Imbibing the spirit of the Valley

From Tuesday, for the rest of the month of June, I will be based in San Francisco. I am hoping that by stretching the day, it will be business as usual for me in the UK (except for face to face meetings) while I meet with partners, entrepreneurs, VCs, Angels, bloggers and folks at Stanford.
Already, the openness and generosity of spirit of people I hardly know has been very encouraging. Rob Young at First Round Capital has offered me a place to camp; Scott Rafer, Lance Cottril and others have made a number of key introductions and the diary is filling up.
TAG does have a number of investments on the west coast and naturally visiting them and meeting with some of the great co-investors we have there will be enlightening.
The companies based on the West Coat (incl 2 in LA) are: Mashery, Lookery, Spotrunner, 60 Frames,OpenX and Academia.
In addition Zemanta and Dothomes have recently made strong forays into the markets there and are considering establishing presence.
There is much to read about the ecosystem that has been developed in the Valley and many other cities are attempting to emulate that special 'sauce' they apparently have. I figured a month may give me some insights.
[A really interesting book dealing with the PRE-web period which describes the way in which Silicon Valley took over from Route 128 - Boston is Regional Advantage by Annalee Saxenian]

Zemanta - enhancing content for thousands of bloggers

Zemanta is more than just an exotic start-up from an unlikely source. They were one of the Seedcamp winners of 2007. At the time the Zemanta founding team of Bostjan Spetic and Andraz Tori - read about them here - moved their entire team (5-6 folks including a biz dev guy who knew the ropes quite well) to London for 3 months and brought the same attitude of complete dedication in going for the total win. They used every opportunity Seedcamp gave them to expand their network, they knew exactly what they wanted and who they wanted to meet.
One of their meetings was with Scott Rafer (Lookery) (who sold Mybloglog to Yahoo) and Oren Michels, of Mashery, who have helped them ever since.
Now Reuters have done a video piece on the company, helping further raise its profile and new releases of the software and new partnerships will be announced soon.
One to watch - and to use, if you create content.

Bostjan and Andraz have hired Bostjan's brother, the experienced Ales to head the company and he has been spending lots of time on the the West Coast, East Coast, all coasts spreading the Zemanta words and striking partnership deals.
Best of luck chaps!
Zemanta is backed by Eden and TAG.
PS: I will be spending the month of June in San Francisco and hope to do my little bit for Zemanta while I'm there.

Reminder: There is exciting stuff happening in Europe

This piece by Reuters is a reminder to the tech investment community that there is good tech innovation coming out of Europe.
Saul's interview draws attention to Seedcamp and the other initiatives.
Lets hope that the current slowdown and change in general investment sentiment does not filter down too strongly to the start-up zone where companies still need decent length runways to establish themselves.
Despite the lower cost of getting tech companies off the ground and the measurable and effective marketing routes available, great companies will still take time, effort and capital to build build them. Patience and persistence is called for.

Have fun spotting fakes - with Koodos

Go to Koodos for authentic top brands at great prices.

Moo wins a Webby

Congratulations to Richard and the team at Moo for being nominated in the retailer category and winning the people's voice Webby award in the services category.
Moo is only one of 5 website winners from the UK this year - the others being: FT, Wagamama, Transport for London and the Discovery Channel.



Its great to win awards from knowledgeable and eminent judges but getting the most votes from an admiring (or loving, in the case of Moo) public is the real accolade.

See what Moo's customers think of the award.

Dopplr meets Mr and Mrs Smith

Dopplr is a service created for frequent travellers who belong to the same social, business or industry network.
If you travel a lot to conferences, meetings or otherwise its amazing how frequently you find that someone in your network happens to be in the same city at the same time - or perhaps you'd miss by a day or two.
The Dopplr site was built early last year and
about 500 heavy travelers from technology and media companies were invited to
road test the software. Since the Dopplr users were logging thousands of air
miles a month, the site quickly became the place for wired
globe-trotters, many of whom are now hooked on checking each others'
movements.

The site is now open but of course permission
to view another member's itinerary is by invitation only.

The service has attracted a lot of attention including a nice piece in Time magazine and is now being adopted by some large corporations as a way of optimising 'face-time' between their wide travelling executives.
Now Dopplr have added a superb, fully integrated partnership (through to booking) with the Boutique Hotel group - Mr and Mrs Smith.



The Hotels recommended by Mr and Mrs Smith may not meet everyone's budget but the direction which Dopplr are going is clear - great functionality for the user and smart monetisation of a super service.
Great job, guys!

