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Tables are turned on VCs

We have remarked before on the proliferation of social networking sites and the enthusiastic response to them by many venture capitalists. There is clearly money to be made in the segment, as any early investor in Myspace will affirm. But now there is a twist on the theme. A new(ish) website has been set up that invites companies and entrepreneurs to comment and rank investors. TheFunded, launched by an anonymous entrepreneur, has gained traction in the US with the same kind of momentum as Facebook or Youtube, albeit among a smaller user-group. It ranks based on their professionalism, approachability, knowledge, track record and so on. Just as one might “Google” a business contact before an important meeting, US entrepreneurs now routinely check TheFunded before seeing investors.

Currently, Mangrove Partners, a Luxembourg-based VC firm, tops the rankings with a score of 4.6 out of 5. It is closely followed in second place by Leapfrog Ventures, OpenView Venture Partners in third and Masterhead Venture Partners in fourth. While these firms will be happy they are highly rated, the rankings are probably more relevant for those at the bottom. According to comments on the website, entrepreneurs will avoid investors that are routinely late or miss meetings, appear to have little grasp of their subject and, worst of all, are openly rude in meetings. This last accusation was levelled at a (named) partner of a (named) firm in San Francisco, who was classified as “rude and arrogant”. The accused was so taken aback by the comment that he corralled friends and colleagues into posting ripostes. Whether the perception that had already been created was altered by the posts from his supporters is as yet unclear.

But the episode and the website do provide telling insights into the evolution of the VC world. Investors have long held the upper hand – they instigate the investment process and organise pitches at which investors dutifully turn up and, in all but a few cases where the company is clearly exceptional, eagerly pitch their wares. Now it seems companies have a little more information – and power – at their disposal with which they can start to pick and choose the investors they believe will be most helpful to their cause. Of course, the balance of power will not immediately change radically and most investors should not feel threatened by this process. Far from it. But the subtle implication is that no investor should feel or appear to feel superior to the companies they meet, regardless of their opinion of the business model.

The Week's Deals

viagogo, the UK-based secondary ticketing company, has raised $30m (€21.7m) in series C funding from Index Ventures, Bernard Arnault, Dr Herbert Kloiber, Lord Jacob Rothschild and other undisclosed private investors. The capital is to be used to support continued global expansion including entry into the US market. European rival Seatwave also recently received a cash injection, raising £4m (€5.9m) in series B funding from Atlas Venture, Mangrove Capital Partners and Oliver Jung. viagogo was set up by Eric Baker, co-founder of US-based ticket exchange company StubHub, which was sold to eBay for more than $300m (€321m) in March this year.

Intune Networks, the Ireland-based developer and manufacturer of networking equipment for the telecommunications industry, has raised $17.75m (€12.9m) from Amadeus Capital Partners, Balderton Capital and Spark Capital. Intune’s vision is to enable the roll-out of practical large scale IP services by supplying innovative technology products to the owners and builders of new networks. In August last year the company recruited Tim Fritzley, a senior executive in Microsoft’s IPTV division, as chief executive.

Anobit Technologies, the Israel-based fabless semiconductor company developing enabling technologies for the flash memory market, has raised $17m (€12.4m) in series A funding from Battery Ventures and Pitango Venture Capital. According to Gartner, the flash memory market has grown from $8.2bn in 2001 to more than $20bn in 2006, and is projected to reach more than $25bn in 2010. Anobit’s says that its technology optimises the cost and performance of flash memory devices, paving the way for the next generation of memory solutions.

Fring, the Israel-based mobile VoIP provider, has raised $12m (€8.7m) in second round funding from North Bridge Venture Partners, Pitango Venture Capital, Venfin, Veritas Venture Partners and Yossi Vardi. Fring provides free mobile VoIP software that enables users to talk and chat using their handset's internet connection instead of more costly mobile airtime minutes. The funding will be used to add functionality, increase the choice of call and chat providers, and provide wider network coverage.

The Week's Exits

JumpTV, the US-based television broadcaster, has acquired UK-based Cycling.tv for £2.44m (€3.6m). Cycling.tv was founded in 2006 as an internet television service for cycling enthusiasts and had received two rounds of funding from The Creative Capital Fund.

CastUp, the Israel-based provider of products for the management and delivery of video over the internet, has been acquired by UK-based NDS Group for $11.3m (€8.2m) plus additional payments to employees and senior management. CastUp provides products for the acquisition, processing, distributing, serving and monetising of rich media content over IP and, in particular, video and audio over the internet. Customers include TV and media companies in Israel as well as the Israeli subsidiaries of large corporations such as HP, Amdocs, MTV and Blockbuster. 

People Moves

[[Ocean Power Delivery]], the UK-based wave power company, has made three senior appointments: Lord Colin Moynihan as chairman; Phil Metcalf as chief executive; and Diana Dyer Bartlett as chief financial officer. The appointments follow a recent announcement that the company is creating 53 new jobs as it moves towards fully commercialising its wave power technology.

ReVolt Technology, the Switzerland-based developer of zinc-air battery technology, has appointed Dieter Woschitz as chief executive. Dr Woschitz replaces Ram Malhotra who will now act as an advisor and consultant to the company. ReVolt says that its rechargeable zinc-air batteries have more than twice as much energy as conventional Li-ion batteries, cost less to manufacture, are safer to use, and are environmentally friendly.

VeriSIM, the UK-based developer of software systems for the financial sector, has confirmed that James Anderson recently left the company and has been replaced as chief executive by sales director Mike Johnstone.

Most Accessed Companies

Marine Current Turbines, the UK-based developer of technology for large-scale power generation from tidal currents, has attracted a lot of attention this week. The company recently announced that the installation of its SeaGen tidal energy system - originally set for the end of August - is to be postponed because the required installation vessel has been delayed working on another contract. According to the company, the SeaGen project will be the world’s first commercial-scale subsea turbine. It is now hoped that a new installation date can be scheduled for before the end of the year.

Myconostica, the UK-based developer of diagnostic tests for infectious diseases, has also received a lot of attention recently. Myconostica is developing and commercialising a set of real-time molecular diagnostic tests for life-threatening fungal infections. According to the company more than 10 million people are at risk of these infections in Europe and North America each year. The company’s first two products, a fungal DNA extraction system and a real-time molecular test for Aspergillus and Pneumocystis, are due to be launched in late October.

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