July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Picking the right hostel can make or break your travel experience, and WeHostels wants to make sure you pick the accommodation that is right for you.

WeHostels is a mobile app for booking hostels and cheap hotels. Today, the startup revealed its latest update, which makes the app more friendly to people traveling in Europe. It is now available in German, French, Spanish, and Portuguese as well as English, and updates prices accordingly in pounds and euros depending on your location. WeHostels also announced a partnership with German Ventures, which will provide capital as well as strategic and operational assistance to facilitate the company’s European expansion plans.

WeHostels is a useful solution for those backpackers and wandering souls who don’t like to plan ahead but also don’t want to wander the streets aimlessly or rely on guidebooks to find accommodations. Listings include more than 40,000 places in 800 cities. While traveling, you open the mobile app and search through available listings in your destination. Each listing contains additional practical information as well as photos, comments, pricing and an option to book.

Founder Diego Saez-Gil said the target market so far has been the U.S., but since launching in August, WeHostels has seen significant organic growth in Europe and Latin America, since those are major backpacker/budget-travel destinations. The startup is responding to this demand accordingly by refocusing attention toward international markets.

“In Europe, the travel market is huge for young people and we see a huge opportunity,” he said in an interview. “The larger vision for the company is to become the world’s largest mobile travel agency for young travelers, providing all the products and services that they need on-the-go. As a travel company, we have even more reasons to go global early. The big challenge with expanding internationally is that you have to understand the local culture when it comes to doing marketing, community management and customer support.”

Saez-Gil said American startups are increasingly looking abroad for expansion in the early stages. Companies like Uber, AirBnB, and HotelTonight have met with success outside of U.S. borders, and the infrastructure and web/mobile penetration numbers are growing quickly in international markets. WeHostels competitors include Priceline’s Booking.com, Hostelworld.com, Expedia’s Hotels.com, AirBnB, and Couchsurfing. WeHostel’s takes a mobile-first approach, which Saez-Gil said distinguishes it from competitors.

“Mobile growth is exponential in international markets and smartphones already outnumber PCs,” he said. “The travel industry is a huge market dominated by big players like Priceline, Expedia, and TripAdvisor, but it has been slow to innovate on mobile and provide great services to mobile users. We are the only company that is focused on mobile offerings for affordable accommodations.”

The company was founded after Saez-Gil traveled around Europe and continuously felt the need for a mobile service that could connect him with places to stay. Hostels can range from brightly-colored eccentric hubs where travelers come together to swap stories to seedy dark buildings filled with questionable sanitation and mysterious noises. He relied primarily on guidebooks and word-of-mouth to navigate, and he felt that there was a better alternative.

WeHostels first started out as a social network for cheap travel accommodation called InBed.me, which raised $1.2 million in seed financing. The company received high demand for a mobile offering and responded accordingly by going mobile-first. This decision paid off and WeHostels has grown its bookings by 778 percent since December. Along these same lines, today’s updates are also a result of user demand.

“Last year we saw the growth we were having on mobile queries, so we made a bold decision: let’s go mobile or go home,” Saez-Gil said. “Now we saw the potential of international markets so we made a new bold decision: let’s go global or go home.”

German Ventures will support WeHostels in adapting to international markets. WeHostels has plans to release iPad and Android apps this summer and will continue to add new currencies for South American and Asian countries as well. There are also plans to add more budget hotels into the listings and expand the Hot Trips feature which helps people hunt down housing during big events like SXSW, St.Patrick’s, and Coachella.

WeHostels is headquartered in New York with offices in Bogota or Munich.

Photo credit: WeHostels

When I co-founded InMobi in 2007, we took a novel “east-to-west” approach to our growth, starting in India before moving into other developing markets, then finally into more traditional “Western” markets as well.

Because this method of expansion didn’t have any precursors, and mobile advertising was at the time still a very new field, we had to chart our own course and set our own example. And as a corollary, we would have to deal with a number of challenges as we discovered that the mobile landscape was different in each geography we entered, and learn to quickly recover from mistakes.

I’d like to talk about some of the challenges we faced and how we dealt with them, as I believe it will be of relevance to other businesses that are trying to build a global footprint:

Learning while doing

Because we were experimenting with a new business model, we often had to rely on intuition as we calculated our next moves. When you are trying to expand across multiple geographies at a rapid pace, you are bound to slip, and we were no exception. For example, our first forays out of India into other geographies, starting with Indonesia and South Africa, did not yield initial success, and we could not gain a strong foothold in the market. Our lack of understanding of the ways in which brands, advertisers, and consumers communicated and interacted in these markets, and incorrect hypotheses about the overall advertising ecosystem, led to delayed revenue streams. But we learned how the ecosystem worked and began expanding our reach in these emerging markets.

Likewise, when we had to extend the capabilities of our platform to serve multiple regions/countries, we almost ran the risk of jeopardizing existing business in India by shifting focus away from it.

We learned quickly from such wrong moves, and this helped us templatize our forays into new countries, and that is the key takeaway:

An experiential learning approach works well if you can recover from your mistakes quickly and identify patterns and models from within a few iterations.

