AllThingsD » fundraising

Scoutmob Attracts Investors and Partners by Saying It's Not a Daily Deals Company

Tricia Duryee — Thu, 24 May 2012 12:30:23 +0000

Scoutmob was able to attract $3.25 million in new funding and a major new payments partner by pitching itself as a mobile company and not as a fledgling competitor in the daily deals space.

The Atlanta-based company’s mobile app tries to be a resource to consumers who are looking for local merchants and events, sort of like the Web’s original CitySearch service from years ago — except that it’s on mobile. The app also distributes coupons to restaurants, but instead of charging consumers for the deals, like Groupon does, they are free, and merchants pay a flat rate to Scoutmob each time one is redeemed.

Investors in the company’s second round include AOL Ventures, New Atlantic Ventures, Capital Broadcasting, Cox Enterprises and Thrillist CEO Ben Lerer. To date, Scoutmob has raised $5 million, which means that even if it wanted to, it doesn’t have the resources to go up against Groupon and LivingSocial.

In an interview, Scoutmob co-founder Michael Tavani said the company gets lumped into the daily deals category, but said that from day one, “we tried to differentiate ourselves and to be more of a mobile company.”

So far, the strategy has worked.

The app, which is available free on iOS, BlackBerry and Android, has 1.2 million users who have redeemed one million offers. To date, the company has launched in 10 cities, with varying success rates. Some markets, like Seattle, don’t have many deals yet, while other cities, like Atlanta or Washington, D.C., are used more.

Because of its emphasis on mobile, the company was also able to to score a partnership with payment processing company First Data Corporation.

“It’s crazy, we are a two-and-a-half year-old company, and every week we have the largest payment companies in the world contacting us,” Tavani said. ”They are worried that if they don’t have mobile engagement, then what do they have?”

First Data processes about 55 percent of all transactions in the U.S., and will help Scoutmob close the loop of offering a discount, making a purchase and earning loyalty points.

The new funding will be used to support the company’s next wave of product development, which will include building out a mobile rewards program with the help of First Data and other payment companies it signs up.

Tavani said it will work like this: When users make a purchase at a Scoutmob location using a credit card, they’ll accrue points automatically. Once enough points have been accumulated, they can be redeemed at any Scoutmob retail location.

Unlike traditional loyalty programs, which require consumers to go to the same coffee shop 10 times in order to earn a free coffee, Scoutmob will let consumers earn and redeem points by visiting any merchant in its network. It’s similar to frequent flyer programs, where miles can be earned at a variety of merchants and then redeemed at a handful of airlines.

“We want to be the equivalent of an airline reward program, but for local,” Tavani said. “That’s exactly what we want to be.”

Scoutmob has landed in a sector spanning local businesses and mobile payments, which is ripe from innovation and extremely crowded by well-funded start-ups and massively large incumbents. But Tavani argues that it’s a level playing field.

“There’s going to be multiple players and lots of winners,” he said. “Groupon and LivingSocial are two with a gigantic lead. But we can go out and visit merchants today — there’s no one preventing us from having those conversations.”

Videogames Using the Power of Fans to Get a Kick Start

Tricia Duryee — Mon, 21 May 2012 14:00:23 +0000

Videogames are fast becoming one of the most popular categories that are able to attract start-up capital from everyday people.

SFC / Shutterstock

With the rise of so-called “crowdfunding,” game makers are finding fans online who are willing to pledge a few bucks toward a game they’d like to see produced.

The primary site where these connections are being made is Kickstarter, a three-year old company. Since Kickstarter got off the ground, the games category has garnered $29 million in pledges, according to the New York Times. Other popular categories include film/video, music and design.

Further, it was reported that 854 game developers successfully reached their fundraising goals, raising an average of $29,409 apiece.

Most impressively, three game companies have raised more than $1.5 million each since the beginning of this year: Double Fine raised $3.3 million from 87,000 backers; Wasteland 2 raised $2.9 million; and Shadowrun Returns secured $1.8 million.

Another site, Gambitious, which will be exclusively dedicated to helping game companies raise money, is preparing to launch on June 5 in Los Angeles as part of E3, the industry’s big annual conference.

The shift to nontraditional fundraising is now even catching the eye of megapublishers like Electronic Arts. Last week, EA said developers who crowdsourced funding will be able to sell their games on Origin at no cost for three months.

Origin is the company’s online game store, which allows users to download PC games electronically and counts up to 12 million users worldwide.

“The public support for crowdfunding creative game ideas coming from small developers today is nothing short of phenomenal,” said David DeMartini, EA’s SVP of Origin, in a release. “It’s also incredibly healthy for the gaming industry. Gamers around the world deserve a chance to play every great new game.”

EA doesn’t disclose how much it charges because it says fees can vary, but through this program, developers will now receive 100 percent of sales during the 90-day window plus any pre-sales that are generated before the title officially launches, a spokesman confirmed.

It’s unclear whether crowdfunding is a fad and consumers will tire of it quickly, and to be clear, not every company that requests money is able to get it.

