Posts for Tag: venture funding

Some color on Color ... don't hate, just appreciate. #Color

Lots of backlash regarding the news that Color got a $41M funding for a pre-launch product in a very crowded space. I am somewhat biased in that two of the founders are Vietnamese and I always root for my peeps. The app itself is slick and well put together. Actual true utility won't come until there is mass adoption which will take time (hence the 41M bones). And don't hate because they were able to get $41M. If nothing, that's a testament to how great a team they have that a bunch of VCs would give them that much money with ZERO adoption. Let's judge them in 3 months, 6 months, a year from now. If they still don't have the adoption then let the hate rain down.

The fate of the newspaper industry and the rise of the micro "newspaper"

Faced with aging presses and strapped for cash to replace them, the move will significantly cut costs at a paper that lost $50 million in 2008, and allow it to focus on news gathering, Publisher Frank Vega said.

I was listening to KCBS this morning and heard about this story. It's definitely a sad sign of the times that an old institution like The Chronicle is slowly shrinking. However, empires are not meant to last forever and everything must adapt or wither away. Outsourcing the printing of its newspapers sounds like a good start but the final move will have to be to abandon print altogether. It's a slow, inflexible, and very expensive way to get your content out to your users. Eventually, devices like the iPhone and the Kindle should suffice (in a lot of ways, they already do) and the rise of yet to be invented handheld devices should move us to a completely newspaperless society.

But less you think that all good journalism is going out the door with the fall of the old newspaper empires, there is good news to report. The TalkingPointsMemo blog just got a nice investment from Marc Andreessen. The small and nimble "newspaper" has received rave reviews (and a George Polk Award) for their journalistic excellence. I think you're seeing the future of journalism in small outfits like TPM. Small, nimble teams of journalists focused on a single industry/genre/beat. Without the cost of pressmen, delivery personnel, and ad sales teams, you don't need to generate a ton of ads in order to be profitable - which TPM is.

Twitter raises $35M. Why people gotta hate?

I'm reading the Techcrunch post re: Twitter and it's Series C round of $35M. Congrats to them. In reading the comments, I noticed there was a fair amount of hate re: why anyone would continue to fund a company that doesn't have a revenue generating strategy in place. That's a legit stance. Still, I don't have as much pessimism about Twitter than I do about say, Facebook. For one, Twitter hasn't unveiled its revenue generating products yet. For all we know, it could hit a monster homerun. Facebook on the other hand has made several attempts at generating revenue with some success (and some failures - Beacon anyone?). Still, I'll reserve judgement until after they roll out those proposed revenue generating products.
One comment in particular was from a guy named Nathan:

Useless is a bit much. The service is useful to millions of people who use it multiple times every day. The issue isn't the usefulness of the service, it's the fact that it doesn't generate revenue. A big difference. Also, it seems that Nathan is a little bitter that his revenue generating start-up can't get funding. On that point, I feel for him. Fundraising is not easy. You'd be lucky to get one second meeting out of ten first meetings with investors. We've been fundraising for about a month and had to hear a lot of no's before we got to the handful of promising second/third meetings we are entering into now. Our business, like Nathan's, is not that sexy though we do generate revenue and have very strong growth projections.
The analogy I like to use is this. Someone comes up to you and asks for a million dollars to open a couple of Denny's franchises. The person provides solid sales numbers, tons of historical data, etc. and tells you that you'll most likely make back your money in 3-5 years and then receive a nice 10% dividend each year. Then another person comes and tells you they need a million dollars to open a new concept high-end restaurant with a new chef who has worked under the best chefs in the country. Who would you fund? My answer would be the Denny's franchise, but that's because I'm not rich and like the stability of a safe investment. For investors who already have money, the idea of a nice solid investment throwing off 10% just doesn't excite them. They need the next billion dollar payout - the next YouTube, Yahoo, or Google. Otherwise, they'd just go buy bonds and commodities.

Maybe I was wrong about Facebook's valuation

I've posted before about Facebook and its valuation ... not always in the most optimistic light. I'm reading a post today about rumors that Bebo is being actively shopped by AOL. Now I'm doing some very very rough calculations based on some very very vague assumptions, but I think I might have undervalued Facebook.
My take has always been that Facebook should be valued at about 5 times revenue. I still hold to that value and have said I would revise my numbers should I get more detail into Facebook's real revenues. Well based on the TechCrunch post, Bebo is rumored to be valued at about $200 million which supposedly is two times its current annual revenues (or $100 million). I pulled some traffic numbers from QuantCast for both these guys:

Making a very simple assumption of traffic = revenue, I'll assume that Facebook has 11.47 times the revenue of Bebo or $1.147 billion. Based on that, my new valuation for them is about $5.735 billion. Still a far cry from the $15 billion valuation they raised their last round with but not too shabby. Again, this is a very rough estimate and who knows whether I'm still above or below their true revenue number. My hope is that Facebook is doing well and that they can still grow. We all know the Bay Area could use a big employer nowadays.