Ouya, the open-source games console, has become the first Kickstarter tech project to graduate to a more traditional funding scheme – venture capital.
After getting $8m from 63,000 crowdfunders last August, Ouya on Thursday announced it has raised $15m from investors including Kleiner Perkins Caufield Byers, Mayfield Fund and Nvidia, to accelerate its plan to attack the mass market.
Venture capital investors appear to be growing increasingly wary of European companies. In 2011, they put just E4.4bn into 1,012 start-ups in the region, a 14 per cent drop from the previous year, according to Dow Jones VentureSource.
This was the lowest annual deal count since Dow Jones began tracking investments in Europe in 2000.
Google and Facebook have ceased to innovate, according to venture capitalist Fred Wilson, an allegation that John Doerr, a rival VC and Google board member, found hard to refute at the Web 2.0 Summit in San Francisco.
Mr Wilson (pictured right, photo courtesy of Web 2.0 Summit), author of the popular A VC blog and a managing partner at Union Square Ventures, said Google had not come up with anything truly transformative that was a home-grown product since Gmail, introduced in 2004. It had relied on acquisitions instead to develop new services.
This summer has seen some interesting blog posts from the venture capital community on the “rise of the super angels” – seasoned entrepreneurs who’ve cashed out and are reinvesting in the next generation.
Seedcamp, the European investor and events programme, is a big part of that story. Next week will see the fourth Seedcamp week in London, with 23 young companies jostling for up to €50,000 in investment and expert mentoring in what’s been dubbed the “X Factor for startups”.
But the increasingly active angel community means that Seedcamp has found itself facing competition too.
Silicon Valley cheered three months ago when there was a slight uptick in venture capital investment during the second quarter of the year. Sure, investment was down 50 per cent from a year ago, but at least it was up from the first quarter, representing a “new normal” from which growth could begin anew.
Turns out the celebrations were premature. Investments in US venture-backed companies dropped in the third quarter, putting 2009 on track to be the worst year since 2003, according to new data from Dow Jones VentureSource. The total number of deals was up to 616, from 595 the previous quarter. But the total dollars invested was down to $5.1bn from $5.4bn.
“The slow recovery we’ve seen for venture capital has faltered,” said Jessica Canning, director of global research at Dow Jones VentureSource. “As liquidity and fundraising lag after the economic meltdown in 2008, investors have no choice but to keep a tight rein on investments until the industry is on more solid ground.”
Nor are many venture firms raising new funds. Just 17 VC firms raised new funds in the third quarter, the smallest number since the third quarter of 1994, according to Thomson Reuters and the National Venture Capital Association.
What’s worse, VentureSource didn’t take a rosy view of the future.
To cheer themselves up in these dark times, Silicon Valley’s venture capitalists have taken to drawing comparisons with tech’s pre-bubble days. If investment activity has returned to levels seen in the mid-1990s, the argument goes, this at least represents a healthy baseline: it is the “new normal” from which things start to pick up again.
So they should get a kick out of the latest figures from the National Venture Capital Association. Based on the $3.7bn put to work in the second quarter (up a little from the first quarter, but down by more than 50 per cent from a year ago), the total invested this year is projected to reach 1996-1997 levels. Of course, back then the VC industry provided a living for far fewer people. The shake-out has barely started.
Twitter’s usage has been soaring into the stratosphere of late; now its finances are receiving a similar boost.
The microblogging service announced on Friday it had closed a funding round led by A-list VC firms Benchmark Capital and Institutional Venture Partners.
The figure is $35m, but there is no official word on what valuation that gives the company.
Is this the best time there’s ever been to be a start-up? Or does the current banking crisis signal the death of American-style risk-taking for new businesses seeking funding? Each view was espoused by two serial tech entrepreneurs at Seedcamp, the tech start-up conference in London.
Brent Hoberman, founder of Lastminute.com and latterly Mydeco, a furniture site, was resolutely optimistic.
Yell investors, who have seen their shares fall from over 400p to less than 100p so far this year, may take some convincing that there is still value in the Yellow Pages market as it moves online.
A who’s who of European technology entrepreneurs will be providing guidance and mentoring to a new generation of start-ups at this year’s Seedcamp. Founded by Saul Klein of Index Ventures and run by Reshma Sohoni, formerly of 3i and Softbank Capital, Seedcamp aims to build and support a community of European tech entrepreneurs, culminating in its main event in London this September.
The best-known entrepreneurs on this year’s advisor list are Niklas Zennstrom, founder of Skype, the internet telephony service, and more recently Joost, a web video provider; and Brent Hoberman of travel site Lastminute.com and, latterly, Mydeco, an online furniture retailer.