But it pairs nicely with a broader trend in the industry that AllThingsD’s Eric Johnson wrote about last week. He explained that game developers are increasingly finding it advantageous to stay small, rejecting the notion that productions need big budgets in order to create blockbusters.

The evolution has been aided by the rise of three new distribution platforms, Apple’s App Store, Facebook and Valve’s Steam Store (and to a lesser extent, EA’s Origin, which is catching up). With these digital platforms, developers can reach customers without having to package up their software and sell it at retail, saving thousands of dollars.

With the crowdfunding phenomenon completely under way, Videogame Analyst and Consultant Scott Steinberg saw the opportunity to write an e-book on the subject called “Crowdfunding Your Business: A How-To Guide.” In the recently released book, he argues that crowdfunding helps developers identify projects that consumers are willing to pay for, before they’ve wasted the money and time on developing them.

He writes that by “requesting feedback or recruiting help from public donors via open calls for assistance — you can gauge demand for and create bankable products from day one.”

Flipboard CEO McCue Likely to Step Down From Twitter Board Over Potential Future Conflicts (Or Closer Cooperation)

Kara Swisher — Mon, 07 May 2012 20:37:24 +0000

According to sources close to the situation, Flipboard co-founder and CEO Mike McCue has approached Twitter CEO Dick Costolo and co-founder Jack Dorsey about moving off the board of Twitter.

It is not clear when McCue — who became a director of the San Francisco social communications company in late 2010 — will step down, but it could come soon.

The reason, sources said, is McCue’s growing feeling that the companies are on a product collision course, with a possible troubled or perhaps more attractive result.

In other words, Flipboard will either face increasing rivalry from Twitter or will end up as a possible acquisition target for it or other companies.

“How users consume and use Twitter is a key part of its future, and that is what Flipboard does well already,” said one person with knowledge of the situation. “There is going to be an inevitable crossroads for the two companies.”

Indeed, Twitter has bought several companies that help users read and discover, such as Summify.

The goal has been to better make sense of the massive amount of data that the service produces daily; to that end, Twitter has pushed to improve its user interface design on a number of devices.

And Twitter is a big part of Flipboard’s app, which is very dependent on the tweet feed and accounts for 70 percent of its links, sources said.

Flipboard is also more of a “mobile first” company, which is where Twitter is also headed even more aggressively.

Already popular on the Apple iPad, Flipboard launched its iPhone app late last year and it is prepping a version for Google Android soon.

That’s why, in addition to being a rival, it is also an obvious acquisition target for Twitter, as well as others such as Yahoo and Microsoft.

In fact, Google already tried to buy it last year, before Flipboard did a massive $50 million fundraising round that valued it at $200 million.

Its investors include Insight Venture Partners, Comcast’s venture arm, Kleiner Perkins Caufield & Byers, Index Ventures and a spate of well known angels, such as Dorsey, Facebook co-founder and Asana dude Dustin Moskovitz, Ron Conway, actor Ashton Kutcher and the investment company of former News Corp. exec Peter Chernin.

Co-founded by longtime entrepreneur McCue (Netscape, Tellme) and former Apple iPhone engineer Evan Doll, Flipboard launched to much attention in mid 2010.

Its innovative social magazine concept is attempting to make the social networking universe more accessible, consumable and, perhaps most importantly, visually arresting via its rich app.

Essentially, Flipboard pulls information from media RSS feeds and sites such as Twitter and Facebook data streams and then reassembles it in an easy-to-navigate personalized format.

Google has mounted a competitor, called Currents, as has Yahoo with its Livestand offering, neither of which have gotten much traction. In fact, sources said, Yahoo is likely to shut Livestand down completely.

There have also been a spate of other similar readers, such as Pulse and Zite.

Spokespersons for both Flipboard and Twitter politely declined comment.

Clicking on a Fortune: Facebook to Acquire Photo-Sharing Start-Up Instagram for $1 Billion

Kara Swisher — Mon, 09 Apr 2012 17:03:43 +0000

Facebook has just announced that it will acquire Instagram, the popular mobile photo-sharing service, for $1 billion in cash and shares.

The social networking giant posted on the acquisition, its biggest yet, on its site, as well as on CEO and co-founder Mark Zuckerberg’s Timeline on Facebook.

Photos are critically important for Facebook, which has been slow to innovate in the fast-growing mobile arena in the important consumer space. By contrast, Instagram has taken the arena by storm, with its delightful and elegant app and the motto, “Fast beautiful photo sharing.”

Consumers have responded (including me — it is the only non-communications app I use many times a day). The San Francisco-based company — with only 13 employees — had 30 million Apple iPhone users before it came to Google’s Android last week, where it got more than a million new users in just 12 hours.

Still, despite all the usage, Instagram had not articulated a plan for, you know, making money. Now, that will presumably be Facebook’s problem to solve.

The Facebook acquisition has been kept very quiet, with its CEO Kevin Systrom working on it in conjunction with new fundraising efforts that would have valued the company at $500 million. Liz Gannes reported on this effort last week, which was poised to close, in fact, before the Facebook deal was struck over the weekend.