Recalibrating world view frequently

Working with an evolving technology and business model, and one that had numerous dependencies on the moves of key players in the mobile device and platform platform markets, brought with it another set of challenges: frequently making informed decisions on the roadmap of our technology platform, which was the pivot of our business.

In addition, our geographic expansion plan also compelled us to be agile and flexible.  Once we had tasted initial success, we laid out a plan to simultaneously expand in Southeast Asia (Thailand, Malaysia, and Singapore), Western Europe and Japan. Each of these markets had its own characteristics and was very different from one another. Western Europe was developed, and so was Japan, but the latter is a contained market with little in common with the European market. The emerging markets, on the other hand, were evolving and needed a totally different approach.

Clearly, we had to tailor our approach to suit each market, and this meant that we literally had to revisit our assumptions and plans every quarter.

In all of the above, our overall commitment to speed — in thinking and in action — helped, and our approach of trying out and making course corrections, rather than waiting and watching, stood out. To me, the key takeaway from this experience is staying committed to a strategy for the future, while adapting the tactics to the present.

Shaping Management Mindset

While the first two sets of challenges emanated from the market, the third was more internal and had to do with adopting the right mindset.

As a startup with global ambitions, we had several mental hurdles to cross. Learning to think big while being small was one of them. Some of us had a tendency to want to do one thing very well as opposed to developing broader competencies and skills, which is a prerequisite to build scale. Another issue was balancing our short-term needs with our long-term goals. Nowhere was it a bigger challenge than when we opened offices in new geographies and set out to hire the regional anchors. How much to pay, how long to wait for the right candidate, what profile should we opt for?  These were real questions we had to find answers for. We made a few errors of judgment here as well, like hiring candidates about whom we were not completely convinced, before we made the tough call to wait for the right candidates and pay them the right compensation.

The last thing we had to do, of course, was to transform our thinking, speaking and actions to reflect those of a truly global organization, and make the transition from being part of an “Indian” team to a cross-cultural one. This entailed creating a consistent corporate culture with frequent interactions between teams based in India and those in the other markets. By encouraging two-way travel, we ensured that teams from India understood market and cross-cultural nuances early on.

In sum, we learned to be open, introspective and aware of the consequences of your behavior and actions.

Thinking back, what allowed us to surmount the challenges we faced and mold our thinking and actions to suit the purpose was our total commitment to our vision and the excitement of creating an innovative and valuable business model.

That is the overarching message I’d like to leave you with: clarity of vision and purpose is the glue that binds a team together and acts as a lubricant to mitigate the friction caused by obstacles along the way.

For more information on InMobi’s East-to-West strategy, see Naveen Tewari’s first post, here.

Naveen Tewari is InMobi’s CEO and founder. He graduated from Harvard Business School and worked at Charles River Ventures and McKinsey & Company before starting InMobi. InMobi, based in Bangalore with offices in Singapore and San Francisco, currently employs more than 900 people and has taken $216 million to date in venture funding.

photo credit: Stuck in Customs via photopin cc

It’s a good day for European and Israeli startups seeking funding, as Accel Partners announced a new $475 million fund today for early-stage tech companies.

The new fund, Accel London IV, was raised in just eight weeks and makes Accel London one of the largest venture capital firms in the region, with $2 billion raised to date across its previous funds. The new fund’s total is more than what was initially rumored back in February, as VentureBeat previously reported.

“Europe has a strong talent base, including a growing community of repeat entrepreneurs, whose success, experience, and ambition continue to fuel our ecosystem,” said Accel London partner Harry Nelis in a statement. “Innovation and entrepreneurship are thriving in Europe, and with technology hubs developing across the region, the next billion-dollar company could emerge from anywhere.”

Accel, which has offices all around the world, said the newly announced fund will focus on investing mostly in companies in Europe and Israel that deal with consumer Internet, big data, cloud, SaaS, and mobile.

Accel is well known for its long list of early investments in wildly popular companies, most notably Facebook. It has also previously invested in Spotify, Rovio, Dropbox, Cloudera, Etsy, Trulia, and Groupon. More specifically, Accel’s London team has invested in QlikTech, Playfish, and Kayak, which sold to Priceline for $1.8 billion after going public last year.

Euros photo via Africa Studio/Shutterstock

Mind the Bridge is a seed fund and accelerator that supports Southern European entrepreneurs from distressed economies, with a focus on Spain, Italy, Greece, Israel. The program helps entrepreneurs set up headquarters, establish a network, and gain exposure for their product in the U.S.

“It used to be there wasn’t good communication and no good way of breaking down international barriers to get all the ideas coming from different parts of the world,” said storied venture capitalist Tim Draper, in an interview with VentureBeat. “Now, I see things from Italy and Southern Europe and they look just like things in Silicon Valley. With the spread of viral marketing and information, and the connection we’ve all got with each other, the ideas are generally based on the same information. These startups are competing head-to-head.”