OFT Clears LoveFilm Amazon merger

Yesterday the OFT gave the go-ahead for LoveFilm and Amazon to merge their DVD rental operations. Whilst most people expected this, it was by no means a 'slam dunk'.
The OFT said that while it had competition concerns about the merger, which will control 90% of the online DVD market, it concluded that LoveFilm had no incentive to worsen its customer proposition because of the competition it faced from an array of other providers of video content.
LoveFilm in the UK and Netflix in the US have once again demonstrated the power of the web to disrupt well established and entrenched business models - in this case the Video Rental stores.
Lovefilm's CEO Simon Calver says the high street film rentals market has "completely imploded" with 50 per cent fewer stores trading today than two years ago as consumers continue to flock online to hire their movies.
Speaking at the First Tuesday 'Retail Revolution' event in London this week Calver said there are simply more attractive options online for film fans, with the internet now accounting for 45 per cent of the total rentals market, as it provides a platform for more choice, greater convenience and better value-for-money.
Although LoveFilm will have 90% of the DVD on-line rental market after the merger, the OFT clearly recognises that the next disruptive wave could be coming from downloads and other VOD channels.

Read previous TAG posts connected with LoveFilm

3 TAGsters make Red Herring 100

Congratulations to Fizzback, Wonga (currently trading as SameDayCash) and Zemanta for making Red Herring's top 100 in Europe.
All three have strong technology at their heart and are backed by first class VCs:
Fizzback (Advent), Wonga (Balderton) and Zemanta (Eden Ventures).
The full Red Herring list is here.

Zoopla! gets off to a cracking start!

Alex Chesterman, Simon Kain (both ex-Screen Select/Video Island/LoveFilm) and the Zoopla team have put together a really superb service addressing the needs of property owners, buyers, sellers and agents.
Very few subjects in the finance arena touches so many people as residential property. Nor do many generate the emotion, the column inches, the TV hours as does the great house price debate.
Until recently getting 'sold prices' on any property has been difficult or costly for consumers. Sold prices are, after all the one 'stake in the ground'.
Zoopla is a cleverly put together service. Its aim is to create a more transparent property market and to empower users by making information free and easily accessible. Its goal is to become the must-use resource for all data related to the property market.
Its interesting that people often spend time intensively researching the prices of PCs, TVs and Cars but when it comes to Property (by far the biggest investment of all) getting a discount off the asking price is the extent of the due diligence!

Zoopla! offers:

• Current value estimates on ANY home - using a carefully devised algorithm AND consumer generated data
• Sold price data on historic transactions
• Local information, trends and statistics
• For sale listings – agent and direct listings
• TemptMe! – owners set a magic number to tempt others to make offers
• AskMe! – find out anything you want to know

Zoopla! provide data on ALL homes – over 26 million – not just homes for sale. Users can find out about any home – theirs or anyone else’s – and participate in the community by sharing information

It has elements of a community website in the true sense, where everyone can participate by adding content and where usage and contribution helps improve the service.

Not everyone is delighted by this transparancy. Some estate agents, instead of using Zoopla to the full - its rich data set is a great tool for them and they can list their for sale properties pretty easily - seem concerned that their hitherto exculsive position as valuation experts is undermined. Of course, there is no substitute for an actual careful examination of the propeerty itself and Zoopla can only ever be a guide - accurate as it is.

The Telegraph has picked up on Zoopla's potential as a voyeur's paradise. Ever wondered what your boss's house is worth?

Meantime consumers appear to love it.
The site has been live for only 9 weeks and it has:
* Over 50k registered users already
* Over 250k visits so far in March alone
* Over 1m unique property searches so far in March alone

Zoopla is backed by Atlas Venture and TAG with William Reeve and Simon Murdoch as angels and board members.

We LOVE entrepreneurs

My recent post has caused something of a flurry. I am just not used to that. Then again, I don't normally craft my sentences that inelegantly or ambiguously.
I wrote: "Funding business plans from first time entrepreneurs just won't happen anymore!"
What I meant, but didn't spell out clearly enough, was that in my view, first time entrepreneurs who simply have a business PLAN (ie a PowerPoint + spreadsheet) would find it very difficult to get funding. They will need to have built something - a demo - a basic service.
In fact TAG loves first time entrepreneurs and makes a habit of backing them.
If you look down the list of our investments, more than half were first timers.
We particularly like those who can demonstrate the tenacity, invention, persistence and sheer bloody mindedness that has enabled them to get their product together with little or no external funding. Those are the guys who when they do raise cash use it wisely and well.
So, please be assured, TAG would not be one of the originators of Seedcamp or OpenCoffee if we didn't believe in and back first timers!!
Apologies for any confusion caused by a sloppy posting.

