Venturing in the services sector was on a roll last year, as the intermediaries that help the business world function capitalised on their strong relationships.
Being in the right place through a services company’s large web of contacts can be lucrative. US-based digital rights management company Intertrust secured a big exit in January, having been an early investor in smart thermostat company Nest, which was sold to Google for $3.2bn (see profile).
Successful venturing units in the sector continue to focus on certain key areas. Mark Read, chief executive of WPP Digital, the internet unit of the UK-based marketing and communications company, said: “Key trends include a continued interest in mobile in all its forms, despite the fragmentation and intense competition in this area. There is much greater client interest in content. Data and analytics continue to benefit from the growth in big data.”
The role or the intermediary can be enhanced by a venturing operation. Read said: “We took a number of clients to California and with Tom Bedecarré, who runs the company’s Silicon Valley operation, WPP Ventures, showed them a number of start-ups and also introduced them to several companies’ Silicon Valley corporate venturing teams. Client interest in this area continues to grow. Challenge remains to take this innovation back into the corporate centre.”
Many groups feel activity is hot. John Somorjai, senior vice president of corporate development at US-based technology company Salesforce, said: “We had our most active year ever investing.”
Shin Nagakura, of Japan based call centre company Transcosmos, said: “We have seen the busiest investment activities since 2004 and 2005.”
He added: “Our sector, e-commerce, has never been down, but is up and up and up. We remain focused on the e-commerce sector, whether its pure business-to-consumer e-commerce like fashion, e-commerce out sourcing or e-commerce site building.” He said the company had a vision of being a one stop service for e-commerce worldwide.
Itzhak Fisher, who chairs Pereg Ventures, the corporate venturingunit of US and Netherlands based measuring company Nielsen, added: “The trends I see are mainly in mobile, data, e-commerce and social media. It is becoming a pretty crowded space but there are some excellent ideas out there.”
Deals
Read said: “WPP has been active in the past year. We took an investment in Fullscreen and in Muzy, followed on in a number of investments, including eCommera, and exited from one investment, Jumptap, to Millenial Media. We also took an active stake in Mutual Mobile, a leading mobile developer based in Austin, Texas.”
Nagakura said: “Since the beginning of 2013, Transcosmos has invested more than $25m in the US, China and Indonesiain three companies – PFS web, an end-to-end e-commerce services company in the US and EU, Berrybenka, the leading fashion e-commerce site in Jakarta, Indonesia, and FineEX, a leading e-commerce fulfilment company in Shanghai, China. These are the main three investments in 2013. We will invest at the same speed and bigger size in the e-commerce space in 2014.”
Aveillant, a UK-based provider of technology to prevent wind turbines affecting airport radar, which was spun off from UK-based services company Cambridge Consultants, raised £6.75m ($10m).
Deals by Salesforce, which boasted its most active year, included large deals, such as its backing of Adaptive Planning, a US-based software-as-a-service company, in a $45m round, MongoDB, a US-based big data technology company that provides document-oriented databases for enterprises, in a $150m round, and Level Eleven, a US based software company, in a $2m round.
Law firms DLA Piper and Wilson Sonsini Goodrich & Rosati were among the winners in the initial public offering of Rocket Fuel, a US-based online advertising services company.
Funds
Nielsen secured the backing of an investment holding company linked to India-based conglomerate Tata Group and media entrepreneur Robert Sillerman for the first fund of its new corporate venturing unit Pereg Ventures. Apex Investments, a Mauritius-based subsidiary of Tata Industries, which invests in new and high-technology businesses for Tata, invested $5m in Pereg Ventures as part of its planned $50m fundraising drive.
Fisher said: “We are doing very well, with $30m raised. We did not do the first closing but did three deals. We will continue to invest selectively while fundraising.”
Salesforce has backed accelerator Alchemist, launched in 2012, which is differentiating itself from other Stanford accelerators and incubators, such as student-led StartX, by focusing on start-ups looking to sell to businesses.
Dentsu Digital Holdings backed US-based early-stage firm 500 Startups’ third fund.
Nasdaq-listed travel company Concur, a travel and expense management solutions provider, launched the $150m Concur Perfect Trip Fund, according to news provider TechCrunch.
German Media Pool, which takes stakes in start-ups in exchange for advertising inventory, raised its second fund backed by new media partner RTL II, with previous media partners, N24, Regiocast and Wall continuing to invest.
People Darren Hermann, of KBS+ Ventures, the corporate venturing unit of Kirshenbaum Bond Senecal & Partners, joined web browser company Mozilla to head a new content unit.
Ben duPont, managing director and co-founder of open innovation fund Yet2Ventures, an investor in US-based mobile commerce point-of-sale technology provider Mobeam, became chairman of Mobeam’s board.
Iris’s Garrigues on Publicis partnership
We talked to Antoine Garrigues, managing partner of Iris Capital, which manages a limited partnership investment for advertising company Publicis, as one of its corporate venturing relationships.
What has been the main news in your relationship with Publicis in terms of investment, personnel and fundraising since the beginning of 2013?
Deployment of the Orange-Publicis funds went full-scale during 2013, with fund deals in the ad-tech space. The main news has been the successful exit of portfolio company Mopub, a mobile ads exchange platform, by Twitter just before its initial public offering.
What are the main trends you are seeing in Publicis-relevant sectors?
Programmatic buying and selling through RTB (real-time bidding) is becoming mainstream globally – geographically, with every type of content and devices – and new start-ups continue to disrupt the field, whether it is on gathering more intelligence, shifting to mobile and so on.
In 2013, the service with the biggest exposure in the field definitely went to the retargeting solutions.
Mobile advertising is raising new questions: How do we replace the desktop cookie for mobile devices to continue tracking visitors? How do we manage geolocation? How does the RTB ecosystem embrace mobile’s specificity – apps and specifically gaming have no equivalent on the desktop? How do we transpose banners to mobile?
Profile: Intertrust flies to Nest deal
Intertrust, the US-based digital rights management company, secured a nice reward for being an early supporter of US-based thermostat company Nest. Intertrust took part in an early round in October 2010. Nest was sold last month for $3.2bn to US-based search engine Google.
Talal Shamoon, chief executive of Intertrust, told Global Corporate Venturing last year about the group’s investment philosophy.
He said: “Our venture fund is a venture in itself. I am obsessive about organisations that run in a matrix. I read in Tipping Point [a book written by Malcolm Gladwell] that the optimal organisation size for a group of people was below 100 and took that to heart. I did not want us to grow too big so I have created companies that orbit Intertrust. “
He added: “The investment thesis of our portfolio is that all our ventures should or could interact with each other. The model is like a Japanese keiretsu [a set of companies with interlocking business relationships and shareholdings], kind of like what Mitsui or Mitsubishihave done – ventures all interact with each other and are all potentially doing deals with each other.”