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| Issue 73 Tuesday, 28th August 2007 |
www.libraryhouse.net
|
This Week:
Regulars:
VentureCast Universe
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Dear Subscriber,
Library House has just published its comprehensive, annual, UBS-sponsored report on the UK venture capital market (downloadable for free). Perhaps the most striking finding of the report is the attention VCs are now paying to the services and retail sector. Gone are the days when venture capital focused on investment in pure technology companies. Indeed the report shows that the services and retail sector is now the largest single target for venture capitalists in the UK with investment in the sector up 91% (by value) from 2005 to 2006.
Why is this happening? The flippant answer is that services companies are delivering very good returns. The report calculates that company exits in the services and retail sector during 2006 generated combined returns (at the company level) of 66% compared to an average across sectors of just 31%. This is an impressive value, especially as the calculation includes ‘exits’ through going out of business.
A more useful answer must explain why the sector is being able to deliver such good returns. A key factor that may be driving this is the deployment of new technologies in the services sector. Services can now be delivered in ways that were, just ten years ago, impossible. Most obviously, retail companies such as Amazon have harnessed the power of the web to sell a variety of products to the consumer without the need for much bricks and mortar infrastructure. Their business model relies on technology- the technology of the web and of the automated warehouse processes that underlie the logistics of product delivery. But this does not make them a technology company. They use technology, not develop it. The web is therefore allowing two things to happen:
1. the development of services which were previously inconceivable (for example, Parkatmyhouse.com’s parking space rental service)
2. enhancing the profitability and scalability of previously existing services (for example online financial services)
Why is this such an important phenomenon to understand? Influential academics, such as Amar Bhide of Columbia University, argue strongly that it is the consumption of innovative technologies, not their development, which is most important for the success of an economy. Policy makers, the media and other observers often comment on how Google, Cisco, Microsoft, Apple and others are all from the US. Why can’t Europe produce a world beating technology company? Bhide would argue that we shouldn’t actually be that concerned- instead we should focus on making sure we are making maximal use of technology as consumers, start-up companies and corporations.
That the growth in the UK’s venture capital market is being driven, at least in part, by investments in services and retail companies should not therefore be seen as dispiriting. Instead it indicates that UK entrepreneurs are adept at consuming innovation and crafting new business models out of the latest technology. The real concern is whether, technology focused or not, venture investment in the UK and Europe will continue to grow or suffer from the emergence of the Asian giants, India and China.
 *ONLY DAYS REMAIN BEFORE ENTRIES CLOSE FOR RUNNING THE GAUNTLET 2007*Over 250 entrepreneurs have now entered the competition, whose investors - CREATE, SEP, NW Brown and Low Carbon Accelerator - are offering a share in funding up to £2m to investable businesses. The competition provides free access (normally £299) to ‘The Gauntlet’, a virtual investor tool developed by Library House and the London School of Economics. ‘The Gauntlet’ guides entrants through questions typically asked by investors and a report highlighting the strengths and weaknesses of the business proposition is subsequently returned. BBC East are offering ten entrants a specially designed media awareness training package as part of the competition's free education program. The training is specifically designed to help entrepreneurs understand the modern media and how it works, which also includes the chance to watch a live news program being broadcast. A further innovative development is the ‘webinar’ planned for 3rd September on the subject of ?How to write a business plan!? This will be presented by Ralph Ecclestone of The Commercialisation Company. To register for the ‘webinar’, send an email to runningthegauntlet@eeda.org.uk entering 'webinar' in the subject box. Enter for the ‘running the gauntlet 2007’ competition before midnight on 2 September 2007 at www.runningthegauntlet.com |
Metacafe, the Israel-based online media and video sharing community, has raised $30m (€22.3m) in series C funding from Highland Capital Partners, Accel Partners, Benchmark Capital and DAG Ventures. Metacafe says that its 25 million unique viewers each month make it one of the world's largest video sites. The money raised will be used to support the company's continued global growth, including expanding the breadth and depth of content from sources including emerging video creators as well as partnerships with established media companies.