Innovation continues apace

Despite the generally uncertain economic climate, we have seen no diminution in the flood of interesting new ventures being launched.
In common with others who are investing in start-ups, I receive at least 2 or 3 propositions per week.
Its undisputable that the bar has been raised pretty high now for new tech companies. There is so much outstanding innovation about and the volume of new businesses is so high that fairly tough criteria are having to be set in order to filter.
For example, the companies we are favouring are those:
1. Founded by 2nd and 3rd time tech entrepreneurs
2. Aspiring to build global businesses with scale
3. With genuinely original ideas which are game changing or a significant advance on current state of play
4. Where the founder(s) have built prototypes or are already demonstrating momentum in customer/consumer adoption
5. Where founders have shown an ability to considerably ‘bootstrap’ the business with very little or no external cash (outside of friends and family).

Funding business plans from first time entrepreneurs just won't happen anymore!

For businesses with some or all of these attributes, there is still a large amount of money available.

The ‘new’ Retail craze: Private Sale

The web’s ability to disrupt well established markets or entrenched trading practices is well documented. The inexorable growth of many sectors of eCommerce at the expense of the high street continues apace.
Every now and then a new form of retailing is ‘invented’ which captures consumers imagination and represents a real threat to established players. The markets which are ripest for attack are those laden with regulation ie those where the freedom to trade in an unfettered way has been severely restricted.
In the past 5 years a new breed of on-line retailer has come out of France which has taken advantage of the years of conditioning which French, Belgian and other European consumers have been subjected to. Vente Privee is generating hundreds of millions of Euros of sales at high levels of profitability and has spawned more than a dozen copies.
Their formula is simple: a product or group of products is offered for sale for a limited period to their ‘members’. The product is usually very good value and is highly desirable.
How different is this from a retailer’s sale? Many retailers in the UK and the US have storecards (ie members) – they are often offered first crack at the bargains.
The difference is the application of rather archaic and restrictive trading laws in France, Belgium and elsewhere. These laws restrict retailers from running sales at any time other than those specified.
The Economist ran an interesting article which explains these laws more fully:

Part of the article reads as follows:
"If all this sounds fundamentally illiberal, that is because it is. One Eurocrat suggests that a key ancestor of many continental bans on unfair trading is a German law from the mid-1930s that sought to stamp out what Nazi officials called aggressive “Jewish” conduct among shopkeepers. But the laws also carry more than a whiff of distrust of capitalism itself. Belgian parliamentary papers from the late 1960s describe indignantly how some shops “deliberately” sell products at a loss to attract customers who might buy other goods at full price, a ploy referred to as “destructive” competition. Such loss-leaders were banned in Belgium in 1971, along with any selling below cost or at “extremely reduced” profit margins. This has kept the lawyers busy as the courts argue over what extremely reduced might mean. And that is why sales in Belgium are such a big deal: though offering discounts is legal at other times of the year, the sales are the only time when Belgian shopkeepers may sell goods at a loss."

Another snippet of news on a closely related topic caught my eye recently:
A union of French bookstores sued Amazon last month over the free shipping on orders over €20, saying that the cost of Amazon's delivery reduced the price of a book to one lower than allowed by the Lang Law. The booksellers were awarded €100,000 in damages in the suit, and Amazon was ordered to enact a delivery charge.
Amazon.com said that it would rather pay €1000 a day in fines than abolish its free shipping on books in France.

Readers of this blog may wonder which TAG company does this piece directly impact since I hardly ever write on subjects not directly concerning portfolio companies.
It is Koodos, the off-price branded fashion eCommerce site which has both open and closed sale platforms and is making quite a name for itself in the UK fashion scene right now. Clearly our belief is that in the US and UK, retailers run sales any day, all day - even pre Xmas - so consumers have different attitudes and are more inclined to buy on the merits of the offer itself.




Get your own partner koodos widget today ...they are starting to appear in many of the best publisher's sites.

Now, MoveMe is Yahoo's 'people's choice'

Yahoo have been running competitions for the best websites of 2007.
This is what they posted today:

"Move Me, this year's People's Choice winner, beat competition from far and wide to take the number one prize, proving that moving doesn't have to be as stressful as we may think.

In addition to taking the People's Choice crown, it also proved a popular site with the expert panel of judges, winning the Innovative category award announced earlier in January.