Until now, Instagram has received Series A funding of $7 million led by Benchmark Capital just over a year ago, when it only had 1.75 million registered users.

Seed investors include Andreessen Horowitz — which did not follow on later — and Baseline Ventures. Also in the Benchmark round: Twitter creator Jack Dorsey, former Facebooker Adam D’Angelo and Chris Sacca.

In a blog post titled “Instagram + Facebook,” Systrom promised no change, except for the $1 billion mountain of cash:

“It’s important to be clear that Instagram is not going away. We’ll be working with Facebook to evolve Instagram and build the network … The Instagram app will still be the same one you know and love.”

Zuckerberg also promised that Facebook would keep Instagram independent, and that such a large purchase would be rare for the company, which is set to go public soon.

“This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users,” he wrote. “We don’t plan on doing many more of these, if any at all.”

Here is the full press release from Facebook:

Facebook to Acquire Instagram

MENLO PARK, CALIF. — April 9, 2012 — Facebook announced today that it has reached an agreement to acquire Instagram, a fun, popular photo-sharing app for mobile devices.

The total consideration for San Francisco-based Instagram is approximately $1 billion in a combination of cash and shares of Facebook. The transaction, which is subject to customary closing conditions, is expected to close later this quarter.

Mark Zuckerberg, founder and CEO of Facebook, posted about the transaction on his Timeline:

I’m excited to share the news that we’ve agreed to acquire Instagram and that their talented team will be joining Facebook.

For years, we’ve focused on building the best experience for sharing photos with your friends and family. Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.

We believe these are different experiences that complement each other. But in order to do this well, we need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook.

That’s why we’re committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.

We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience. We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook.

These and many other features are important parts of the Instagram experience and we understand that. We will try to learn from Instagram’s experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook’s strong engineering team and infrastructure.

This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.

We’re looking forward to working with the Instagram team and to all of the great new experiences we’re going to be able to build together.

Aileen Lee Launches Kleiner-Backed Seed Fund

Kara Swisher — Fri, 06 Apr 2012 17:14:36 +0000

Kleiner Perkins Caufield & Byers partner Aileen Lee is founding a new seed fund — still unnamed — that is focused on backing and helping develop early-stage start-ups.

Lee, who has been at the famed Silicon Valley venture firm for a dozen years, will remain a partner at Kleiner Perkins, although her full focus will be on the fund. While she declined in an interview this morning to say what the size of the new fund will be, most such efforts range from $10 million to $70 million.

Along with Kleiner, there will be several other unnamed investors and strategic partners, said Lee, who is in a quiet period of fundraising and could not give more details. It will be separate from Kleiner.

“I read a book that said you should make a big change every seven years, and this was an area of investing that I really have wanted to be in,” said Lee, who at Kleiner has backed companies such as One King’s Lane, Rent the Runway and Dollar Shave Club. “I really have become very interested at working with and helping entrepreneurs at the early stages of their growth.”

KP’s John Doerr said that while some VC firms are creating their own high-profile seed funds, he and Lee felt it was important for such an investment vehicle to be independent to be effective and also to work with other seed efforts that have exploded on the tech scene.

“But we wanted to invest in it, so it’s the best of both worlds,” he said. “It’s really important that start-ups at that stage get the kind of attention Aileen can give them.”

According to her bio on KP’s Web site, Lee worked at the Gap before her VC life, as well as Odwalla and the North Face. The MIT and Harvard Business School grad also worked at Morgan Stanley in technology mergers and acquisitions.

Wikipedia's Pledge Drive Ends -- So Do Those Jarring Testimonials!

Tricia Duryee — Tue, 03 Jan 2012 00:35:22 +0000

The Wikimedia Foundation’s annual fundraising campaign concluded today after the nonprofit raised $20 million from one million donors worldwide.

The end of the pledge drive also means the end of those fundraising banners on every page that highlighted editors who contributed to the site.

Against the site’s normal black-and-white page design and absence of ads, the contributors’ color photos popped from the page and certainly fulfilled the goal of pulling readers up to the plea.

And while their absence won’t exactly be mourned by readers, it will deprive us of some entertaining juxtapositions, such as the one at right, with the visage of an earnest volunteer looking like an illustration accompanying the Wikipedia entry for a “Saturday Night Live” skit featuring Justin Timberlake called “Dick in a Box.”

Wikimedia said it will use the funds to buy hardware, develop new features on the site, expand mobile services, provide legal defense for the projects and support volunteers.

The site now employs 97 people and plans to spend $28.3 million this year on expenses.

The remainder of funds will trickle in throughout the year in the form of grants and other donations, such as ones from Google co-founder Sergey Brin and 23andMe co-founder Anne Wojcicki’s Brin Wojcicki Foundation, which gave $500,000 as part of the campaign in November.

In a letter thanking donors, Wikimedia Executive Director Sue Gardner wrote: “We’re the #5 most-popular site in the world — we operate on a tiny fraction of the resources of any other top site. We will use your money carefully and well, I promise you.”

