Posts on Technology Investment

December 20, 2007

First Year Anniversary for

Exactly one year ago, the team spent a white night launching their baby. And as one of the proud parents, I insist on showing you a video of Jon Elosegui and his team installing the first server.

Thirty servers and over ten Gbits of bandwidth later, we are approaching 10 million unique users a month. The team has hit the perfect viral storm, check out the traffic graph below.

The systems department has responded heroically. Even though it occasionally came down to me driving a van full of servers to our London datacenter, capacity has always been ahead of the viral whirlwind's demand. Nobody says incubating is easy.

Not to be outdone, the Sales team has sold its first major brand campaign for Nokia. Unlike straight banners on the site, video overlays have great impact on viewers. Given its similarity with TV advertising, clients and agencies are rapidly accepting the format. All good news on the profit & loss side. It is all looking good for a great second year.

Happy birthday and congratulations to Jon, Felix and company. Have a great second year.

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September 18, 2007 in the Top 250 Most Authoritative Sites on Technorati

Quite an achievement for a web service that has avoided writing a blog. Who says engineers cannot communicate? The team had a bit of a chuckle over this.

I guess it is not what they say, it is what they do.

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July 25, 2007 Breaks into the Top 100 in Mexico

spanish free - video gratis

Free video site traffic keeps on growing. It has broken into the top 100 sites for Mexico, according to Alexa Ratings. It is number two video site after youtube.

Talking with the team reminds me that "When you grab a tiger by the tail, it is all about hanging on. Fortunately, the hispavista team has ten years experience of launching and sustaining online services; it is not their first time.

tutv traffic traffic accoding to Alexa Ranking

Nevertheless, feeding the beast is a challenge. Video sites are resource hungry projects, and the team needs to exercise ingenuity and flair in maintaining the service. It is a good thing the company has an engineering and technical background.

[Disclosure: We are invested in]

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June 12, 2007 Breaks the Top 100 in the Alexa Rankings

spanish free - video gratis

Free video site is in the throes of viral uptake. Since launch Christmas, traffic has grown to millions of unique users a month.The service is currently the number two free video service in Spain, behind alexa rank graph
The Alexa service ranks number 88 in the its Spanish Top 100 list for today. Following its current trend, it will enter the top 50 by the end of the month. A look at the traffic graphs shows the doubling period is around a month; a worthy contender in the list of present day web2.0 success stories.

Jon Elosegui, head of innovation, is no stranger to viral growth; with half a dozen viral growth services to his credit in the 1990s and early 2000, he has detailed insight into how to create a thriving online communities. One of his salient themes is that it is about the product, not the promotion. The service has had little uptake in the mainstream press, or among the blogosphere elite, the A-listers. Viral marketing has other vectors with which to access the target internet users.

When you have a hit product, promotion is often not necessary, and sometimes undesirable. The world is getting smaller. In the rush to improve the product and infrastructure in the face of ferocious uptake, marketing must take a backseat.

The innovation team is currently incubating new projects. You will see no press release, nor blogosphere comment on launch. Just straight launch into the young spanish internet user segment. A somewhat perplexing view of PR and "how to influence internet users", but you cannot argue with the traffic numbers.

[Disclosure: We are invested in]

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June 2, 2007

Google Developer Day London


Chris Dibona keynoting Google Developer day in London. Open Source program manager at Google, Chris is ambassador at large among the Open Source and Free Software community. He is in charge of the Google's summer of code program, and also the legal framework of licenses under which the Google releases and uses FOSS code.

As expected, the Semantic Web (with capitals) came up during Questions & Answers; Chris is candid regarding the intellectual ambition and scope of SW, and is skeptical of its practical application and adoption among web developers. Given the volume of content and wide-ranging approaches to developing the web, he thinks standards will evolve organically rather than be dictated top-down. A widely held view considering Tim Berners-Lee's difficulty in forging concensus even within working groups at the W3C.

