AUTUMN 2011
TRADESHIFT GOES FROM STRENGTH TO STRENGTH
Tradeshift has had a very busy few months. In October they launched their Instant Payments service enabling customers to post invoices onto their platform and then receive immediate payment into their account, all with significantly lower interest rates than other options in the market. Cashflow is a major problem facing businesses today that banks seem less and less prepared to solve (see Jos's post ‘Do we really need banks anymore?) and estimates state that in the UK alone SMB’s are owed over £24 billion by late payers.
Hot on the heels of the Instant Payments launch Tradeshift announced a new funding round of $17M from Kite Ventures and ru-Net Holdings with Notion supporting. The fundraising valued Tradeshift at $137M marking one of the largest investments and valuations for a European start-up this year.
Tradeshift will open their US offices in San Francisco in January and we continue to feel confident that they can be a truly global success story that will redefine process automation for businesses of all sizes.
Tradeshift are hiring for a number of exciting roles right now so if you know anyone who might be interested you can check them out at tradeshift.com/jobs
NEWVOICEMEDIA – DELIVERING CONTACT CENTRES IN THE CLOUD
NewVoiceMedia aim to overturn the $8.5B call centre market with a product that is cloud based, pay as you go and does not require any complicated on-site hardware and software. Since the appointment of Jonathan Gale as CEO, and a number of other developments earlier in the year, they are starting to grow at a pace that reflects their big vision. In the first half of the year sales are up an incredible 475% year on year and the average customer size has increased three times as they take the proposition to larger enterprises.
The company has also launched a trust site that provides real-time figures on how the service is performing thus addressing one of the big concerns for a business critical cloud based service. NVM back this up with industry leading service level agreements for availability and performance providing further reassurance to customers. At Notion we are big believers in cloud companies meeting this challenge head on with transparency in service performance backed up with strong SLA’s and it is great to see NVM taking a lead on this.
EVENTS
Jos was invited to be a judge on the Real Business Future 50 awards to uncover 50 of the most innovative and fast growing companies in the UK. The winners were announced in August and then in October there was a launch event in London where Jos talked to the winners and other guests providing some advice on how to raise money.
In October Jos also attended the F.ounders Event in Dublin where the top movers and shakers in the tech industry talked about how we can make the European market even more successful and the launchpad for more global success stories. This year Bono and the Irish Prime Minister were both in attendance so we were in good company! You can read our blog post on the event here.
Jos was invited to be a judge on the Real Business Future 50 awards to uncover 50 of the most innovative and fast growing companies in the UK. The winners were announced in August and then in October there was a launch event in London where Jos talked to the winners and other guests providing some advice on how to raise money.
In October Jos also attended the F.ounders Event in Dublin where the top movers and shakers in the tech industry talked about how we can make the European market even more successful and the launchpad for more global success stories. This year Bono and the Irish Prime Minister were both in attendance so we were in good company! You can read our blog post on the event here.
Dear all
Welcome to Notion’s Autumn Newsletter.
Since the last newsletter we have made two follow-on investments into existing portfolio companies – NewVoiceMedia and Tradeshift. This reflects both the progress made by these companies and also our continued confidence in their futures - I have an included an update on both.
Outside of Notion we continue to see evidence for the unstoppable move to the cloud. There has been great activity in one of the cloud’s largest markets – namely cloud content management that allows users to have all their ‘stuff’ centrally hosted enabling access, collaboration and sharing across different devices and users. This is a cornerstone of the cloud promise to deliver resources in a way that is completely untethered to any device or location. I’ve included a separate section on this.
We have also seen some encouraging signs in the IPO and M&A markets with some big deals taking place including Groupon’s IPO and Oracle’s acquisition of RightNow showing further demand for internet companies. Again, I’ve included a separate section on this.
On the UK front it was great to see David Cameron’s recent visit to East London as he continues his commitment to better understand and support technology start-ups especially within the East London ‘Tech City’ area.
We also have a recap of the various events Notion has been involved with together with our usual sections on the European market in terms of fundraising, deals and exits.
Happy reading.
Jos
Two of the emerging leaders in this space recently announced massive funding rounds. In September Box.Net got the wheels turning by raising a further round of $110M at a valuation of more than $600M and then the following month Dropbox announced a $250M investment round at an eye-popping $4B valuation. Whatever you think about the size of these rounds and valuations, one thing is clear – there is huge amounts of money being invested into the cloud and the ‘any device, any location’ freedom that it brings.