Draper kicked off the demo event, which featured presentations from six startups. Each of the companies participated in Mind the Bridge’s three-month accelerator program and received coworking space and guidance from mentors who understand the unique position of foreign entrepreneurs. Founder Marco Marinucci advocates a “dual-company model,” whereby development stays in the home country, but headquarters are in Silicon Valley, where the market and the money is.

“These entrepreneurs have a strong sense of creativity that is generally more pronounced than locals and easier and cheaper access to talent,” he said in an interview after the pitches. “Our startups all have a product launched and proved in different geographies, but the bigger challenge is to make it in biggest costumer market in the world- the U.S.. The market here is incomparable. This way you can play the big game of the mass market and find funding here, while maintaining all the development abroad. This is the model that I see working.”

Each of the presenting startup have built consumer-facing startups that span a range of sectors. Italian Atooma is a smartphone app that lets you set up conditional events that automatically trigger simple actions based on things like time of day, location, and favorite apps. Myze is a Spanish-based service that helps consumers collect and maximize their credit card rewards to access discounts, promotions and deals. Bad Seed is a gaming company from Italy developing mobile games that achieve ‘the quality of console games.’ Weendy is a social ‘sports mate’ application where surfers, skiers, kite boarders etc… can share information on weather conditions. The founders are from Greece. Also hailing from Italy, Map2App is a web-based platform that lets travelers create custom mobile travel guides to access on-the-go, and in3Dgallery’s technology turns 2-dimensional content into dynamic 3D presentations.

In true European form, the presentations were punctuated with breaks for h’or dourves, pasta, coffee, and cookies, and the entrepreneurs all seemed remarkably at ease. The event did not have the same level of tension or anxiety that often pervades the room at demo days, and the founders seemed just as eager to chat with each other as with potential investors. Marinucci said European entrepreneurs often have a different attitude than locals, and the Mind the Bridge community is a supportive, rather than a competitive one. “

“There is a more social attitude, he said. “It takes an immigrant to understand an immigrant and the nitty-gritty of the challenges you face. Everyone has different nationalities, but they all have similar issues, and that makes them a tighter community.”

Mind the Bridge was founded in 2007 as a side project while Marinucci worked at Google. It was first conceived as a non-profit accelerator program dedicated to developing Italy’s startup ecosystem, but has grown to encompass a wider geographical scope and includes a seed fund and startup school. Today’s startups were the first to graduate from the accelerator program, but they won’t be the last. Marinucci plans to make between 12 to 15 seed investments a year of between $40,000 and $100, 000 and is raising a second fund. Read more on VentureBeat.  

This is a guest post by lawyer Peter Buckland

I have heard a lot of hype about Berlin as a burgeoning startup hub, and how its cool culture and affordable rents have drawn talented, tech-savvy entrepreneurs from across Germany, the UK and Europe.

But urban cool doesn’t necessarily translate into a sustainable startup ecosystem. Infrastructure is critical. So what impressed me most during my recent trip to Berlin was just that. Everywhere I looked I saw signs that this capital city is evolving into a more mature, structured environment for start-ups.

I met with a number of organizations in Berlin that support the burgeoning startup community. During my trip, I presented at an event for a large number of founders and investors organized by a group called FoundersTable, a division of the Make a Startup Angel Fund. They are doing great work in Berlin and other parts of Europe to build a critical link between promising startups and capital funding.

Some big players like Google and Microsoft are also having a visible impact in Berlin. Both companies presented  FoundersTable event, and both have been involved in multiple acquisitions of Berlin-based startups. Their presence, including the specific programs they are making available for start-ups, provides another important resource for entrepreneurs to gain connections and momentum.

Tech incubators and accelerators in Berlin are also blossoming. Incubators have produced some of the best-known new companies in recent years, and are a key part of the established ecosystems of New York, Boston, and Silicon Valley.

Of course, capital is one of the most critical drivers of a growing, sustainable start-up tech sector. I met with a number of early-stage investors from Germany, France, and other parts of Europe during a series of meetings on my trip. Each expressed excitement about the opportunities in Berlin. Seed and angel funding appears to be readily available. Meanwhile, U.S investors are also increasingly recognizing the opportunities in Berlin, both in terms of investing locally and helping to bridge transitions to the U.S.

So what’s holding Berlin’s startup economy back? The level of institutional venture capital available in Berlin is still small. Part of this appears to be cultural — Germany’s large institutional investors tend to avoid this asset class. That said, a number of European venture capital firms have announced office openings, and professional investors are travelling to Berlin. 

The energy in Berlin’s emerging tech sector feels very much like New York’s did five years ago, before its ecosystem was fully developed. With a little more time, Berlin could find itself in a similar situation, and serving as a model for sustainable startup ecosystems throughout Europe.

Peter Buckland is co-chair of WilmerHale’s Emerging Company and Venture Capital Practice Groups. He is based in Palo Alto, California. The firm maintains offices in Berlin and Frankfurt, which includes more than 35 corporate lawyers.

photo credit: Sprengben [why not get a friend] via photopin cc

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Big Data and Predictive/Real-time Analytics startups: Are you looking to jumpstart development & accelerate market traction? Sign up for the SAP Startup Focus program to receive technology, support, resources and community to help you develop new applications on SAP HANA, a cutting edge database platform. Get started here, and enter promo code “VB2013″ on the form.

