We had a special edition of This Week in Venture Capital this week shooting out of the Next New Networks offices in New York. Our guest was Mo Koyfman of Spark Capital. Spark Capital is relatively new to VC (founded in 2005) yet has become one of the hottest new VCs having invested in Twitter, Tumblr, AdMeld, Boxee, KickApps and many more companies.
This was a really fun episode for me because Mo is informed and knowledgeable on so many topics and being a Boston / NYC VC it gave us so much to talk about relative to just covering California VCs. I think you’ll enjoy this TWiVC video because the topics were so wide ranging. [note: video as of Saturday AM is ustream but we have high quality video (from a “friendlier” camera angle ) going live later in the weekend. Content, of course, is the same!]
Mo was graduated from Wharton, worked in investment banking, spent 6 years at IAC (including in an operational role for Connected Ventures which includes College Humor, Busted T’s and Vimeo) before joining Spark Capital in 2008.
Topics we discussed in the first 45 minutes of the video include:
- What is VC like in NY? In the media NYC is “hot” right now yet having just spent 6 days in NY I heard many similar stories as I get in LA: not enough VC and hard to get great tech resources. We discussed NY vs. Silicon Valley and NY vs. Boston. We also discussed having distributed teams (e.g. ops team in NY, dev team in Philly and having dev teams in Israel).
- Why liberal arts undergraduate degrees can be more valuable than economics / business undergraduate degrees. Mo & I both have double majors with one being finance / econ. Mo’s other degree was English, mine was Political Science. We both felt that the critical reasoning skills and writing skills were critical to our career development.
- Targeting SMB’s (small & medium businesses)
- The importance of understanding “The Innovator’s Dilemma”
- Online video: is Hulu’s inventory really “sold out” as they often claim? How could it be when they always have “schlocky” ads or PSAs (public service announcements). These are both either “remnant” or free ad types.
- Google Analytics vs. Facebook’s new analytics tool
- The Spark Capital website (it’s one of my favorites). How did they end up with such an irreverent site and what was their objective? And what we think about Sequoia’s website, First Round Capital’s and True Ventures (we both like to copy stuff from True).
- Should you have 7 people doing your seed round and why Ron Conway is the S&P 500 of Venture Capital (this discussion starts at minute 59).
We then moved on to discuss the following deals:
Deal of the Week
BookRenter – plus a discussion about Chegg … what is going on in the university book market? We talked about the analogies between what NetFlix achieved in movies and whether this is relevant to the book market.
-Online text book rental service
-Currently offers 3mm books to over 5,000 higher education institutions in the US
-Offers a private label service that allows campus book retailers to offer an online rental model; serves 1.3mm to-date
-Company grew by more than “400% each year” for past few years [assume growth metric = revenues]
-Founded in 2008 by Mehdi Maghsoodnia
-Competition: Chegg (has raised $144 in debt and equity)—estimated by Steven Carpenter (TechCrunch) to be 10x more unique visitors than BookRenter (during peak book renting seasons) with nearly $140mm in revenues for 2010
Current round: $10mm in Series B by Norwest (lead), Storm Ventures and Adams Capital. Total raised: $16.0mm
– Online travel guide that is served up in-stream with restricted data size in the same was as Twitter.
– No big shocker since it is co-founded by Biz Stone and Adam Ruegel
– Investors are the “who’s who” including: Steve Case, Ron Conway, Jack Dorsey, Dave Morin, Betaworks, Founder Collective, AOL Ventures
– $1 million seed round
– TechCrunch article
-Private, flash sales site focused on apparel goods (women, men and children)
-Business model: Premium brands offer select goods (often excess inventory) for sale at 40%-70% discounts; consumers need to be invited by existing member or via application to participate in private sales; HauteLook collects percentage of gross sale
-Metrics: 2.5mm members, 1,000 brands, 2,500 sale events to-date
-New funding will be applied toward user acquisition and to expand into new product categories (gourmet food, wine and new services)
-Launched in 2007 in Los Angeles by Adam Bernhard and Konstantin Glasmacher
-Competition: Gilt Groupe, Ideeli, RueLaLa (sub of GSI Commerce), OneKingsLane, department stores like Saks and Neiman Marcus
-Recent competitive financings closed by Gilt Groupe ($35mm in 05/2010), OKL (undisclosed value in 12/2009) and Ideeli ($20mm in 12/2009)
Current round: $31.0mm in Series C by Insight Venture Partners (Jeff Lieberman). Total: $41.0mm plus undisclosed Series A
Read more: TechCrunch
-Online radio music service
-Free experience is web and mobile app-based, has ads, limited skipping, and limited listening time (40 hours/month)
-Premium experience ($36/yr) offers a desktop application option, unlimited listening, no ads, higher quality audio and more skips
-Metrics: 50mm users (up from 40mm in Dec 2009),
-Competition includes: Spotify, Last.fm
-Founded in January 2000 in Oakland by Tim Westergren; new CFO, Steve Cakebread was previously CFO of Salesforce.com
-Factoid: 99% of its employees are musicians
Current round: Undisclosed, but investors include GGV Capital, Allen & Company; previous round raised $35mm in Series D in July 2009. Total raised: $56.3mm
Read more: TechCrunch
-Popular apps include: “SuperWall” and “Likeness” for FaceBook, “Slideshow” and “PhotoFx” for MySpace/Hi5, Friendster, Orkut, Bebo
-Users: More than 280mm monthly users worldwide use its apps or see its advertising
-RockYou (US) was founded in Redwood City in November 2005 by Lance Tokuda and Jia Shen
-Current round allows RockYou (US) to obtain a majority position in RockYou Asia
-RockYou (Asia) is primarily focused on the development of social networking apps and games; founded as a joint venture between RockYou, SoftBank and SK Telecom
November Softbank led $50mm was round (previous SoftBank extension D Series or E $10.0mm round
Total raised: $129.0mm
InviteMedia (acquired by Google)
-Online DSP (demand-side platform) and ad exchange for display advertisers
-Revenue model: % of total ad or data buy purchased through platform
-Formed in 2007 by UPenn students, Nat Turner, Scott Becker, Michael Provenzano, and Zach Weinberg, in Philadelphia
-Competition: DSPs (DataXu, X+1, Efficient Frontier) and Ad Exchanges (DoubleClick, RightMedia, AdECN, OpenX)
-Google acquisition helps address advertiser demand for a bidding platform that integrates with DoubleClick and plans to allow InviteMedia to remain platform agnostic (not just Google/DoubleClick)
-Investors include Comcast’s (CMCSA) venture arm, First Round Capital (Chris Fralic), Roger Ehrenberg; total raised = $5.0mm
Transaction terms: $70.0mm (rumored by Peter Kafka, Media Memo, AllThingsD)
Read more: MediaWeek
(Cross-posted @ Both Sides of the Table )