Novafora, the US and Israel-based fabless semiconductor company targeting the video processing sector, has raised $12m (€8.9m) from Gemini Israel Funds and Vertex Venture. The company, which is currently operating in stealth mode, was set up in 2005 by the Zaki and Shlomo Rakib, the two brothers who founded Nasdaq-listed Terayon Communication Systems in 1993.
Small World Financial Services, the UK-based money transfer operator, has raised £2.4m ($3.5m) from MMC Ventures. Small Word operates ‘corridors’ of money exchange between western Europe and developing countries. The UK is reportedly a strongly growing market, with many newly arrived workers now sending money back to their home countries.
iMotions, the Denmark-based developer of software to measure emotional response, has raised $2.7m (€2m) from Inventure Capital, The Way Forward, Andy Miller, Joergen Thorball, Kenneth Morse and other undisclosed private investors. The company's software is designed to be an objective, non-intrusive and reliable way of measuring human emotional response to visual stimuli such as print ads, direct marketing material, and brochures. The investment is intended to allow the company to strengthen and expand its sales organisation in the US and its support organisation worldwide.
Epidauros Biotechnologie, the Germany-based pharmacogenetics company, has been acquired by Nasdaq-listed Clinical Data for €8.75m in cash. Clinical Data says that the acquisition provides it with an established portfolio of proprietary genetic biomarkers, expertise in genetic biomarker discovery, relationships with leading diagnostic companies, and a fast-growing pharmacogenomics services business.
Smart Network Devices, the Germany-based software company developing and selling operating systems for embedded devices, has been acquired by MSC Vertriebs for an undisclosed amount. MSC Vertriebs is a Germany-based high-tech distributor of electronic components throughout Europe. Smart Network Devices will operate as a business unit inside MSC Vertriebs with all its products and services retained, in addition to plans for further expansion.
Varioptic, the France-based liquid lens company, has appointed Christian Dupont as chief executive, replacing Etienne Paillard who has now left the company. Varioptic says the change coincides with a move in company focus away from technology and product development to the challenges associated with deploying its products in the mobile imaging market.
HelioDynamics, the UK-based developer of solar energy technology, has appointed Clarke Simmons as chief executive and Keith Glichrist as chairman. The news coincides with the announcement of further funding of £600k (€886k) from the Low Carbon Accelerator. HelioDynamics has developed a solar photovoltaic system that uses mirrors to reflect and concentrate sunlight to produce electricity and heat. The recent appointments are intended to add a further layer of commercial focus to the company.
SoonR, the US and Denmark-based developer of technology for accessing and sharing computer files remotely, has appointed Patrick McVeigh as chief executive. Mr McVeigh was most recently chief executive of Nasdaq-listed PalmSource, a global provider of mobile handset operating systems. SoonR has developed a service that is designed to link data-enabled devices, such as mobile phones, PDAs, or computers, to applications and data on any internet connected computer. The company also announced that founder Martin Frid-Nielsen has been appointed chairman and chief product officer.
OB10, the UK-based business-to-business e-invoicing network, has attracted a lot of attention this week. OB10's internet-based network is designed to streamline the invoice-to-pay processes without the need for client organisation or supplier to implement any hardware or software. The company says that OB10 can reduce the cost of paper invoice processing by up to 60 per cent. Customers in Europe and North America include HP, GSK, Agilent, General Motors and Barclays. Founded in 2000, the company's backers include Cargill Ventures, Fleming Family & Partners and Lynx Capital Ventures.
3Dfacto, the Denmark-based provider of software to the manufacturing industry, has also attracted a lot of attention. The company's first product, called VirtuBUILD, is a web-based application platform that enables the building of products in a virtual world. The company has already attracted major Danish clients such as Danfoss, Velux and ABB, and announced its entry into the German and Swedish markets during 2007. An investment round from Danish Fund for Industrial Growth and Symbion Capital earlier this year was intended to allow expansion into the Nordic markets.
There are now 38210 companies in VenturePedia, 10898 investors, and 54046 contacts.
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