Start-Up Rally Wants Your Cause to Raise Money Online, Even if Justin Bieber Isn't Tweeting About It

Drake Martinet — Fri, 15 Jul 2011 15:00:30 +0000

There’s an old maxim in fundraising: It’s better to get one dollar from 100 supporters than it is to get $100 from one supporter. Or you can just get Justin Bieber to tweet about you.

Assuming you can’t trap yourself a Bieber, a new online fundraising start-up called Rally is available to take advantage of the network effects of your real supporters.

Rally CEO Tom Seres was quick to point out that social online fundraising isn’t new, but says that “most organizations see the Red Cross’ success and think that putting a Twitter button on their site will make them more money.”

According to Seres, they are wrong.

“The reality is, those few campaigns that succeed in social do so because of huge networks,” he said. “[But] not everyone … has Will Smith tweeting about their fundraising.”

Rally’s recent growth got it a chunk of funding from a prominent string of investors, including Mike Maples, Reid Hoffman and Ron Conway. Seres would only describe it as a “fairly large seed round.”

The cash is being spent on turning an existing white-label product called Piryx, built by Seres and his co-founders, into the more consumer-focused Rally, which is both the name of the new platform and the pivoted company.

Why the consumer focus?

The most significant way Rally’s model differs from other fundraising sites such as Kickstarter, Seres said, is that Rally is the payment processor as well as the fundraising platform. Kickstarter farms its payments out to Amazon.

The four percent Rally charges on most transactions — which covers the credit card fees, as well as Rally’s profits — leaves a pretty slim margin. Therefore, massive profitability for Rally will only come at massive scale.

The reborn Rally’s main focus is to make online fundraising “more social” — or more annoying, depending on your take.

Its platform allows for two layers of supporters, Seres said: “One who just wants to donate … and another who can actually start [his or her] own fundraiser associated with an existing Rally campaign.”

This model isn’t new for fundraising, and Seres said it has been successful for events such as walks for charity, partially because “People respond better to requests from people they know. It is about leveraging that closer network connection.”

Just as interesting as Rally’s “better mousetrap” model for the online fundraising space is the type of data it will gather about what works with donors online.

If it can reach scale, Seres said, Rally would “be able to tell fundraisers what the value of a piece of content they post is, and on the larger scale, what people actually care about online and what makes them act.”

Here is a video interview of Seres talking about all that and more:

[ See post to watch video ]

Machinima's Latest $5 Million Round Doesn't Reflect Its Big-Money Valuation

Tricia Duryee — Tue, 26 Apr 2011 02:18:15 +0000

Machinima, which is mixing the art of film-making and game development in an attempt to build a new media empire, is close to raising a round worth roughly $5 million.

But despite the round’s petite figure, especially in today’s healthy venture market, make no mistake that the Los Angeles-based company has blockbuster-sized ambitions and a valuation to match.

The round was revealed in a regulatory document filed today, but from what we are hearing from people close to the situation, it will put the company’s valuation in the low hundreds of millions. A company spokesperson declined to comment.

The financing is from existing investors, Redpoint and MK Capital, and brings the company’s total to about $20 million, including a small line of credit. It will give the company the cash it needs to fuel additional growth without requiring the executive team to lose focus by kicking off a gigantic fundraising effort. From what we are hearing, the latest round is not a reflection of the company’s growth, but it will help it stay on track.

Its YouTube channel is quickly becoming the destination for hardcore game fans to watch videos. Trust us when we say the demographic is as far from those playing FarmVille as you can get. It’s often adrenaline-pumping action filled with violence and profanity. In other words, it’s the top shelf of entertainment for most males aged 18 to 34.

While the niche sounds small, it isn’t.

In 2010, Machinima’s YouTube channel attracted 2.3 billion page views. Last month alone, it attracted 575 million page views and 67 million unique visitors. It’s seeing between 15 and 20 percent growth every month. The funding will allow it to keep growing and to expand to other platforms.

The growth is not that hard to understand. In fact, it’s probably the same trend that propelled Activision Blizzard’s Call of Duty: Black Ops to hit $1 billion in sales after slightly more than one month–the equivalent of a blockbuster movie release.

According to the company’s Web site, the word “Machinima” is basically a mash-up of the words “machine” and “cinema,” which is used to describe the process of “creating real-time animation by manipulating a videogame’s engine and assets.”

The company is essentially building a destination for videogame fans to watch a ton of its own editorial content, but also allows players to upload their own videos. Often, the video is a recording of someone playing a video game and providing their own play-by-play soundtrack as they achieve some great accomplishment.

By creating content and attracting fans, Machinima can generate buzz for videogames long after their initial launch dates. Users who continue to play games may buy additional downloadable content, which leads to incremental revenues for the game maker. In essence, Machinima is an advertising network, and it has worked on projects with all of the major gaming companies and film studios.

In a recent example, Machinima teamed up with Warner Bros. Digital Distribution to produce an original online series to promote Mortal Kombat. The nine-episode series, which has the quality of a feature-length film, debuted on April 12. In the first five days, the first episode got more than 5.5 million views.