Move Me aims to take away the stress of moving house with its free Move Planner. The planner takes everything into account from finding reputable removal firms to who you need to notify of your change of address. "

Apparently, there were 18 sites shortlisted by the judges and Moveme took 1 in 6 votes - over 17% of the votes cast.

Congratulations to Mark, Keith, Charlie, Andy, Seb and the team.

In addition to being Yahoo's choice MoveMe announced today that it is the choice of Balderton and Advent too.
The following goes out on the wires today:
Moveme.com, the online home moving specialist, today announced it has secured £3.4million in its second round of funding from Balderton Capital, formerly Benchmark Capital Europe and Advent Venture Partners (“Advent Ventures”). Moveme.com will use the funds for further product development, marketing, recruitment and a new site launch in February.

Moveme.com is a free service which takes the hassle out of moving house in the UK. It helps both renters and buyers to manage the moving process online, giving information on everything from booking a removal company to changing satellite TV subscriptions and re-directing mail. The site is easy to navigate and requires only the date and addresses of the move. It can then provide a bespoke planner in diary-form to streamline the moving process, saving users’ time and money. The site currently has over 40,000 registered users.

Mark Cunningham, co-founder and CEO of Moveme.com, said: “Moving house can be one of the most stressful experiences in people’s lives. Moveme takes away this stress and helps those with very little time arrange all aspects of their house move online.

“We are delighted to partner with two premier investment firms. This latest investment is testament to Moveme.com’s continued success. The proceeds of this funding now give us the resources to re-launch the site and accelerate our plans for growth.“

Commenting on the investment, Sean Seton-Rogers of Balderton Capital, said: “All of us at Balderton are excited to be part of the Moveme team. Each of us has experienced the hassle of moving home and wish Moveme.com had been around to help us. We believe customers are going to love this free service that takes all the hassle away. The company has experienced tremendous growth and Balderton is proud to invest in the company’s expansion.”

Frédéric Court, Partner, Advent Venture Partners, added: “We immediately bought into the founders’ vision of easing the way people move when we first met and seeded Moveme last year. We are delighted that Balderton has joined us in backing Moveme and that the number of users of the service continues to increase rapidly.”

Sean Seton-Rogers of Balderton Capital has joined the Moveme.com Board of Directors, alongside Frédéric Court from Advent Ventures and Robin Klein from The Accelerator Group. The company is also backed by Brent Hoberman, co-founder of Lastminute.com.

MoveMe wins another award

If winning awards was the key to success, MoveMe has certainly unlocked that particular door.
After being shortlisted for Yahoo!’s Finds of the Year 2007 campaign, moveme.com has just been chosen by the judges as a winning site of their category in innovation. There is also a People Choice award as this does not take place until 16th Jan 08 so get voting now on Yahoo! Finds.

Move Me (www.moveme.com) aims to take away the stress of moving house with its free Move Planner. The planner takes everything into account from finding reputable removal firms to who you need to notify of your change of address. The judges particularly liked the user interface and design of Move Me. They also described the calendar as a brilliant tool which set the site apart from the other entrants.


This award follows the one they got from New Media Age back in June for the best new business.

MoveMe are working hard to get the latest version of their site launched this month but already many thousands of home movers have reduced their moving headaches by using www.moveme.com and the flow of complimentary comments from users back up the judgement of those who have chosen Moveme from the many great new sites launched in 2007.

The Seedcamp Video

The concept of Seedcamp is not difficult to explain. What is tougher is to convey the spirit of the enterprise.
Seedcamp have recently published its video. Its a 10 minute piece edited from 80 hours of film which is worth the watch if you have an interest in the entrepreneurial scene in Europe and what practical steps people are taking to fuel it in the tech arena.


The filming, editing and production was done by Bonney and Klein (the Klein being Anthony Klein, my nephew). This post would have been up a month or two ago but I was waiting the the guys to get their website up - to give them a well-deserved plug.
Alex and Anthony are very talented film-makers who are applying their talents in a number of creative ways.
For example: FilmWorks is a film-making ‘boot camp’ developed by
Bonney and Klein Productions for companies wanting interesting and exciting training and team-building programs.

Bonney and Klein did a superb job on 80 hours of Seedcamp footage - thanks guys!