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Yesterday was an interesting day for me at Mobile World Congress in Barcelona. As always the sheer size of this event is somewhat overwhelming, however there is no better place to see what the future of the mobile industry holds.

One thing that really stood out on day one is that Samsung, which has one of the largest stands here by far, has chosen not to launch its flagship product for the year, the Galaxy S4. Instead the company opted to use social media to announce that the S4 will be unveiled to the world at a special event in New York on March 14 (which will also be streamed online). This is one of the clearest indications yet that the center of the mobile industry has seen a shift from Europe to North America.

Traditionally MWC, and Europe in general, was the dominant market for mobile innovation. Major companies such as Nokia, Ericsson and Vodafone have long held the power and driven industry innovation.

Now the power has shifted to the U.S.. Apple and Google are the leading players in the mobile market with their superiority rooted in software for smartphones. For competitors to rival these big players, they need to be seen on the other side of the Atlantic in Apple and Google’s domestic market. This is without doubt part of Samsung’s rationale for launching the S4 in New York.

However this transfer in epicenter does not mean that the European mobile market has died. In fact, the shift has given rise to a new, thriving market for app development. In the UK in particular the market for mobile app developers, building new products for smartphones, is producing some genuinely brilliant businesses, which are catching the eyes of investors. A great example of this is SwiftKey, which topped the Google Play paid app charts for more days than any other app in 2012.

An example of how the app market has developed in the UK is the Smart UK Project, a competition run by the UK Trade & Investment, which held the final of its contest today here at MWC.

Beginning with 70 UK based mobile companies, a shortlist of 20 was selected and this was then reduced again to five, who had the privilege of presenting to a panel of six judges at the show, of which I was one.

This year’s winner, OpenSignal, is a brilliantly innovative app that can help users to understand the quality of the network coverage they have in any given region. Despite fierce competition, OpenSignal has really wowed the judges with its innovation and practical application. Knowing which mobile network operator best covers where you live is an attractive proposition for consumers and will certainly increase competition among operators.

There has been a clear shift in where the mobile industry considers its main market to be, representing a change in business strategies for handset manufacturers and telcos. This has given rise to new business and investment opportunities, especially in the burgeoning app market. As always, the UK finds itself a hotbed of innovation and creativity and with competitions such as the Smart UK Project, investors don’t have to look far to find their next opportunity.

Frederic Lardieg is a principal at Octopus Ventures. You can follow him on Twitter at @FredLardieg.

Photo: MozillaEU/Flickr

Windeln.de is a German online retailer for baby products, and it has tucked away $19.6 million (€15 million). In 2012, the company developed faster than a healthy toddler, and this financing will support continued growth.

Known as the Diapers.com of the German-speaking world, Windeln’s inventory includes includes more than 20,000 products from 300 companies, including diapers, baby good, toiletries, and pacifiers. Parents can easily place orders for their baby needs online and have them delivered to their door. Prices are lower than in many physical retailers, and parents of newborns appreciate the convenience of shopping from home.

Windeln had a successful year in 2012. According to a statement, it grew by more than 300 percent and now has a revenue run rate of $65. 34 million (€ 50 million). Furthermore, almost 70 percent of orders originate from existing customers. These are enticing numbers for investors. As such, existing investor DN Capital and new investor MCI led this funding round, with participation from Acton Capital Partners and 360 Capital. Each of these firms have European offices and will support Windeln’s expansion into new European markets.

The idea for Windeln was born when founder Constantine Urban and his wife, Victoria, were vacationing with their children on the North Sea in 2009. As young parents, they wished they didn’t have to lug large boxes of diapers to-and-fro — or panic when they ran out of the one kind of baby food their child liked. Urban founded Windeln in Munich in 2010.

Babies aside, Germany is one of the hottest markets for startups in Europe. Venture capital firms and incubator programs are setting up shop in Berlin, and the thriving cultural landscape presents a desirable environment for young, hungry entrepreneurs.

Babies may be expensive, but like startups, there is enjoyment in watching them grow up. Read the press release. 

Photo Credit: Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

What comes after LTE? Europe’s digital chief, Neelie Kroes, is determined to find out.

Aiming to make Europe a wireless leader once again, Kroes (above, scoping out a connected car) announced today at Mobile World Congress that she’s pouring €50 million (around $65.3 million) into the development of next-generation 5G networks, GigaOm reports. She hopes for “delivery” of 5G by 2020 — but that will likely be difficult since it EU countries will have to figure out wireless spectrum issues.

“Europe used to lead the world on wireless… European 5G is an unmissable opportunity to recapture the global technological lead,” Kroes said today.

Kroes is hoping to spur on research for wireless technology that’s that faster, more power efficient, and more efficient with spectrum than 4G LTE. LTE manufacturers and chip makers have made huge strides when it comes to battery consumption, but it remains the single biggest problem for most LTE devices. If we are to rely on our smartphones more in the future, we need them to last more than a work day.