Google Maps Platform

Ed Parsons, Andrew Eland and Peter Birch, geo-spatial technologists, gave a sweeping view of the geographic data in corporate networks and User-Generated data waiting to be collected and exploited. Excellent work integrating Google Earth and Google maps through KML files, the new standard for encapsulating geographic and viewing data together with the multimedia information.

Mapplet is the term for Google map widgets. A mapplet deploys data and functionality on a users' Google map. Users can submit and select mapplets from Google's mapplet open directory. The same as Google gadgets. Google Maps is fast becoming the platform to render and present geographic multimedia information AND functionality. With 200m downloads of Google earth and the strong Open Standards emphasis, the commons community seems to be adopting the platform rapidly.

Google Maps Mashups

Mike Astle, from online estate-agent Nestoria, was forthcoming about working and organizing a Google mashup company. Nestoria's added value is geo-locating and processing estate agent information, either scraped or XML fed, onto Google Maps. Mashup business models are inherently fragile, as they depend on the whims of Google's rapidly evolving Map/Mymap/Mapplet platform, and Mike sternly fielded the inevitable questions during the Q&A.

Whether Google's creative commons ecosystem can also support businesses is still an open question. Only a few of the 50,000 Google mashups have revenues at present. Tellingly, Nestoria has built a buffer interface to Google maps, so as to allow swapping it out for Yahoo's map service.

Google Developer Day

Google Mobile Search

Gummi Hafsteinsson described the ease with which mobile web can be developed nowadays. The new converging xhtml standards allow a KEEP IT SIMPLE approach which eases targeting a particular mobile device/mobile user for a particular service. Google's mobile index is becoming the focus of conversation, as it is central for accessing mobile internet users. Gummi described how the newly relaunched index combines so-called transcoded and true mobile web sites to provide optimum results for the mobile user.

Google Gears

The big announcement was Google Gears. The ability to use Google spreadsheet, Google documents, Gmail and Google Reader while not connected to the internet. Google's office suite can now be used in lieu of Microsoft's Office suite. Google has stepped out onto the desktop software arena, no question.

Members of the Hispavista innovation team were present, with their boss Jon Elosegui, to hear the latest update on Google's APIs for the various mashup projects in incubation. User Generated content is increasingly geo-tagged and Google maps renders such tagging best at present. With Google Developer day ongoing in 10 cities, we were not alone.

[Ian Forrester provides a good interview of Chris Dibona over ]

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April 27, 2007

Panda Software Company Sold Cheap

panda antivirus

Panda software, one of top antivirus software companies in the world, has been purchased by a Venture Capital Syndicate. Panda software founders have sold 75% of the company at a reported €133m valuation. Oddly, Panda has not issued an official press release. The valuation is a sales multiple of less than times one last reported revenues. An inexplicably low sale price for a world player in the antivirus market.


Local hero, Mikel Urizarbarrena, has always been a reference to EUCAP partners in northern Spain. Mr. Urizarbarrena has created a world leading software security company, while retaining 100% of founder equity. A staggering entrepreneurial feat.

As recently as 2005, Panda was ranked number four in market share, as shown in the table below.

Worldwide 2005 Total Antivirus Software Revenue for All Software Segment Types (Millions of Dollars)

Company 2005 2005 Market Share (%) 2004 2004 Market Share (%) 2004-2005 Growth (%)
Symantec 2,150.4 53.6 1,915.3 54.2 12.3
McAfee 753.9 18.8 666.5 18.9 13.1
Trend Micro 555.7 13.8 509.3 14.4 9.1
Panda Software 128.6 3.2 103.9 2.9 23.8
CA 86.5 2.2 75.3 2.1 14.9
Other Vendors 340.2 8.5 263.0 7.5 29.4
Total 4,015.4 100.0 3,533.2 100.0 13.6

Source: Gartner Dataquest (June 2006)

Currently, Symantec has a market cap of €12b, and McAfee €4b. F-Secure, a recent European entrant to the top 5 antivirus products, has a €380m market cap on the Helsinki stock exchange.