Here’s that video [for mature audiences only!]:

VC Fundraising Has Best Start Since 2001

Alistair Barr — Mon, 11 Apr 2011 19:30:21 +0000

The U.S. venture-capital industry had its best fund-raising start since 2001 as three firms dominated, Thomson Reuters and the National Venture Capital Association said Monday.

Thirty-six U.S. venture-capital funds raised more than $7 billion in the first quarter of 2011. That’s up 76 percent, by dollar commitments, compared with the first quarter of 2010, which saw 44 funds raise $4 billion, according to Thomson Reuters and the NVCA.

Bessemer Venture Partners VIII raised $1.6 billion during the quarter, while Sequoia Capital 2010 raised $1.3 billion and J.P. Morgan’s (JPM 46.97, +0.13, +0.28%) Digital Growth Fund raised $1.2 billion.

Read the rest of this post on the original site »

First Half of Groupon Funding Done–DST, T. Rowe Price, Fidelity, Capital Group and Morgan Stanley

Kara Swisher — Fri, 07 Jan 2011 08:01:05 +0000

Groupon has officially completed the raising of half of a $950 million funding, getting $500 million from a range of top-drawer investors, said sources close to the situation.

Those investors include Russia’s DST Global, T. Rowe Price, Fidelity, Capital Group and Morgan Stanley.

It’s unclear how much each investor has put in and who will make up the next tranche of funding, which will also close imminently.

The New York Times previously reported on the regulatory filing related to the funding, as well as investments from T. Rowe Price, Fidelity and Morgan Stanley.

Now completed, the investments value the Chicago-based social buying service at $4.75 billion, which is less than the $6 billion Google offered to buy Groupon.

Those acquisition talks failed. But Groupon is still attracting interest from other possible buyers.

For now, though, it’s just talking a pile of money–probably the right strategy–to keep growing its explosive business. A big chunk will also go to some Groupon execs and early investors.

Groupon has competitors, of course, such as LivingSocial, but has established itself as the leader in the local online discounting space.

Allen & Co. is advising Groupon on the fundraising.

A Groupon spokeswoman declined to comment.

Q: Why No Twitter Board Seat for Kleiner's John Doerr? A: His Google Board Seat (Plus, Is the Star VC Looking at Spotify and Groupon Next?)

Kara Swisher — Thu, 16 Dec 2010 13:14:41 +0000

Yesterday, star venture capitalist John Doerr of Kleiner Perkins forked over $150 million in funding to Twitter.

At at $3.7 billion valuation, that got him a big chunk of the San Francisco microblogging site.

But what it didn’t get him was a seat on the board of Twitter, which many figured he would be given for after handing over so much moolah.

According to sources familiar with the situation, that’s due to Doerr’s being a director on another board: Google.

Several sources who BoomTown spoke to, after breaking news of the massive funding, said that his being on the board of the search giant was seen as too much of a conflict of interest.

A conflict because Google has plans to wade deeply into the social space. And also, of course, because it is the No. 1 potential acquirer of Twitter, as the Silicon Valley company seeks to gather more tools to fight its latest rival, Facebook.

Doerr has very deep ties at Google, having been on its board since mid-1999.

He got that seat, along with Sequoia Capital’s Mike Moritz, after he ponied up a critical $25 million equity round for Google in June of that year.

Interestingly, no other Kleiner partner was named to a Twitter board seat either.

But, some speculate, it might make sense for Mary Meeker–who just joined Kleiner to head up digital investing efforts, after a long-time stint as a Wall Street analyst for Morgan Stanley–to eventually become a Twitter director.

Meeker has, of course, deep IPO and M&A experience.

And, frankly, after adding Flipboard’s Mike McCue and former DoubleClick exec David Rosenblatt yesterday and former Netscape exec Peter Currie recently to its all-boy board band, a woman director might be a good idea to consider.

Other directors at Twitter include Benchmark Capital’s Peter Fenton, Union Square Venture’s Fred Wilson, Bijan Sabet of Spark Capital, Co-founders Evan Williams and Jack Dorsey and CEO Dick Costolo.

I reached out to Doerr for a comment, but he has not yet replied; Twitter declined to comment.

Even more interesting to consider is what Kleiner will invest in next after this mega-funding, given how aggressively many sources said Doerr had pushed to lead the Twitter round.

And, in fact, sources said that Kleiner is looking closely at new funding rounds for both the Spotify music streaming service and Groupon, the social buying start-up that recently decided to turn down a $6 billion acquisition offer from Google and an earlier $3 billion one from Yahoo.

Groupon is now seeking more funds to remain independent and hold onto its lead in the fast-growing local discounting market, sources said.

(Bloomberg also reported on Groupon’s new fundraising efforts, although it was written about after it turned down the Google offer.)

And Spotify, which is hugely popular outside the U.S., is trying to enter this market, but needs more funding to expand and perhaps strike better deals with music labels.

Both are the just the kind of companies Doerr has targeted in what looks like a serious effort to compete with other firms–especially Andreessen Horowitz and Russia’s DST Global.

