companies.
The article notes that Kleiner has yet to have an exit from its green investments. That is not terribly surprising given that there is not yet an M&A structure for green investments, leaving IPOs as the way out.
Read - Fortune article
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November 11, 2007
Canadian Health Network Wellocities Raises $1M Seed
Toronto-based Wellocities has raised $1M in seed funding from XDL Ventures, having been incubated by the firm. Wellocities is nothing if not focused. It has launched a network for Canadians with chronic health conditions.
The more we see of these hyper-niche social networks, the more we are convinced that these cannot be break-out businesses. We could create a network on Ning within an hour for Canadians with chronic health conditions for free and it would have more functionality than Wellocities has. So how are they going to set themselves apart?
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