MappingTheWeb //

Is it just me or has the VC world slowed down over the past couple months?

Six months ago, TechCrunch or GigaOM would report numerous VC fundings everyday. Now, they seem less frequent and more dispersed. So… is it a case of VC money (and private equity) drying up, or is it that the VC’s are simply picking and choosing their investments more carefully?

My gut says it’s the latter. Why do I say this? Well, a typical A round of financing tends to lie somewhere in the $1-5 million range. Below that it’s usually considered a friends and family round. Above that is usually considered a B round.

We are seeing less and less rounds falling within these boundaries. Perhaps, some are carefully placing smaller amounts of money in more start-ups to hedge their bets. This would explain the ‘under-the-radar’ financings that don’t get much press or media attention.

But interestingly enough, we have witnessed a few unusually large A rounds of financing take place. Forget the typical $1-5 million dollar range. Take a look at these recent investments: Reunion.com just raised $25 million in their A round and Spock raised $7 million in an A round (with no BETA product even). Now obviously these are special cases, but it should be noted that these types of Internet-related start-up fundings are rare. Or at least they used to be.

It should also be noted that Aggregate Knowledge, another prominent new-comer, just raised a whooping $20 million after their initial (and substantial) $5 A round.

So is VC money really dead? I doubt it. We are definitely not seeing the same bubble warning signs as the late 90’s. The days of a good domain name and a slick Powerpoint presentation are gone. Nowadays, it takes a business model, and perhaps… just perhaps… a revenue model to convince a VC your company is a worthy investment.

Spock has been one hyped beast. Buzz has been swirling around this stealth start-up for months now. This low-flying aircraft has carefully managed to avoid the media at large and focus on the company. And despite the hype, the company looks to have an exceptional service from my preliminary analysis… 

Already, the company has raised $7 million (in December 2006) via Clearstone Venture Partners and Opus Capital Ventures. This was even before a BETA product was available. 

At the core, Spock is aiming to be the Google of people searches - which it estimates to be around 30% of all Internet searches. Should this number be accurate, then obviously there is huge potential in a largely untapped market. Competitors include the likes of Wink and ZoomInfo - neither of which has made a significant impact on the search world or gone mainstream.

Search results and profile information are being aggregated from blogs, Wikipedia, and social networks, among other sources. Individual searches reference tags and meta data that is edited by users. Finally, a given individual can claim his/her profile through an e-mail verification process with Spock.

Exclusive screenshots courtesy of TechCrunch are available here:

• Spock screenshot 1
• Spock screenshot 2
• Spock screenshot 3

What do I like about the profile interface?

• Prominent display of the search bar at all times
• Simple demographic information
• Abbreviated bio
• The ability to quickly and easily find pictures, related people, and even contact information

There is even a widget available… talk about web 2.0 compliant…

I would imagine that many people (including myself) end up on a Wikipedia page when researching a famous person. Not only am I biased to Wikipedia, but a link is usually present on the first page of nearly every search result for a given person. Having said that, I do use IMDB the odd time when researching a movie star or entertainer in particular. However, should Spock prove to be as useful as it looks, I may be changing my searching tendencies…

Is it just me or has the hype seem to have faded? I swear it was only 6 months ago (or even a few months ago) that the buzz was still buzzing. Now, it seems to have lingered. Though healthy for the Internet economy, it seems that many entrepreneurs and web junkies aren’t getting their daily dose of high adrenaline, heart-pumping web 2.0 hoopla they so dearly crave.

Evidence of this trend can be witnessed by visiting TechCrunch, widely accepeted as the grand daddy of web 2.0 blogs. It seems the content nowadays is focused more and more around the big guys (Google, Yahoo, Microsoft, AOL, Amazon) than around the small start-ups that TechCrunch became famous for writing about. I wouldn’t go as far as saying TechCrunch is selling out, but maybe we are seeing a shift. Perhaps less and less new web start-ups are launching? Perhaps major consolidation is imminent?

Furthermore, it seems TechCrunch is adding a new candidate to the “Dead Pool” on a daily basis. In other words, more and more start-ups are filing for bankruptcy and/or selling off their assets, as they just can’t make a go of it.

Maybe the industry is in a lull? Maybe a moderate crash is to be expected? I don’t think so.

New web start-ups will continue to launch as long as the Internet is running, albeit less at times than others. In any case, it takes less money and human resources than ever before to launch a successful venture. Many 1-, 2-, and 3-man operations have gone on to accomplish big things in a short time period. Many web application frameworks, such as Ruby on Rails, have given start-ups a head-start and allowed them to concentrate less on building a service from scratch, and more on creating an excellent experience. Moreover, this also allows for more time to be concentrated on the business functions as well, most notably marketing and business development.

It will be interesting to see if this lack of news is just a short-term bump or if we are indeed in the midst of a major overhaul. My guess is that it’s the former.

Acquisition rumours have been swirling throughout the web 2.0 world in recent days. Two start-ups, BubbleShare and StumbleUpon, have been noted as being possible take-over targets in the very near future.

First up, TechCrunch reports that BubbleShare has been in talks with News Corp., the parent company of MySpace. Details and information is still very preliminary, but the deal is rumoured to be under $5 million. The Toronto-based photo sharing start-up is only about two years old.

Check out GigaOM and Maple Leaf 2.0 for more info on the possibility of a deal.

Second up, we have StumbleUpon, an Alberta-based start-up which has relocated to the Valley. Reports indicate that the company recently approached at least one possible company to be acquired. The company is looking for $50 million.

No concrete details of any deal have been disclosed and the CEO refused to comment on the rumours. It will be interesting and exciting to watch this innovative, successful company continue to prosper.

It’s great to see all the attention focused on a few aspiring Canadian start-ups. I hope this trend continues as there are many tech gems in Canada that our neighbours down south are unaware of.

Popular news aggregation site Topix.net has announced a $15 million round of financing with investments coming from Gannett Co., Tribune Company, and the McClatchy Company. This Series B round of financing comes as the company continues to drive significant traffic.

Since launching in early 2004, the site has already snatched an Alexa rank of 1,261. Pretty respectable by most accounts. However, traffic at Topix has flattened out over the past year. Its rank has only risen by a couple hundred spots, a small percentage rise in comparison to the exponential gains of previous years.

The site pulls feeds from all over the net - news, blogs, entertainment, local/world, business, and sports. In addition, the site contains forums and a classified ads section. According to GigaOM (see link above), the site attracts 9 million unique visits a month.

The concept behind the site is not overly revolutionary or extravagant. Pulling feeds from other sources is nothing new. However, the manner and execution of Topix has been nothing short of brilliant. The interface is very intuitive and well laid out. Ads are cleanly and cleverly integrated into the content in a logical manner. The site is essentially a mass-aggregated, organized directory of news stories and blog posts, in a nutshell. Features such as local and comments take it one step beyond a simple ‘feed’.

Though I am not a regular user of the site, I have been known to visit on the occasion and I am a fan. Functionality is useful, but not over the top. In an age where content is king, quality articles and feeds rule the landscape.

I am a bit hesitant and leery of the amount of money raised. A $15 million round seems extremely high for an aggregated news site. What will Topix do with this equity injection? Such a large investment must mean big things are in the mix. Will Topix move to new mediums of news dissemination such as radio, TV, or print? Will it begin to spin-off niche news sites? Will the company simply build the current offering and integrate sophisticated functionality and features? For the time being, all we can do is speculate. But expect big things to come as the world continues to move toward a more democratic news dissemination system.