They have garnered the heat Kleiner used to have, largely by backing more of the top entrepreneurs recently.

Doerr has already put money into social gaming phenom Zynga and also started an sFund for social-focused investments.

Add Twitter to the pile and you can see where this is headed: Except for the board seat, John Doerr will no longer be denied.

Latest Check Shows Insufficient Venture Funds

John Paczkowski — Mon, 12 Jul 2010 18:51:26 +0000

The “Darwinian contraction” in the venture capital industry continues with no end in sight. A joint study released today by the National Venture Capital Association and Thomson Reuters found that VC firms in the U.S. raised just $1.9 billion in the second quarter of 2010. That’s a nasty 49 percent decline from the $3.7 billion they raised in the first quarter. It’s also the weakest quarter for VC fundraising in nearly seven years. The last time the industry saw this low of a dollar commitment was the third quarter of 2003.

“Ongoing economic uncertainty has kept many limited partners and venture capital firms on the fundraising sidelines in 2010 and this hesitation is likely to continue for the remainder of the year,” NVCA President Mark Heesen said in a statement.

Certainly looks that way. Consider the chart below (click to enlarge).

Quite the downward trend, yeah? What is it that Sequoia Capital partner Michael Moritz often says? “The best time to invest is when people are cowering under their desks.” Hmm. Something like that…

After Some Flashy Investing, Is Andreessen Horowitz's Next Move a Big New Fund?

Kara Swisher — Mon, 12 Jul 2010 14:25:21 +0000

Since it launched almost exactly a year ago with a $300 million fund, the venture firm of Andreessen Horowitz has cut a rather high-profile path through the Silicon Valley investing community.

And it’s clear the firm has been aiming to make a big splash in the sector–from its involvement in the fractious fight over the spin-off of Skype to its funding of a series of high-profile start-ups (Zynga, Asana, Kno and Rockmelt) to its most recent aggressive moves to finally win the top spot in investing in hot social location site Foursquare.

Now, according to sources and after spending about half its kitty, Andreessen Horowitz is poised to begin another round of fundraising to further bolster its clout.

While it is unclear how much the VC firm will raise, sources expect it to be much more than its first fund.

In its last go-round, the firm had a quick completion of the fund raising, in the midst of a national econalypse. So many assume the next try will be a lot easier, especially given its knack for grabbing hot deals.

A spokeswoman for Andreessen Horowitz declined to comment on future fundraising plans.

The firm is going to need the money as it expands its partners and ambitions to change the venture landscape, as iconic entrepreneur Marc Andreessen noted when he founded the firm with his longtime business partner Ben Horowitz in July of 2009.

Andreessen said then that he was essentially professionalizing the active angel investing that he and Horowitz had been doing.

Over the last several years, either together or apart, the pair have invested in a large variety of innovative start-ups, such as Twitter, Aliph, Digg, LinkedIn and many more.

Andreessen is on the board of Facebook and an adviser to Twitter too.

In an interview with me last year, Andreessen said that unlike many VC firms, Andreessen Horowitz will invest in companies at any stage of life–from early stage to late–and of any size and in any kind of digital sector and will focus on companies led by tech-savvy founders.

He also expressed a disdain for the way the venture business was run.

“For the first time in my life, I am crossing over into the dark side,” said Andreessen at the time, in a joke about VCs being like Darth Vader.

At the time, he also noted that money talked. “It’s important to have more capital,” he said. “Sometimes having a huge checkbook is a great thing.”

Well, we’ll see if Andreessen Horowitz can make that checkbook even larger.

Until then, here is a tally of investments that Andreessen Horowitz has made so far, sourced from the firm, split up into categories and size of investment round the firm participated in with other investors. The firm declined to provide the exact amount of their participation in each investment.

It should be noted that Andreessen’s and Horowitz’s previous individual investments in some of these companies are not identified here:

Board

Kno: tablet device for students; $7.5 million
Nicira: cloud infrastructure software; $13 million
Okta: cloud app management; $750,000
Proferi: analytic applications; $2 million
Rockmelt; desktop browser for Facebook; unknown funding
Skype: Web telephony; $50 million

Passive

Apptio: IT cost transparency solutions; $14 million
Asana: enterprise collaboration; $9 million
Boku: mobile online payments; unknown funding
Digg: social media and content; unknown funding
Foursquare: social location; $20 million
Fusion I/O: enterprise I/O solutions; $45 million
Tiny Speck: social gaming; $5 million
Zynga: social gaming; $180 million

Seed

Burbn; social location; $500,000
Canvas Networks: image boards; $625,000
Factual: structured data; $1 million
GoodData: cloud-based collaborative analytics; $2.5 million
Quantifind; enterprise; unknown funding
RethinkDB: database storage; $1.2 million
Mixed Media Labs: photo sharing; $370,000
SnapLogic: open-source enterprise data integration; $2.3 million
TopProspect: social recruiting; unknown funding
Vikkii: user-generated subtitling; unknown funding
Ze Frank Games: online gaming; unknown funding

And here are video interviews BoomTown has done with both Andreessen and Horowitz in the last year on their investing theories:

Tech Firms Turn to Debt

Ben Worthen — Tue, 20 Apr 2010 11:00:11 +0000

A growing number of technology companies are turning to debt to raise capital, taking advantage of the thawing credit markets to build their war chests in anticipation of a wave of dealmaking.

