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The value of green marketing

Carbon reduction and offset reports are finding their way into many corporate accounts these days and for good reason. Whatever the truth about the causes of global warming, companies can be sure that environmental activists and investors alike will be snapping at their heels if their shade of green is too pale. Even pension funds, those gentlest of investors, now often have strict rules on investing in the shares of environmentally-friendly businesses.

So it is hardly surprising that many early-stage companies are making a virtue of any technology or other service that can boost the green credentials of clients.

Take Netviewer, a German-based group, which last week attracted €9m in funding from Invision Private Equity and TVM Capital. Netviewer, founded in 2001, is primarily focused on the video conferencing market. Although this market is far from new, it seems to have been given new impetus by the increasing costs and difficulties of air travel, which, at the margin, encourage companies to do less business face-to-face.  Even more important though, is the shame any company would face were it to be found to have significantly increased its "carbon footprint". Conversely, any company that could show it had cut back significantly on its air miles stands to gain positive publicity.

Sensing an opportunity, in June Netviewer said that for each video-conferencing licence it sold, it would "offset" half a ton of greenhouse gases. The company also likes to publicise its support for climate protection projects carried out by Swiss non-profit organisation Myclimate, including the restoration of hydropower plants in Indonesia.

This is all very laudable but does carbon offsetting actually work? Does employing energy-hungry equipment reduce or add to carbon usage over the long-term? Do activities such as recycling require more energy to implement than they save?

If we are to be cynical, in pure business terms none of this matters. Such initiatives show a willingness to act and appease politicians and the public, and that is enough for now. Video-conferencing clearly saves on airplane fuel costs and that's pretty much all that matters in the current climate.

Many other young companies also laud the potential environmental benefits of their product, not least the alternative energy providers.

This is an entirely reasonable marketing ploy – marketing is, after all, about perceived rather than actual benefits. Whether these perceived benefits will lead the companies to command a premium for their products or during a deal is harder to say. It is probable that the value of environmentally-friendly services has not been fully discounted in the market. Despite Al Gore's truth, carbon reduction is not yet paramount in the minds of many companies and individuals so there is probably unrealised value left to tap.

Let us know your thoughts at: weeklyfeedback@libraryhouse.net. Where possible, we will address any points raised in future newsletters.

The Future of European VC Is Now

Join leading members and stakeholders of the European venture capital community October 3-5, 2007 at the European Venture Capital Forum in Stockholm, Sweden as they share expertise and best practices across information and communication technologies, life sciences and clean technologies in a non-commercial, off-the-record environment. Featured topics include valuation, capital efficiency, the correlation between VC activity, stock market performance and liquidity, the creation of winning companies and how to expand the venture capital playing field. Visit www.evca-specials.com/vcf07 to learn more and register today.

The Week's Deals

Dailymotion, the France-based video sharing website, has raised $34m (€24.9m) from AGF Private Equity, Advent Venture Partners, Atlas Venture and Partech International. The investment will be used towards technological and creative development as well as marketing. Dailymotion was launched within a few months of its main competitor YouTube, which was sold to Google last year for $1.65bn (€1.3bn). Website analysis company Alexa currently rates Dailymotion as the world's 49th most visited site, compared to Youtube’s ranking of 4th.

XMOS Semiconductor, the UK-based fabless semiconductor company, has raised $16m (€11.7m) in series A funding from Amadeus Capital Partners, DFJ Esprit and Foundation Capital. XMOS has created a new category of semiconductors - called Software Defined Silicon (SDS) chips - for consumer electronics applications that require high performance, low manufacturing cost and design flexibility. The company expects its silicon, development tools and software components will sample to lead customers towards the end of this year and be broadly available from Q1 2008.

Netviewer, the Germany-based provider of real-time collaboration software, has raised €9m from Invision Private Equity and TVM Capital. Netviewer’s service enables business users to view each other's PC screens simultaneously in order to collaborate on a variety of documents, calculations or graphs. The company says that it has more than 10,000 corporate and SME customers from more than 43 countries. The latest investment is to be used to accelerate international growth and for further product development.

PowerID, the Israel-based provider of low-voltage patch technology to the cosmetic industry, has raised $12m (€8.8m) from Amadeus Capital Partners, Apax Partners, Clal Industries and Investments, Infinity Venture Capital and Partech International. Power ID's patches, powered by an embedded ultra-thin printed battery, are designed to boost cosmetic efficacy by enhancing the effect of active ingredients. The company develops patches addressing various cosmetic applications including anti-aging, anti-wrinkle, skin whitening, anti-cellulite and acne. Pharmaceutical applications are also under development.

The Week's Exits

Netgiro, the Sweden-based e-commerce software developer, has been acquired by US-based Digital River for $27m (€17.8m) in cash. Netgiro's platform can support 20 online payment methods, ranging from credit and debit card processing, to direct debit, internet bank payments, local bank transfers and cheques. Earlier this year Aim-listed payment service provider Datacash Group terminated a proposed €10.2m acquisition of NetGiro, claiming a breach of the purchase agreement.

Joost, the Netherlands-based internet TV company, has acquired the digital programming guide OnTheToob.com. The website helps Joost beta testers create customised channels and RSS feeds out of Joost's channels and programs. Creator of the technology, Hal Schechner has also joined the company. Financial terms of the deal were not disclosed.

CogniTens, the Israel-based provider of dimensional measurement products, has been acquired by Swedish measurement company Hexagon. Terms of the deal were not disclosed. CogniTens’ 3D non-contact measurement technology is designed to improve engineering and manufacturing processes in the automotive and other manufacturing industries.

People Moves

Nitec Pharma, the Switzerland-based specialist pharmaceutical company, has appointed Anders Härfstrand as chief executive, and Andrea Buscaglia as chief financial officer. Nitec Pharma is focused on the development and commercialisation of optimised medicines for the treatment of chronic inflammatory diseases. The appointments are designed to enable the company to drive the commercialisation of its late-stage product Lodotra, as well as to progress the development of its pipeline.

JADO Technologies, the Germany-based developer of cell membrane-targeted drugs, has appointed Charl van Zyl as its new chief executive, taking over from co-founder Gary Jennings who will continue as chief scientific officer. Mr van Zyl was most recently Novartis' head of marketing and sales for Europe, and prior to that head of global marketing for Ophthalmics.

Egalet, the Denmark-based specialist pharmaceutical company, has appointed Michael Fiorini as chairman and Peter Nordkild as chief executive. Mr Fiorini replaces Egalet's existing chairman, Seppo Mäkinen of Bio Fund Management, who has chaired the board since 2005. Mr Nordkild will supersede co-founder Jan Quistgaard.

Most Accessed Companies

MyHeritage, the Israel-based genealogy site, has attracted a lot of attention this week. MyHeritage is aimed at people wanting to explore their family history. The company recently announced the acquisition of Pearl Street Software, bringing technology that allows the service to compare multiple family trees to find overlap - even if names are spelt differently or the basic data doesn't match exactly. If both sides agree, the trees can then be merged at appropriate places. The company eventually hopes to map much of the world's genealogy online. Backers of the company include Accel Partners and business angels.

Turbine Developments, the Northern Ireland-based developer of gas turbine generators, has also received a lot of attention. Turbine Developments has developed a gas turbine engine which generates electrical power from low quality landfill gas. The company recently recieved investment from Low Carbon Accelerator to fund final development work on the turbine. It says that as UK landfill gas concentrations decline over time its specialist engine will enable landfill gas power generating companies to maintain a production capacity on sites which would otherwise have to burn off the gas.