The 5G investment is part of a public and private partnership across the European mobile industry. Major EU carriers like Telefonica, Deutsche Telecom, France Telecom are also involved (no surprise there). The biggest problem for the continent is the harmonization of wireless spectrum (basically, agreeing on the same spectrum to make wireless deployments and roaming simpler). Kroes likens Europe’s current spectrum map to “a bowl of spaghetti.”

Photo: Campus Party Europa/Flickr

PayPal Here will soon be available in the U.K., marking its first (and it hopes not its last) entrance into the European market.

PayPal Here is a triangular “dongle” that turns smart devices, like phones and iPads, into mobile point-of-sale terminals. PayPal launched Here in March as a direct competitor to Square, a hot startup that pioneered this type of system back in 2009. The combination of a dongle (in Square’s case, it is square) and software that tracks the transactions makes it significantly easier and less expensive for small business owners to accept digital payments.

Square has met with significant success in the U.S. over the past few years and recently expanded into Canada. The company does not yet have an overseas presence, although startups like iZettle, Payleven, and mPowa have built comparable products in Europe.

PayPal already has a large presence in the U.K. and seeks to capitalize on its existing network as well as name recognition. It plans on using the U.K. as launching point to take on the rest of Europe.

Rather than swiping cards with a magnetic strips and signing, like we do in the U.S., the primary “plastic” payment system in the U.K. is “Chip and PIN,” whereby cards are embedded with a microchip and customers enter a Personal Identification Number (PIN) at the point of sale. PayPal has modified its European version of Here accordingly through a “Chip and PIN” version of the service.

Now, instead of cash or checks, small business owners in the U.K. can securely and efficiently do business from their mobile devices. As for British customers, they will no longer have to spend their lunch hours waiting in long ATM queues. Unless they want to.

Lame British humor courtesy of Christina Farr.  

Photo Credit: bjornmeansbear/Flickr

Today, Point Nine Capital announced its new $53.8M fund (€40M) to support early-stage European companies. The firm’s approach is to be “the angel VC.” The partners are focusing on mentoring entrepreneurs in areas such as Software-as-a-Service, eCommerce, marketplaces, and mobile.

Most of the investments are in consumer Internet technology, although it’s also done a slew of business-to-business product and enterprise management platform deals. Portfolio companies include Delivery Hero, Couchsurfing, Shiftplanning, Vend, Westwing, and Zendesk.

Berlin is setting itself up as a European hub for startups. Along with Point Nine, Rocket Internet is a well-known startup incubator and seed fund based in the German capital that makes investments around the world. Global venture capital fund e.ventures has offices in Berlin, and last year, Index Ventures made the city a priority as a startup hub.

The thriving art scene in Berlin means that large pool of creative talent and success stories have generated excitement about the possibilities for local startups. Well-known companies like SoundCloud and Etsy are either headquartered or have offices there, and Rally.org recently launched its European platform and incubator out of Berlin.

Mayor Klaus Wowereit said, “Berlin is poor, but sexy” back in 2004. Now, it is poor, sexy, and filled with entrepreneurs.

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Big Data and Predictive/Real-time Analytics startups: Are you looking to jumpstart development & accelerate market traction? Sign up for the SAP Startup Focus program to receive technology, support, resources and community to help you develop new applications on SAP HANA, a cutting edge database platform. Get started here, and enter promo code “VB2013″ on the form.

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Rally’s approach emphasizes storytelling to help people fundraise for causes they believe in. The platform took off quickly in the U.S. and has more than 4.5 million global users.  With the launch of the European program, Rally’s payment network will accept Euros and there are plans to expand to the British pound.

“This is all part of our larger vision of empowering what we call the global Cause Economy,” said spokesman Nick Warshaw. “Europeans are focused on their localities, and causes, clubs, individuals, and political parties across Europe are clamoring for a robust, easy-to-use online fundraising solution.

The demand for fundraising channels encouraged Rally to also host Give Camp, which will teach people how to make the most of crowdfunding, and the incubator program, which helps organizations leverage Rally’s platform. For the first initiative, entrepreneurial network Startup Weekend, music resource-sharing company Muzup, and social relocation community G10BALS will join forces to preserve Berlin’s princesses garden Prinzessinnengarten.

This announcement follows Rally’s hefty $7.9 million first venture capital round in June, which it completed online. Investors include Relay Ventures, Mike Maples of Floodgate, Reid Hoffman of Greylock Partners, Kevin Rose of Google Ventures, Tim Ferriss, and Eric Ries. At the time, CEO Tom Serres said the money would support international growth.

Serres initially founded Rally based on the idea that fundraising for a cause is more effective when there is a personal story behind it. After traveling around France, Spain, Germany, and England in 2009, he discovered that people across the pond were interested in how Obama used the internet to raise money, and saw potential for Rally in that market.

On Rally, cause owners create a profile page and can spread awareness, post blog entires, and safe visual content. It also provides analytics to maximize fundraising power. Use cases range from college students raising money for college tuition to massive organizations like the Make-a-Wish Foundation. Rally is headquartered in San Francisco with an office in Berlin.