Last month Apple also got in on the act launching its iCloud service which Steve Jobs had described as an acknowledgement that the ‘digital hub was now in the cloud’ and for which Forbes ran the headline ‘Apple demotes the personal computer.’
Also last month Amazon launched their own tablet called the Kindle Fire at a much lower price point than the iPad and talked more about the content and services it gave you access to as opposed to the device itself. You can read Jos's blog post about this and how the Kindle Fire is perhaps the first device to accept its place as simply a servant to the cloud. We think you can expect to see more and more of this in the future.
Google and Amazon are also moving more and more into cloud based content management so this market is going to get significantly bigger and more competitive over the coming years.
And all this is undoubtedly good for the consumer, bringing more choice and better services for today’s always connected, multi-device and mobile world, and also great for getting more people to understand the benefits of using the cloud.
Welcome to Notion’s Autumn Newsletter.
Since the last newsletter we have made two follow-on investments into existing portfolio companies – NewVoiceMedia and Tradeshift. This reflects both the progress made by these companies and also our continued confidence in their futures - I have an included an update on both.
Outside of Notion we continue to see evidence for the unstoppable move to the cloud. There has been great activity in one of the cloud’s largest markets – namely cloud content management that allows users to have all their ‘stuff’ centrally hosted enabling access, collaboration and sharing across different devices and users. This is a cornerstone of the cloud promise to deliver resources in a way that is completely untethered to any device or location. I’ve included a separate section on this.
We have also seen some encouraging signs in the IPO and M&A markets with some big deals taking place including Groupon’s IPO and Oracle’s acquisition of RightNow showing further demand for internet companies. Again, I’ve included a separate section on this.
On the UK front it was great to see David Cameron’s recent visit to East London as he continues his commitment to better understand and support technology start-ups especially within the East London ‘Tech City’ area.
We also have a recap of the various events Notion has been involved with together with our usual sections on the European market in terms of fundraising, deals and exits.
Happy reading.
Jos
There’s no doubt that this kind of high level support and attention really helps to shine a light on London and especially East London’s position as the leading European hub for emerging technology companies. Cameron illustrated the progress made in the region by launching an interactive map showing that there are now 600 tech companies in the area up from 200 the year before. There were also announcements from Cisco and Intel making an investment to support companies in the area. The Prime Minister also announced the Red Tape Challenge to 'crowd-source' further ideas for cutting red tape and making it easier for start-ups to do business.
It’s great to see such high level support and when you look at all the initiatives being driven through, including tax relief, entrepreneur visas and simplifying government procurement, it is clear that the government is having an impact. However, I believe that they could do even more to help entrepreneurs – including further tax breaks for capital gains reinvested, putting more pressure on banks to change their policies to lending, revising the employment laws and also investing in more world-class computer sciences and engineering education that is vital to the success of any technology company. It's also important to remember that governments are only one piece of the jigsaw and the real stars of the show must be and will be the entrepreneurs and companies who go on to become global success stories, driving employment and UK exports, and ultimately delivering exits worth hundreds of millions. This success is by far the best way to breed more success and how we will build a sustainable eco-system.
David Cameron visits Tech City
It’s great to see such high level support and when you look at all the initiatives being driven through, including tax relief, entrepreneur visas and simplifying government procurement, it is clear that the government is having an impact. However, I believe that they could do even more to help entrepreneurs – including further tax breaks for capital gains reinvested, putting more pressure on banks to change their policies to lending, revising the employment laws and also investing in more world-class computer sciences and engineering education that is vital to the success of any technology company. It's also important to remember that governments are only one piece of the jigsaw and the real stars of the show must be and will be the entrepreneurs and companies who go on to become global success stories, driving employment and UK exports, and ultimately delivering exits worth hundreds of millions. This success is by far the best way to breed more success and how we will build a sustainable eco-system.
Following LinkedIn’s successful IPO back in May, Groupon was the next of the new generation of social network companies to go public. Despite some reservations that many have about Groupon’s numbers and business model (see Jos's post) their IPO went off well and the share price actually rose by around 40% on the first day of trading. Zynga, the amazingly successful social gaming company, has already surpassed the $1B revenue figure and is next to go public in another offering that is expected to have strong demand. All this will perhaps set up Facebook’s mega IPO next year and suggests that these fast growing businesses are managing to make the transition to profitable and credible public companies. The journey will not be without its ups and downs, and indeed Groupon’s share price has now slipped below the IPO price, but we don’t think this is another bubble and believe most of these companies will be part of our everyday lives for many years to come.
