Category Archives: Venture Funding

Nirvanix Shutdown: Collateral Damage in Big Players’ Price War?

The sudden shutdown of Nirvanix, an early but recently faltering participant in the “pure-play” Online Storage space dominated by the likes of AWS S3, Microsoft Azure and Google, is in large part a result of downward pressure on prices as the big players continually lower theirs. Amazon, for instance, launched S3 in 2006 and charged $0.15 per gigabyte-month. After many step-wise price cuts S3 is down to $0.095 per gigabyte-month.

Pure online storage is fast becoming the sole province of vendors who either enjoy economies of scale, or who treat their offerings as a loss-leader to get other business (or a combination of both).

Smaller players may have to add value in other ways to survive. Nirvanix was not profitable, and when their latest round of funding came up short it was the last nail in their coffin.

Drew Houston’s Y Combinator Pitch for Dropbox

Here are some choice tidbits from Drew Houston’s application for Y Combinator backing:

What is your company going to make?  
Dropbox synchronizes files across your/your team’s computers. It’s much better than uploading or email, because it’s automatic, integrated into Windows, and fits into the way you already work. There’s also a web interface, and the files are securely backed up to Amazon S3. Dropbox is kind of like taking the best elements of subversion, trac and rsync and making them “just work” for the average individual or team. Hackers have access to these tools, but normal people don’t.

There are lots of interesting possible features. One is syncing Google Docs/Spreadsheets (or other office web apps) to local .doc and .xls files for offline access, which would be strategically important as few web apps deal with the offline problem.

What’s new about what you’re doing?  
Most small teams have a few basic needs: (1) team members need their important stuff in front of them wherever they are, (2) everyone needs to be working on the latest version of a given document (and ideally can track what’s changed), (3) and team data needs to be protected from disaster. There are sync tools (e.g. beinsync, Foldershare), there are backup tools (Carbonite, Mozy), and there are web uploading/publishing tools (box.net, etc.), but there’s no good integrated solution.

Dropbox solves all these needs, and doesn’t need configuration or babysitting. Put another way, it takes concepts that are proven winners from the dev community (version control, changelogs/trac, rsync, etc.) and puts them in a package that my little sister can figure out (she uses Dropbox to keep track of her high school term papers, and doesn’t need to burn CDs or carry USB sticks anymore.)

At a higher level, online storage and local disks are big and cheap. But the internet links in between have been and will continue to be slow in comparison. In “the future”, you won’t have to move your data around manually. The concept that I’m most excited about is that the core technology in Dropbox — continuous efficient sync with compression and binary diffs — is what will get us there.

What do you understand about your business that other companies in it just don’t get?  
Competing products work at the wrong layer of abstraction and/or force the user to constantly think and do things. The “online disk drive” abstraction sucks, because you can’t work offline and the OS support is extremely brittle. Anything that depends on manual emailing/uploading (i.e. anything web-based) is a non-starter, because it’s basically doing version control in your head. But virtually all competing services involve one or the other.

With Dropbox, you hit “Save”, as you normally would, and everything just works, even with large files (thanks to binary diffs).

What are people forced to do now because what you plan to make doesn’t exist yet?
Email themselves attachments. Upload stuff to online storage sites or use online drives like Xdrive, which don’t work on planes. Carry around USB drives, which can be lost, stolen, or break/get bad sectors. Waste time revising the wrong versions of given documents, resulting in Frankendocuments that contain some changes but lose others. My friend Reuben is switching his financial consulting company from a PHP-based CMS to a beta of Dropbox because all they used it for was file sharing. Techies often hack together brittle solutions involving web hosting, rsync, and cron jobs.

Want more detail? Read the full application.

Breaking: Internet-based TV Operator Raises $19 Million

Magine, the Swedish cloud-based cable operator, today announced that it has closed a $19 million Series A round led be a group of Swedish and international investors.

The company says that it will use this new influx of cash to fund its international expansion, with Germany and Spain being the next countries on its radar. The service is already available in Sweden.

“Magine is not just another TV platform, but a totally new way of accessing and consuming content,” said Magine chairman Michael Werner. “It is a subscription service that was devised to make viewers come back to watching TV and this is why broadcasters and content providers are very keen to adopt the service. Magine helps them create new forms of monetizing whilst respecting the current rights chain.”