APAX and GMG bag WGSN as part of their £1bn EMAP buy

I don't normally comment on non-TAG companies but I felt compelled to write something about one of my favourite digital companies, WGSN.
WGSN (originally Worth Global Style Network!) describes itself as 'the world's leading online research, trend analysis, and news service for the fashion and style industries'. It was a pioneer in subscription based information services on line at a time when major clients required a dedicated satellite dish to receive it because the web was inadequate.
WGSN was launched by the brothers Julian and Marc Worth in 1998 and was sold to EMAP in October 2005 for £140m.
Amidst the myriad properties that APAX and Guardian Media Group (GMG) have acquired this nugget which from EMAP's public statements in March and July this year indicated was continuing to perform ahead of its plan.
I wouldn't be surprised if WGSN could recover half of the entire purchase price for Bidco. Another coup for Stephen Grabiner and his team!
APAX and GMG both have strong digital credentials and will certainly understand WGSN a lot better than EMAP did and its potential should be unleashed.
My own connections with WGSN go back to when I introduced the service to Arcadia and it became WGSN's first significant client.
Later, Marc and Julian were very keen for TAG to invest but we were never able to come to terms. Ah well ....

More Flesh on the bones ...

Apologies to the few readers of this blog that my previous post announcing the sale of Agent Provocateur was thin on detail.
You'll understand that confidentiality rules apply and one has to wait for details to enter the public domain before commenting or confirming.
On the numbers provided, a sale price exceeding £60m looks very full but the business is well primed for a classic retail rapid roll-out. The aggregate, consolidated pre-tax profits for the year ended March 07 (accounts were filed last week) were £1.9m but quickly heading north.
The brand is capable of being a global luxury brand of sizable proportions.
Many more stores are planned but the role of digital media and its viral effect has been a significant factor in the brand being far bigger than the business at this stage.

Whilst both founders remained in the business, rapid expansion was impossible. The solution found is one that is perfect for the business and the strong management team that has developed over the past 5 years. 3i have made a very good buy.

Trust the Sunday Times to add the colour - and there is a lot of it.

From TAG's point of view a very successful exit but one which we would not have sought had the unfortunate breakup between the founders occurred a year ago.

A welcome exit from AP

Early yesterday morning, TAG sold its interest in Agent Provocateur.[See FT piece which is sort of accurate]. See also 3i announcement.
TAG held its stake via an investment syndicate which it put together in October 2002 to acquire 20% of AP from the founders. At the time the company had 4 shops.
This brings to an end a most fascinating and involving investment about which we have posted on previous occasions. MBE rejected, MBEs awarded,Kate Moss for AP.
FT.com featured the sale today. I particularly like this bit: "The last published accounts for Agent Provocateur show the business made a pre-tax loss of £207,831 for the year to March 2006 on turnover of £8.9m.
Mr Corré, who warned that he did not worry about financial detail, said he thought the following year had seen the company make a “profit of about £2m” and “£15m or £20m turnover”.
No doubt there will further column inches in the coming days. This company has a penchant for headlines.

Digivate becoming a serious digital agency

Digivate is one of TAG's oldest investments. Its positively mature. TAG invested about 7 years ago. Far from getting a 7 year itch, we're pretty excited about the way its shaping up. Profitable and cash generating from its core business of building eCommerce websites on its own open source platform, Digivate has fairly recently extended its activities beyond eCommerce and database building/email marketing into search engine marketing (SEM) and particularly into SEO.

Their approach to SEO is comprehensive. Understanding the internal structures of websites through building dozens of them certainly helps but adding a really good understanding of how contextual links works and building forums, blogs and developing (writing) appropriate content for clients all go to deliver a compelling solution.

Digivate have developed their own sophisticated SEO evaluator tool that emulates the Google search algorithm and breaks down the relevant site to identify the specific areas where improvements can be made. Its tools can also provide detailed reports of competitors' weaknesses to provide an advantage for the most competitive search terms.

The next step for Digivate is to extend their graphical and UI (User Interface)design capability

The heritage of the founders lies in catalogue mail order, direct marketing, database design and development. It shows.

Digivate clients include leading high street retail groups, catalogue companies, new internet services and financial services companies.

Imagini announces its funding

Imagini the company that introduced or 'created' visual DNA with such compelling effect has announced its Series A funding round.

Imagini definitely falls in the 'intriguing' category and a year ago left many potential funders scratching their heads as to where the company would ultimately go.

By April 2m users had completed their visual profiles in a matter of months (now well over 4m) and Imagini was seen in a somewhat different light and wrapped up a very interesting group of investors fairly quickly.

Now Imagini has developed a super facebook application called Youniverse which promises further engagement with the concept of visual DNA.

Victor Keegan has written intelligently about the company in the Guardian. This is worth a read if you're still scratching your head.

Backers include Atomico, North Zone Ventures and TAG