On these 2005 sales multiples, Panda should have been valued in the €700m range.

The speculation is that recent Panda revenues have come under pressure from smaller entrants like Sophos, F-Secure and Bitdefender (SOFTWIN), in the race for new hardware platforms like mobile, and the lucrative corporate market.

As the market consolidates further, it is clear capital is the key to funding the marketing and sales drive required to maintain market share. One can speculate that Panda was under-capitalized during 2006, as the founders were reluctant to accept new shareholders.

Hopefully, the supposed €100m injected in the company will provide the impetus to consolidate its market share, and see Mr Urizarbarrena through to a successful public offering at a billion € valuation.

[Via Investindustrial y Gala Capital compran Panda Software -]

A press release has been issued

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December 22, 2006

Hispavista launches free video service for the spanish market

spanish free - video gratis
Hispavista, portfolio company, launches new free video service for the spanish market. Fully web2.0 compliant, the team led by Jon Elosegui, has put together tag clouds, RSS feeds and social voting and filtering functions.

Three days after launch, two email marketing campaigns later, we have over one thousand video clips uploaded. There is nothing quite like having a database of several million opt-in users for launching a viral marketing campaign. Needless to say the User Generated Content editing team, which currently covers our free web page service, have had their hands full with pornographic video clips. The new lesson is User Generated Censorship. The team has implemented a "one complaint, you are out policy". This morning after reviewing click-stream and user generated voting and complaints, the team has deemed social censorship reliable. Nice result.

The team has been pulling all-nighters for the past week, and the coffee machine has also borne the brunt of the effort. My personal favorite (in spanish)

[Disclosure: Jon Elosegui is my brother, and we are invested in Hispavista.]

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October 31, 2006

Lycos Acquires German Online Shopping Technology

Lycos Europe, european online portal has acquired Mentasys, shopping software provider, for €30m and an additional performance related €14m. Mentasys software connects sales networks with intelligent product advisors. The software facilitates the sales process. Mentasys' 60 staff doubles Lycos' shopping technology development team. According to Antoine Boulin, MD of Pangora HQ in France.

Pangora and Mentasys competencies are very complementary. Pangora brings its expertise in front-end technologies, sales and international distribution. With this new partnership, Mentasys brings know-how in back-end technology, product data and reviews... [Free translation]

Lycos, european online portal, is investing in its white brand shopping portal Pangora. Christoph Mohn, CEO de Lycos Europe declares

We are convinced that more and more purchasing will be done online. European online shopping sector has double digit growth every year. Lycos Europe has a strong position in the sector and is constantly improving its performace thanks notably by its Mentasys acquisition. It's strong expertise, specially in B to B, and its white brand shopping solutions will help us in more than our German market. We forecast these sales figures in other markets like UK, France and Italy. [Free translation]

Pangora's own brand shopping site is, which has a small market share in Germany; the site is yet to top 500,000 unique users a month. Lycos is pushing the eVita brand to France and UK. Though not part of the top 10 shopping sites in UK, Europe's top market, the eVita is expected to contribute significantly to Lycos' struggle for positive cash-flow.

[Via euro adhoc: The European Investor Relations Service]

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September 14, 2006

eBay Disrupts the M&A Advisory Market


Mergers & Acquisitions professionals have food for thought as Kiko, the web2.0 calendar application, sold itself on eBay for $238,000. The sale of Kiko to Tucows cost $3800 in eBay's intermediary fees, 1.5% of the transaction value.

Many M & A boutiques have traditionally advised technology companies in fund raising, acquisitions and exits just like Kiko's.