Why ParElastic Could Raise $5.7 Million

ParElastic Corporation has raised $5.7M in a Series A round financing led by General Catalyst Partners.  The company’s existing investors including Point Judith Capital, CommonAngels and LaunchCapital also participated in the round. The Series A brings ParElastic’s total financing to $8.7M. The ParElastic Database Virtualization Engine “dramatically increases the flexibility of your current relational database, improving performance and reliability while reducing storage and processing costs.”

Read more, watch a video, download a white paper here.

Kaplan Launches Education Startup Accelerator

Kaplan, Inc., the education services subsidiary of The Washington Post Company, announced today the launch of the Kaplan EdTech Accelerator, powered by TechStars, an intensive three-month mentoring and business development program for 10 startup companies, in collaboration with TechStars, a nationally recognized startup accelerator.

The Kaplan EdTech Accelerator will select startups using technology to create products and services across the broad spectrum of education including K-12, higher education, professional education, lifelong learning, and other areas. TechStars will invest $20,000 in each company accepted into the program.

The Kaplan EdTech Accelerator is the first corporate sponsored accelerator focused exclusively on the education sector, using TechStars’ mentor-driven, deep immersion model. TechStars has completed 15 accelerator programs and its selected companies have attracted more than $285 million in funding in the past six years.

The Kaplan EdTech Accelerator will host the startups, to be chosen by application, at its offices in New York City’s West Village neighborhood from June to September 2013. They will be mentored by industry leaders, such as Kaplan, Inc. Chairman and CEO Andy Rosen, TechStars founder and CEO David Cohen, Washington Post Company Chairman and CEO Don Graham, noted venture capitalist and Foundry Group Managing Director Brad Feld, and many notable founders of ed-tech companies, including Jose Ferreira of Knewton and Eren Bali of Udemy.

Additionally, Kaplan will provide the startups with office space and facilities, and other resources as they work to build their companies and products. This support includes access to Kaplan’s proprietary “Kaplan Way for Learning” program, which harnesses the latest learnings from the fields of science, instructional design, and technology to support the development of highly effective, evidence-based learning products. Kaplan also has tremendous reach in education with more than one million students enrolled annually, taught by 10,000-plus instructors globally, relationships with 300-plus U.S. school districts, more than 20 university partners worldwide, and thousands of corporate customers.

The program will culminate in Demo Day, when the startups’ founders will present for an elite group of angel and venture investors and education industry influencers, with the goal of securing funding to grow their companies.

“We’re thrilled about partnering with TechStars to launch the Kaplan EdTech Accelerator,” said Andy Rosen, Kaplan, Inc. chairman and CEO. “Kaplan’s mission is to provide students around the world with the best, most efficient means to achieving their educational goals. Ongoing cultivation of new innovations from all across the sector—in ways like this accelerator program—is embedded in our company’s history.”

From its start, Kaplan has pioneered notable education innovations. It has, for example, launched the first wholly online law school in the U.S.; built its online university into one of the country’s largest higher education institutions; and, more recently, created mobile delivery systems for its test prep and professional education customers, a new prior learning assessment service for adult learners, and an innovative, large-scale online instructional platform, KAPx. Kaplan will be making available as mentors several of those Kaplan professionals who have driven many of these innovations.

The application deadline is April 14, 2013. Selected companies will be contacted in late April, and the program will begin in June. Further details and the application for the program are available at KaplanEdTechAccelerator.com.

Sailthru Gets $19 Million for Smart Data Digital Brand Communications

Sailthru, a technology company specializing in digital brand experiences and communications, has announced a $19 million Series B investment led by Benchmark. Sailthru will use the investment to accelerate the growth of the company by increasing both staff and infrastructure and expanding the use of Smart Data™ by Fortune 500 companies. Sailthru joins Benchmark’s portfolio that currently includes other industry-leading companies such as Dropbox, Twitter, Instagram, Uber, Quora, Yelp and Zillow.