Read more about Rally on VentureBeat.

Accel London IV will be dedicated to companies in the IT, software, Internet, and consumer sectors, with three-quarters allocated to early-stage companies and the remainder for later-stage deals. According to unnamed source, it will invest 80 percent of the pool in Europe and Israel and the rest in the U.S.

Accel is perhaps most well known for being an early investor in Facebook. The firm has also made investments in big name companies like Spotify, Rovio, Dropbox, Cloudera, Etsy, Trulia, Groupon, and Kayak, which went public last year and sold to Priceline for $1.8 billion.

The firm has offices around the world in Silicon Valley, New York, London, China, and India. The latest London fund is expected to officially close in March, but Accel has not yet responded to request for comment.

While buzz exists here in the U.S. about emerging markets and the potential for European startups, there is less access to venture capital across the pond and many entrepreneurs prefer to come to Silicon Valley to seek out funding and connections.

Bloomberg cited data from the London-based research group Preqin Ltd. Fundraising that there are 26 Europe-focused funds, as opposed to 84 North American-focused funds, and that venture investing in Europe fell by almost 55 percent in 2011.

But some exciting things are happening in Europe. Sweden and Germany are hot spots for tech, design, and innovation, and the Prime Minister and Major of London unveiled a plan into December to build a £50 million ($78 million) coworking space in London.

Accel has made some good bets over the years and in 2011 carved out a $100 million “big data” fund, correctly anticipating that enterprise tech, IT infrastructure, cloud computing, and big data would be a hot sector in the years to come.

With this latest fund, Accel seeks to cement its position as a premier venture capital firms on the continent. Other notable players include Index Ventures, which announced its sixth fund of $473.8 million (€350 million) in July and e.Ventures.

Believe it or not, comics are big business on the iPad. Digital comic book startup ComiXology’s iPad app ranked No. 3 in Apple’s top 10 grossing list in 2012, and was among the top 10 highest grossing apps in 2011.

Now, with its usage in the U.S. at an all-time high, ComiXology has plans to launch the service into Europe, the company tells VentureBeat.

ComiXology is currently one of the only digital services to offer a variety of comic book publishers in its store, including DC Comics, Marvel, Image, IDW, and Boom. The store’s single comic issues range in price from $0.99 to $4.99, and new issues come out weekly.

The comic-book app’s success in the App Store is especially impressive given all of the successful mobile iOS apps on the market today that have with their own in-app purchases, from games to magazine publishers and beyond.

While ComiXology is already enjoying success in Europe with its library of American comics, the international expansion will see the company pull in local language comics that are popular in other countries. As I’ve said in the past, pulling in new publishers/creators is one of the easiest ways for ComiXology to grow its business. Once it has content from countries like Spain and France, it’s likely that those comics will  get translated to other languages and boost ComiXology’s sales in all regions.

The push into Europe also makes sense because of the robust comic book reading audience in countries like Germany, Italy, Spain, and the U.K. France’s comic book industry alone is reason enough for the company to set up shop, as its comic book sales are comparable to the U.S.

“ComiXology has already proven to be enormously popular with consumers in many countries around the world — and that’s just in English,” said CEO David Steinberger. “With Europe, comiXology takes the first step in becoming the platform for multi-language graphic literature from all over the world.”

Along with its Europe expansion announcement, ComiXology also announced that it was opening up an office in Paris, France to help facilitate agreements with local-language publishers.

French Spider-Man art via Adam Baker/Thinkbaker.com

Payleven is a payments startup based in Germany that turns mobile devices into point-of-sale terminals through the use of a dongle. A dongle, for those of you who may be out of the lingo loop, is a small piece of hardware that plugs into a device, and Payleven’s enable credit card transactions.

Square is the most well-known first startup to send the dongle to the soaring heights of popularity it now enjoys. Payleven is applying similar technology and business models to the European market. A statement issued by the company claims it is the first company in Continental Europe to fulfill the high security standards required for this type of product and service. Payleven has worked closely with Visa to ensure the standards are appropriate and up to snuff.

For this, it has raised a vague “high single-digit USD million funding” from a mysterious, new, unnamed investor. Previous investors New Enterprise Associates, Holtzbrinck Ventures, ru-Net, and Rocket Internet also contributed to this round. It will contribute to growing Payleven’s merchant base. Most of the clients are small and independent businesses that need an easy way to accept credit card payments. Payleven takes a small percentage of every transaction and there is no minimum turnover or fixed fee.

Payleven is currenty available in Germany, the Netherlands, Italy, Great Britain, Poland, and Brazil. It has 70 employees, with headquarters in Berlin and an office in London.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

The founders of HotelTonight must have fancied an alpine ski vacation this winter, because today the popular app announced that is now available in Germany and Switzerland.

HotelTonight is a last-minute hotel booking app that connects travelers with available accommodation from their mobile phones. It is now available in 10 countries and over 80 destinations around the world. It also announced that it surpassed 4 million downloads.