On the M&A front, Oracle paid $1.5B for Rightnow who have a cloud based customer service platform. This was Oracle’s first big move into the cloud, something that Larry Ellison has previously been somewhat lukewarm on. Rightnow provides customer management software using a cloud-based, software-as-a-service model and their pitch is about helping companies manage customer services across multiple channels including call centers, web, and social networks. Oracle made the following comment on the deal:
"Oracle is moving aggressively to offer customers a full range of Cloud Solutions”
It seems likely that this will be the first of several acquisitions for Oracle as part of their cloud strategy and we expect most of the large technology companies to continue to buy their way into the cloud computing market.
Strong demand for internet companies
On the M&A front, Oracle paid $1.5B for Rightnow who have a cloud based customer service platform. This was Oracle’s first big move into the cloud, something that Larry Ellison has previously been somewhat lukewarm on. Rightnow provides customer management software using a cloud-based, software-as-a-service model and their pitch is about helping companies manage customer services across multiple channels including call centers, web, and social networks. Oracle made the following comment on the deal:
"Oracle is moving aggressively to offer customers a full range of Cloud Solutions”
It seems likely that this will be the first of several acquisitions for Oracle as part of their cloud strategy and we expect most of the large technology companies to continue to buy their way into the cloud computing market.
Two of the emerging leaders in this space recently announced massive funding rounds. In September Box.Net got the wheels turning by raising a further round of $110M at a valuation of more than $600M and then the following month Dropbox announced a $250M investment round at an eye-popping $4B valuation. Whatever you think about the size of these rounds and valuations, one thing is clear – there is huge amounts of money being invested into the cloud and the ‘any device, any location’ freedom that it brings.
Last month Apple also got in on the act launching its iCloud service which Steve Jobs had described as an acknowledgement that the ‘digital hub was now in the cloud’ and for which Forbes ran the headline ‘Apple demotes the personal computer.’
Also last month Amazon launched their own tablet called the Kindle Fire at a much lower price point than the iPad and talked more about the content and services it gave you access to as opposed to the device itself. You can read Jos's blog post about this and how the Kindle Fire is perhaps the first device to accept its place as simply a servant to the cloud. We think you can expect to see more and more of this in the future.
Google and Amazon are also moving more and more into cloud based content management so this market is going to get significantly bigger and more competitive over the coming years.
And all this is undoubtedly good for the consumer, bringing more choice and better services for today’s always connected, multi-device and mobile world, and also great for getting more people to understand the benefits of using the cloud.
There was a disappointing drop in investment into early stage businesses in Q3. Venture capitalists put €951m into 219 deals for European companies in Q3, a 12% drop in investment and 13% decline in deal flow over the same period last year, according to Dow Jones.
The UK remained the favorite destination for venture capital investment in Europe, taking 35% of overall investment. Companies in the UK raised €336m for 73 deals, a 4% drop in deal count but a 45% increase in capital raised.
The UK remained the favorite destination for venture capital investment in Europe, taking 35% of overall investment. Companies in the UK raised €336m for 73 deals, a 4% drop in deal count but a 45% increase in capital raised.
HEADLINE FINANCINGS
In Q3 2011, one of the largest European Financings saw music streaming service Spotify raise $100m (£61m) in a funding round that values the company at $1bn.
Other Interesting European VC financings (internet) during Q3 2011 included, UK payment services hub, Dovetail ($10.1m); German Social Media Monitoring site, TrustYou ($5m); UK based global mobile advertising marketplace, Adfonic (£4.7m); Spanish private sales club, Groupalia ($26m); UK social games creator, Kixeye ($18m); French reference and content platform, eBuzzing ($25m); UK fantasy sports site, FanDuel ($4m); and French job search website, Qapa (€1.7m).
SPOTLIGHT ON THE CLOUD
We are pleased with the results from a recent IDC study, which forecast that the SaaS market reached $16.6 billion in revenue in 2010 and will grow to $53.6 billion by 2015 at a compound annual growth rate (CAGR) of 26.4%. SaaS delivery will significantly outpace traditional software product delivery, growing nearly five times faster than the software market as a whole and becoming the significant growth driver to all functional software markets. By 2015, the SaaS model will account for nearly $1 of every $6 spent on software.
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