Sailthru’s Smart Data is leading a major shift in how companies engage with their customers through the automatic analysis of big data sets to generate informed, personalized communications across all digital channels. Unlike Big Data, which merely exists in a passive state and can often be overwhelming, Smart Data powers decisions. Sailthru’s Smart Data allows businesses to understand, predict, and engage each consumer on an individual level in real time. Sailthru’s clients are improving their ROI, customer time on-site and are seeing strong increases to customer lifetime value from their adoption of Smart Data.

Ravello Systems Gets $26 Million for Hybrid Cloud Hypervisor

Ravello Systems today announced that it has closed its second round of funding bringing the total amount of funds raised to $26 million. Ravello is now backed by Sequoia Capital, Norwest Venture Partners and Bessemer Venture Partners. Founded in 2011 by Rami Tamir and Benny Schnaider, the founding team behind the now standard KVM hypervisor, Ravello is positioned to change the game in the hybrid cloud market by delivering the industry’s first Cloud Application Hypervisor.

“Enterprises cannot use the public cloud the way that they would like to which is to be able to rent capacity on demand and simply spill-over bursty workloads,” said Tamir, CEO, Ravello Systems. “That’s not possible today because the public cloud environment is completely different from the enterprises’ internal data center. The industry needs a solution to normalize the application environment across the private and public cloud, so that enterprises can truly begin using the public cloud.”

“We have developed a Cloud Application Hypervisor that encapsulates multi-VM applications along with their entire environment including the VMs, networking, storage etc. so that enterprises can run any application in any cloud without making any changes,” said Schnaider, president and Chairman of the Board, Ravello Systems. “Unlike other solutions in the market that adopt a management only approach, Ravello’s Cloud Application Hypervisor normalizes the application environment so that it can run on the private or public cloud.”

FlixMaster Gets $1.125 Million for Enterprise Video

FlixMaster, the platform for Enterprise Online Video, today announced it has secured $1.125 million in additional funding from a syndicate of investors led by New York-based investment firm Golden Seeds.

The company said the investment would be used principally to expand sales and marketing efforts, particularly in the corporate enterprise markets. The company also announced it was launching new industry modules for its video editing and deployment platform designed for online retailing, corporate customer service and media markets.

FlixMaster is addressing the growing need for more creative uses of video by corporations and media properties alike. To date, Enterprise Video technology has been primarily focused on video distribution and content management, but as those technology challenges fade, creative professionals are looking for platforms that improve content quality and increase viewer engagement.

“The promise of Enterprise Video has been high engagement that converts interaction into action,” said Erika Trautman, co-founder and CEO of FlixMaster, a Boulder, CO-based graduate of the prestigious TechStars program. “The problem is, most videos simply transfer a conventional TV-like experience to the web, and even though most viewers go to the video first, they’re gone in a matter of seconds.”

“Brands need to produce interactive video experiences that draw viewers in and keep them there. And companies need to be able to produce those experiences at scale and at a reasonable cost. That’s what FlixMaster offers,” she continued.

The company was recently engaged by HBO to develop an interactive online experience for the newly launched Cinemax series, “Banshee”, that incorporates FlixMaster video technology and makes heavy use of the Player API. The online destination, Banshee Origins, provides audiences with an enhanced viewing experience, driven through interaction with the video player itself, and gives them an opportunity to explore the show and interact with its characters and themes. Last summer, FlixMaster’s technology powered an acclaimed web experience for the USA Network show, “Covert Affairs.”

ClickFuel Gets $4 Million for Fuel Station Expansion

ClickFuel recently closed a $4 million Series B Round with Baird Venture Partners among the participants. The investment will be used to develop new products and services to expand the use of Fuel Station in data and business intelligence applications.

Fuel Station is a SaaS-based marketing analytics and performance management solution tailored for small to medium-sized businesses, providing more than 200,000 activated dashboards for SMBs to access, track and monitor marketing initiatives and results. Through more than two dozen partners, Fuel Station addresses the challenge SMBs face in maximizing online marketing spending, tracking campaign effectiveness and reducing the time necessary to analyze campaign data.

With Fuel Station, ClickFuel partners such as The E.W. Scripps Company, DudaMobile and Propel Marketing, a GateHouse Media company, provide their SMB customers with comprehensive marketing dashboards that address the complexity of marketing and advertising campaign performance. This dashboard delivers data on a single platform to empower decision-making and improve campaign productivity and presence. ClickFuel partners also leverage Fuel Station’s back-end business intelligence platform to improve account managers’ efficiency, differentiate their businesses in the crowded media industry, increase customer lifetime value and reduce customer churn.