Arthur Anderson (now Accenture), Price Waterhouse and Ernst & Young made a furious trade as acquisition advisers during the 2000 boom. Not to mention the lucrative IPO advisory. Though not the most expensive advisers, I repeatedly paid said consultants six figure sums for advise through acquisition and sale transactions. And the IPO consultancy typically cost well into seven and eight figure sums.

Even nowadays, the standard fee for "creating a market" for raising funds for a company is an upfront fee typically in the thousands, and a minimum percent or two of the transaction value.

M&A consultants and startup advisories were harshly hit by the 2000 dot com crash. Many boutiques have closed down, and the remaining have moved on to advising the private equity market. But the hits keep on coming.


First Google dis-intermediated much of its IPO underwriting through its use of the Dutch auction technique. Rather than the banks creating a market of buyers and sellers pre-IPO to ensure a good volume on the IPO, Google used an electronic buy-sell market for part of the sale instead. Naturally, the traditional IPO underwriting banks were aghast at Google's snub of their service.

Similarly, Kiko has used eBay to sell 100% of its equity. Though the value involved is low by M&A standards, the ease and success in creating a liquid equity market with hundreds of bidders spells more dis-intermediation for the M&A advisory boutiques.

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August 11, 2006

Martin Varsavsky & Niklas Zennström Invest in Technorati

martin varsavsky Martin Varsavsky, an entrepreneur's entrepreneur with an estimated fortune of over €300m, explains why he has invested in Technorati with Skype founder Niklas. He states in his spanish blog that:

... in my view, the most important feature of Technorati is the real time search. The PINGING concept. The great difference between Google and Technorati is not that Technorati finds blogs (Google's blogsearch does too, but not as well). The difference is in the search based on spiders used by Google, and the ping based search used by Technorati.

My contribution to Technorati is to get all the other sites, that are not blogs, start to notify Technorati each time they put new content on line, places like Charity sites, corporations, news sites, and search results will become more interesting still. [Free Translation]

Martin does not miss much; RSS and Pinging is one of the richer veins of growth in the tech arena.

His self-professed role as "Ping Ambassador" at Technorati is somewhat puzzling though. The web's RSS infrastructure is centered more round companies like David Winer's (now part of Verisign) and, than Technorati. Until recently Technorati used's ping server (RPC function). And, when it comes to promoting the next generation web infrastructure, the World Wide Web Consortium could certainly use Martin's help.

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July 4, 2006

Lifestyle Companies - The Scourge of VC Portfolios

In a moment of weakness marketing guru Seth Godin muses that "So, what's wrong with small business?". In VC culture, stable no growth companies - or lifestyle companies - are disaster investments little better than bankruptcies.

Barings Bank observed in a recent review of startup investments that 20% of companies developed into substantial profitable businesses, 20% failed and lost all equity, and 60% drifted sideways often regressing to life-style businesses for a small group of owner-managers.

The fact is that an investor, bank or VC fund, does not inject money into a business to improve the founders life-style and status. A VC fund usually has a 5 to 7 year window in which to realize the value of their investment. Investors want growth, preferably in multiples of 10. Life-style companies clutter up a portfolio, and require investors to negotiate a buy-out with managers. Not quite bankruptcy, but not much better.

However, ultra-growth comes at a price always. No pain, no gain. Or in financial notation, no volatility - no return. Startup owners have to suffer through extreme risk and volatility in order to accomplish growth. Life is easier and safer for the small business owner, happy with his place in the status quo.

But is safe not risky ? With increasingly dynamic markets, globalization, a stable life-style company can have some nasty surprises as competitors, with greater economies of scale, descend on its little niche. Everybody has to acquire an appetite for change, either gradual or in big lumps. Small companies are not what they used to be.

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June 12, 2006

The next Google will come from outside the US

A great quote from Danny Rimer, the EU venture capital partner behind the Skype company. But, if not from the US, will the next Google come from Europe ?