Each day at noon local time, HotelTonight offers a new set of deals. If you find yourself without a place to stay in a strange city, simply launch the app and select the city, and it will present you with unsold rooms at steep discounts. Travelers can book the deal through their smart phones, and in no time at all, be staying comfort.

HotelTonight opened its doors in January 2011 and raised $23 million last June to promote global expansion. The San Francisco-based company has a strong U.S. presence and recently opened its European headquarters. In addition to Belgium, France, Ireland, the Netherlands, and the U.K., it is now active in Berlin, Munich, Zurich, and Geneva.

HotelTonight has also been busy updating the product. The 4.0 version of the iOS and Android apps debuted in September to provide travelers with more personalized recommendations based on their exact location, booking history, and feedback. These efforts have not gone unrecognized by users, venture capitalists, or the tech community. Apple named HotelTonight one of the most disruptive services of the year, and it received a Best E-Commerce Application nomination for the 2012 Crunchies Awards.

The U.K., Germany and Ireland respectively received the most nominations, cementing London and Berlin’s reputations as the twin poles of the European startup scene. The Europas organisers hail from Ireland and the U.K. so this might also explain a slant towards those nations. U.K. companies received 65 nominations as opposed to 26 for German companies and 13 for Ireland.  However, the Nordic countries, France and Spain also did well on total nominations.

Things get more interesting when you look at the nominations per capita. Small European countries like Ireland, Finland and Sweden leave Germany and the U.K. trailing based on this measure, while all the Scandinavian countries perform well. Tiny Latvia (population 2.2 million) received 4 nominations but they were all for the same company, DIY infographics tool Infogr.am.

The entrepreneurial performance of Spain, France and even Germany starts to looks less than impressive when adjusted for population. Even Greece does better than the former two countries.

So what does this tell us about the state of entrepreneurship in Europe? This is obviously not definitive data since it is based on nominations for one set of startup awards, but the results do indicate that investors and media should look beyond the obvious centres of London and Berlin. Interesting things are happening on the fringes of Europe in the scrappy smaller members of the European family.

The data: If you leave out the people’s choice awards, regional awards, the award for startups outside Europe and non-startup awards like best investor, 164 nominations remain. Several startups received multiple nominations and these all counted towards the country totals. Pinpointing the country of a startup was not always straightforward. Gidsy‘s founders, for example, are Dutch but they started the company in Berlin. Several European startups nominated are now based in the U.S. I mostly used the base of the company, if it was within Europe, or the home country of the founders as the startup’s country. Mail me if you would like a copy of the raw data.

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Munich-based Paymill has raised €10 million ($13.2 million) for its API that quickly and easily enables online credit card payments.

Similar to the San Francisco-based startup Stripe, Paymill offers a “quick start” solution for online stores and service providers to set up an online payment system. All they have to do is copy and paste a few lines of code and “poof!” E-commerce.

Paymill charges a 2.95 percent of the transaction amount, as well as 0.28€ ($0.37) for every successful transaction. The service is secure, and Paymill offers documentation and support for its customers. From the dashboard, businesses can track the amount of clients, transactions, turnover, and success rate over time.

The company launched in Munich in June of 2012 and quickly became active in 34 countries. According to a statement, “Paymill is the first provider to have brought the simple and user-friendly technical solution to Europe.” As the European technology community and e-commerce continue to heat up, so does the demand for simple payment integrations.

Paymill will use the funding to develop the technical platform and improve customers support efforts, as well as continue to enter new markets. German accelerator Rocket Internet, Holtzbrink Ventures, RI Digital, and Sunstone Capital contributed to this round, which comes to over $13 million.

GetYourGuide is a website that helps people search for, find, and book tours, attractions, and activities in advance. Today, it announced it was putting $14 million into its fanny pack to expand to its database of things to do and enter new markets.

Figuring out what to do in a foreign country can be challenging and stressful. You’ve got language barriers and innumerable offline options, and traditional guidebooks are often limited or out of date in what they suggest. As a result, the online travel space is heating up right now as startups like Viator, Peek, and Vayable take a stab at facilitating “experiences” while Gogobot and Trippy take a social approach to trip planning.

GetYourGuide’s approach to this market is to collect and index tours, along with ratings, cost, and customer reviews. It has aggregated more than 16,900 activities in more than 1,680 destinations around the world, and it has distribution partnerships with more than 1,000 online travel agonies such as TripAdvisor and Kayak.

“We realized that there were a lot of suppliers who didn’t sell their tours online and a huge demand coming from travelers, to actually have access to this a great offer of tours and attractions worldwide,” said CEO Johannes Reck in an email interview. “We have a two-sided marketplace with a consumer front-end and a supplier reservation system, which lets the whole range of travel activity suppliers upload and self-manage their inventory. This has allowed us to grow the world’s largest inventory in under two years.”

Spark Capital and Highland Capital led this first round of funding, which the company cites as one of the largest Series A investments raised by a European tech startup. GetYourGuide has offices in Zürich, Berlin, and Las Vegas.

I asked Georg Greve, a former physicist and nanotechnologist, exactly that question.