Software companies including SAP AG (SAP), Adobe Systems Inc. (ADBE) and Salesforce.com Inc. (CRM) have recently raised several billion dollars by selling debt for the first time in their histories. The moves follow similar offerings over the past year from cash-rich giants like Microsoft Corp. (MSFT), which had $25 billion in cash when it took on debt for the first time last May.

The decision to take on debt breaks from tradition in tech, where companies have typically preferred to raise money by selling stock. Debt has become a more attractive fundraising option largely because interest rates are low.

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Norwest Venture Partners Goes Big

Pui-Wing Tam — Thu, 19 Nov 2009 13:00:15 +0000

Norwest Venture Partners on Wednesday announced that it had closed a new venture-capital fund sized at $1.2 billion. That’s nearly double the size of the Silicon Valley venture firm’s last fund in 2006, which closed at $650 million.

The new fund is unusual in this day and age amid a tough fundraising environment brought on by the recession. What’s more, many venture capitalists argue that funds need to be smaller to get back to the basics, especially since venture capital isn’t an industry that necessarily scales upwards.

Here’s what Promod Haque, NVP’s managing partner, had to say about all this:

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Jill Sobule's Internet-Funded Album, "California Years," Debuts Tomorrow

Kara Swisher — Mon, 13 Apr 2009 07:01:32 +0000

We consider Jill Sobule to be the musical muse of ATD–which we desperately need since we are obviously way, way too jacked into the matrix.

That’s precisely why we have the gifted singer-songwriter appear annually at our D: All Things Digital conference–to kick off each day’s sessions with one of her songs and, more to the point, add a lot of much-needed levity and nontechie soul to the proceedings.

And tomorrow, Sobule’s Internet-funded album, “California Years,” produced by the legendary Don Was, debuts. I urge everyone to click the link here and get a copy–online, of course.

And by Internet-funded, I mean that the $75,000 needed to produce the album was raised entirely through an innovative Web initiative Sobule ginned up in late 2007 via a site called Jill’s Next Record.

Sobule wrote about the effort several times in our Voices section, where you can read about her asking for ideas here, launching her fund-raising site here and, finally, talking about the result here.

Sobule (pictured here in cartoon form)–whose big mainstream hit a few years ago was a much-better-than-hopelessly-dopey-Katy-Perry “I Kissed a Girl”–had worked her way through four record labels (she was dropped by two and two went belly-up) with six CDs.

Sick and tired of the way musical artists had their work funded, she essentially asked her fans to become her record label, writing on her site: “It would be a sort of patronage thing, where you guys are the Medici family, except I give you prizes for donations of certain amounts.”

The $1,000 “platinum” level, for example, got the donor a theme song and the $5,000 “diamond” level got a house concert by Sobule.

And what her fans are getting now in the completed album is superb–a sometimes funny, sometimes sad and always moving work. (My young sons cannot stop singing her perfect song, “San Francisco,” for example.)

As Sobule writes:

“‘California Years’ was written over the last three years, following my move to the West Coast. It was influenced by the sights and sounds of the Golden State, especially the seductive, but not always sunny Los Angeles. Maybe the next record will be ‘The Utah Month’ or ‘Back to Brooklyn.’

“The whole thing was made possible by a small but mighty fan base. They gave me the love, encouragement and the dough to do this. I was truly surprised and so very grateful. This record is for them.”

Let’s cheer on efforts like Sobule’s and hope for a hit. Because hers is indeed a small but mighty effort, as all kinds of content creators try to figure out businesses in the new digital age, unafraid of the changes inevitably coming (AP might want to take notes about this).

Here is Sobule in a long interview on NPR last week (which you cannot embed, bad NPR!) and another video below on CNN about her digital project:

And here are two videos I did with her about the effort. The first has one of the songs on the new album, called “Nothing to Prove,” and the other an update on what she wants to do next, digitally and musically speaking:

Facebook CFO Gideon Yu Out; Fast-Growing Social Network Says It's Doing Fine Financially

Kara Swisher — Tue, 31 Mar 2009 19:09:39 +0000

Facebook CFO Gideon Yu (pictured here) is leaving Facebook, as the company announced internally today that it was replacing him and searching for a new CFO on the path to an eventual IPO.

The Wall Street Journal also reported the news, noting that the huge social-networking start-up was looking for a CFO with “public company experience.”

But several sources within the company said the departure was more due to an increasingly strained relationship between Yu and Facebook founder and CEO Mark Zuckerberg over strategic disagreements about a wide range of issues, from increasing advertising revenue to fund-raising discussions with investors.