Danny is getting a huge amount of mainstream press coverage. And well he should, the skype investment has netted his family VC firm in excess of £300m. The limited partners of the last fund recouped 100% return with the skype deal alone.

Judging by the amount of PR, Index Ventures must be fundraising again. I would wager that the majority of their fundraising will come from US investors, who are keen on the strong European technology base. The "capital preservation" culture among fund managers in Geneva, Index Ventures home town, wll not encourage great uptake from banks in their neighbourhood.

Some of Danny's observations on Europe are:

To be an entrepreneur in Europe, there is a stigma attached to it," he explains. "There's a reason why England is known as a nation of shopkeepers. Part of it is the idea that it's better to have a shop and keep it up and running than close the doors and try to do something much more significant.

Steady personal income is pretty much a must in Europe. The idea of embracing greater volatility and uncertainty is an alien one. A disastrous attitude if you are to encourage serial entrepreneurs. To quote Stelios Haji-Ioannou, founder of EasyJet, there is no such thing as easy money; all great returns are paid for with risk and volatility.

Danny goes on to say,

"The environment in Europe these days is a brutal one, as huge private equity houses pull in billions while smaller venture groups struggle. Index is one of the few to have had little trouble attracting big investors."

Unfortunately, Index Venture's success is almost an anecdotal statistic in Europe. Even after the 2002 bust among VC firms, established VC funds have been unable to raise finance. Many talented venture fund managers have been struggling to raise a minimum size fund. Julie Meyer has been trying to close a fund since she exited from "First Tuesday" 6 years ago. Similarly Jon Snyder and Marting Bloom at Cambridge Accelerator Partners, and Marc Goldberg at Occam Partners.

Danny concludes with

Innovation is not a problem in Europe. But the lack of a unified market to sell that innovation, or even give it away, is a problem - and so is the paucity of investors willing to back it. "The next Google is more likely going to come from outside the US," says Rimer. "Whether it's in Europe, I am not sure. A lot of things have to change

European entrepreneurs will have to work extra hard if the next Google is up to them.

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June 6, 2006

European VC investment increasing

European venture funds increased 44 percent in 2005 and are nearly at the same level as 2001, according to figures compiled for the European Private Equity and Venture Capital Association. The amount of money raised for high-tech companies in particular doubled last year to €5.59 billion from €2.47 billion.

Although restrictive market environment still hobble growth of small companies, Europe is competing more evenly with Silicon Valley.

One of the reasons is vastly improved productivity. Cheap hardware, free open-source software and cheap broadband reduce the need for staff recruitment. One of the big achilles heels of European startups. A technology based business can be efficiently created with few staff. Sidestepping the labour law overheads of potential layoffs down the line.

Neither does Geography matter as demonstrated by Indian IT and call-center outsourcing. Internet and the telecoms infrastructure allows cheap global distribution regardless of where the company HQ location. In contrast to US startups, most European companies suffer from poor local markets before accessing a stronger US and UK markets. Companies more frequently plan for an international presence right from the start. Counting on a strong demand market from the start makes investment easier.

Danny Rimer a rennaissance Venture Capitalists at Index Ventures, happy talking about Linux Kernel details and term sheet minutae, points out that the Open Souce advantage is also European. Linux, the open-source computer operating system, was created by Linus Torvalds in Finland. Last month, Trolltech, a Norwegian company that markets its software on the open-source model, said it was taking its shares public. MySQL the Linux of the database world is Swedish. Open Souce based business models are being used by startups all over Europe.

Another particularly European niche is peer-to-peer computing/ The Kazaa network, over which copyrighted song files are exchanged freely, began in Sweden. After that success, its founders turned right around and started Skype Technologies, the Internet phone company that eBay bought last year for $2.6 billion, or $3.4 billion. A third European specialty is community-building networks, like Lunarstorm of Sweden or Habbo Hotel, which is likely to reach €60 million in revenue this year.

Let's hope for a good spring and summer, they have been a long time coming.

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