“The Fuel Station dashboard has quickly become an invaluable tool for our account executives from coast to coast,” said Adam Symson, chief digital officer of Scripps, a leading media enterprise. “Our television stations and newspapers are focused on providing the market’s most-effective solutions for our advertisers, and Fuel Station makes it possible to measure and track our success so customers have actionable evidence that we’re helping them build their businesses.”

“Providing our customers with transparency into their marketing investments across all mediums helps us build trust and lasting relationships with them. As a convergent resource that fully integrates all components of a marketing campaign from pay-per-click to behavioral analytics to call tracking, Fuel Station makes it easy for our clients to visualize their campaigns and returns on investment, and helps our account managers better serve our customers,” said Dave Myer, director of advertising operations at DudaMobile, anonline platform that converts websites into mobile friendly websites.


Rackspace Launches UK Startup Programme to Fuel New British Businesses

Rackspace the open cloud company, announced plans to launch its Rackspace Startup Programme in 2013 to provide cloud computing resources to new businesses driving growth in the UK economy. With a global track record of partnering with premiere startup accelerators and incubators in the USA and Australia, the firm now broadens its focus to include the EMEA region aiming to help power thousands of UK startups to success.

“Since launching in the US two years ago, we’ve helped over 850 startups through the programme. We’ve also worked with over 100 programme partners, including some of the top accelerators, universities, co-working spaces and VCs, and we are thrilled to launch the UK startup programme,” said Taylor Rhodes, Managing Director, International at Rackspace.

Given the cloud model’s inherent flexibility and elasticity, the fact that it requires minimal capital expenditure up front, and its unmatched ability to scale, it’s an essential differentiator for many fast growth businesses. In 2009, nearly 250,000 VAT registered businesses started in the UK*. This highlights the vast number of startups that could potentially benefit from cloud services, if they aren’t already.

Starting as a ten man entrepreneurial venture itself back in 1998, Rackspace recognises the need to provide fledgling businesses harbouring great potential the enabling technologies for growth and commercial success. The Rackspace Startup Programme therefore exists to provide low cost cloud hosting and support services to startup incubators who have identified cloud computing as a more efficient route to IT service delivery.

As a company that likes to refer to information technology as the “fifth business utility”, Rackspace views cloud computing as a means of democratising access to powerful IT resources at every tier of the business spectrum. As such, the Rackspace Startup Programme has been engineered from the outset to give incubators an unrivalled opportunity to drive startup firms towards development, expansion and commercial success.

“Cloud computing services are built around the principles of not only flexibility and scalability, but automation and self-service too as we serve customers’ needs from our local datacentres with additional service layers all backed up by our world-renowned Fanatical Support,” said Rhodes. “Bringing the power of our continuously available cloud services to the dynamic world of startup business is, to be quite honest, really exciting. I can’t wait to see what happens next.”

Rackspace unveiled its Startup Programme at a ‘Boost Your Start-Up’ networking event held in the heart of London’s Tech City on 20th November 2012. The event featured a panel discussion with some of the most prominent thought leaders in this space, moderated by Robert Scoble, the world’s pre-eminent blogger and evangelist on technology and start-ups. Moving forwards, Rackspace expects to work with high profile accelerators including DreamStake and Springboard, to ensure that businesses across the UK have access to its Startup Programme.

“With a multiplicity of extremely sensitive and highly fluid business factors to juggle, startups need an IT backbone built around maximum levels of elasticity, control and automation. We welcome Rackspace’s commitment to providing this through their cloud offering. The scalability in a pay-as-you-go model is essential for fast-growing businesses and will be a key business enabler for startups now and in the future,” said Sean Kane, Co-Founder, Springboard

Rackspace is also offering one start-up team the chance to win a trip to San Antonio, Texas, plus a 1-on-1 mentoring session with founder and Chairman, Graham Weston, while they’re there. Entrants must submit a pitch video for a start-up idea centred around cloud computing by December 14th for a chance to win. The winners will also receive £3,000.