“At Facebook, you’re either with Mark or you’re not,” said one source at the 800-person company, located in Palo Alto, Calif., and founded five years ago. “And, if you’re not, you leave.”

As a sign of that, Yu was out of the company HQ immediately today after a meeting, said several sources.

Facebook confirmed the move in a statement, focusing instead on its hope for an IPO sometime in the future:

“Facebook confirms that CFO Gideon Yu will be leaving the company. Gideon has played an important role in helping us achieve our financial success, building a strong finance team and establishing the core financial operations of our company. We are grateful to Gideon for his contributions to Facebook and what we are trying to accomplish. Despite the poor economic climate, we are pleased that our financial performance is strong and we are well positioned for the next stage of our growth. We have retained Spencer Stuart to lead our search for a new CFO and will be looking for someone with public company experience.”

In addition, trying to stanch the rumors of its financial weakness and need to raise more funds, Facebook said in its internal memo to staff that it was on the path toward a public offering soon, with revenue growth up 70 percent in 2009 and EBITDA profitability this year, and that it would be cash-flow positive in 2010.

The memo also painted Yu’s departure as another step toward its much anticipated IPO, although it is clearly an ouster of much more complex internal reasons about how Facebook is run.

Facebook has had a lot of those in its short history.

From come-and-then-gone Google tech exec Ben Ling to former COO Owen Van Natta to the pair who started Facebook with Zuckerberg, the fast-growing start-up has seen more executive turnover and turmoil than most big companies.

In fact, Yu–who was an exec at both Yahoo (YHOO) and YouTube and integral to its sale to Google–replaced former CFO Mike Sheridan in 2007, in another case of a key exec being replaced.

Some inside and outside the company were quick to blame COO Sheryl Sandberg for Yu’s departure–probably due to the fact that the pair’s relationship was initially tense when the well-known Google exec arrived a year ago. That has been much less so of late, sources said.

And while Facebook can be a highly political place, with an unusual level of passive-aggressive infighting among execs, it is also a place where Zuckerberg and his wishes firmly hold sway.

And those wishes included the fact that Zuckerberg has long and publicly maintained that Facebook’s growth was paramount over a focus on monetization of the service.

Yu is known internally to be more conservative fiscally, pushing on Zuckerberg to ramp ad revenue more quickly and to consider a range of options outside of IPO, including selling the company.

Many current and former execs had hoped the company would IPO, a process that has been dragged out due to the weaker economy. But–barring that–many had also hoped it would sell to a larger company like Google (GOOG) or Microsoft (MSFT).

In fact, Microsoft has expressed interest in buying Facebook many times, and it was Yu and Van Natta who were key to getting the software giant to outbid Google to invest in the company at an astounding $15 billion valuation.

After raising more than $500 million previously, Yu has more recently been busy working with top execs on the best way to raise more funds for Facebook, in order to allow it grow faster and give it a deeper financial cushion.

High user growth has blown past Facebook’s internal projections, which is both an audience blessing and a cost curse.

But that fund raising has been at a much lower valuation and in a very weak economic climate, adding to stress internally at Facebook, many said.

Yu has held a number of meetings with investors, many of whom have told me they have asked him consistently about the monetization issues at Facebook and exactly when Zuckerberg would turn on the ad spigot at the service.

Yu has also has been involved in some recent debt financing of equipment, which is not as unusual for a fast-growing company as some recent reports have portrayed it, although that might also have been a source of tensions.

How to answer prospective new investors has probably been at the heart of his problems with Zuckerberg, who has been known to run hot and cold on top managers, especially with those who disagree with him too much.

That was clearly the case with Yu.

But, said many execs at the company, Zuckerberg’s conviction that growth is key over all other concerns–about which the company today is taking the edge off by noting sunnier financial results in the internal document–has been the correct one.

Currently, Facebook is veering in on 200 million users, which represents an astounding accomplishment.

But how it is going to take those numbers and make Facebook into a revenue-rich company on par with its increasing power on the Web is the question it will face until, of course, it does.

Besides the current drama over Yu today, Facebook has also recently been embroiled in unhappiness about its recent redesign and separately, about onerous changes to its Terms of Service.

Facebook has since backtracked on both issues, likely adding to the level of pressure on Zuckerberg and top execs.

And that is not even mentioning the curse of the Winklevii–it seems the fun never stops at Facebook HQ!

On an actually more amusing note, I once nicknamed Yu “Death Cat.”

As I wrote in mid-2007:

“Like that cat named Oscar who can detect death, Yu seems to have an amazing ability to get a sweet job at the hot Web company of the moment at just the right time. Case in point: He left Yahoo as its treasurer and went to YouTube as its CFO just a month before it sold to Google for $1.6 billion, a deal in which Yu apparently played a key role. Then, on his way to a spot as a junior partner at also-hot VC firm Sequoia Capital, he grabbed the Facebook CFO job in July. I say we watch where Yu goes and follow stealthily behind so as not to be detected.”

It’s more than likely Yu will pop up again soon in Silicon Valley in another prominent CFO job or as a venture investor. Although, after today’s events, this digital cat has definitely lost one life.