“There are three pillars of productivity for modern knowledge workers,” Greve replied. “One is the browser, the second is office applications, and the third is groupware. Free software has tackled the first two very well … but on the groupware side, almost nothing has happened.”

Greve is the CEO of Kolab Systems, which produces Kolab groupware, an enterprise-scale email, calendaring, contact management, and task management suite that is fully open-source, freely available, and interoperable with multiple web, desktop, and tablet clients. The company’s clients include Fortune 500 companies — which Greve cannot contractually name — who have 60,000 employees using Kolab, as well as the entire school system of Bazel, Switzerland, and the German Federal Office for Information Security.

In fact, that’s where the solution originated: an open source German government software project initiated in 2001.

Source: Kolab

Kolab works on Windows, Mac, or Linux.

“They needed a fully audit able, fully open-source solution that was designed around security awareness,” Greve said from Switzerland, where he lives and works. “But they couldn’t find anything.”

So they built one — or at least the foundations of what would become a full groupware solution. Most solutions, Greve says, come to the enterprise with “freedom stripped.” Kolab comes free not just in the standard beer sense — free to use — but also in the speech sense: free to alter, modify, and adapt.

Greve joined as CEO in 2010 when it became clear that the companies who had contracted with the German government to provide the solution needed focused attention on Kolab. Version 3, with an almost entirely refactored codebase, a completely new storage layer, and 100 percent open standards, is being released in January.

“We’re using IMAP as the database, which means we get insane scalability,” Georg said, adding that the company had partnered with Opera to get the project completed. “We’ve also built in full mobile connectivity … all the cloudy stuff … and added support for a whole range of native platforms: Mozilla Thunderbird, Lightning, Outlook … on Windows, Mac, and Linux.”

The data format is xCal and xCard, and enterprise clients can interact with the data via an open API, integrating their groupware solution into any other solution or even creating their own administration clients.

Kolab is bootstrapped with a little cash from Greve, other executives, and others and has a subscription revenue model similar to RedHat: training, certification, service level agreements, prioritized updates and fixes, and support.

It was to provide that third pillar of productivity that Georg joined Kolab from the Free Software Foundation of Europe. OpenOffice and Firefox area available for the other two; The Gimp, WordPress, and of course Linux itself, plus many other open source projects, provide options in other areas. But groupware was a bit of a green field.

Of course, it was also to fulfill an unusual long-time dream for the open-source believer:

“I had always wanted to go into business.”

photo credit: AGoK via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple has reached the highest smartphone market share ever thanks to strong sales of the iPhone 5, according to the latest sales data from Kantar Worldpanel ComTech.

With the iPhone 5 joining the 4 and 4S models still in the market, Apple broke through the 50 percent barrier and reached 53.3 percent market share in three months ending Nov. 25.

And the good news for Apple doesn’t stop there, according to Kantar:

“Apple has reached a major milestone in the U.S. by passing the 50 percent share mark for the first time,” Kantar director Dominic Sunnebo said in a statement, adding that the research company expects Apple to make “further gains” during December.

The same cannot be said across the Atlantic.

Samsung is top dog in Europe, with the highest number of sales and a 44.3 percent market-share position. Apple came in second place with 25.3 percent, while HTC, Sony, and Nokia are all vying for third. Nokia is taking back some of its lost share in the U.K., Sunnebo said, but it’s having a tough time reaching the most desirable demographic: youth.

“Over the past six months, just 28 percent of Nokia Lumia 800 sales have come from under 35s, compared with 42 percent of all smartphone sales,” Sunnebo said.

Meanwhile, Windows phones in the U.S. continue to have a tough slog, Kantar’s data suggests. With Microsoft putting on a full-court marketing press, the next quarter “will prove crucial in revealing initial consumer reactions to the Nokia 920 and HTC Windows 8X devices,” Sunnebo added.

Looks like Apple has found the marketsharing winning formula: releasing new phones. Now if only they could do that every quarter.

photo credit: PHOTO/arts Magazine via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Korean electronics giant Samsung said today that it has dropped injunction requests against Apple products all across Europe, including in the U.K., France, Italy, Germany, and the Netherlands.

Samsung requested injunctions on various Apple products because it said Apple was infringing on some of its patents. Many saw that move as a counter-attack to Apple’s repeated attempts to get Samsung’s products banned in Europe and other parts of the world.

In a statement given to The Verge, Samsung said:

Samsung remains committed to licensing our technologies on fair, reasonable and non-discriminatory terms, and we strongly believe it is better when companies compete fairly in the marketplace, rather than in court. In this spirit, Samsung has decided to withdraw our injunction requests against Apple on the basis of our standard essential patents pending in European courts, in the interest of protecting consumer choice.

Samsung very well might be dropping these because the European Commission had been investigating the company for abusing its patents. Under European Union law, companies must license certain patents on a fair, reasonable, and non-discriminatory (FRAND) basis. Samsung did not appear to be giving Apple a fair shot at licensing its patents.

Although this is big news, the war with Apple appears far from over. Even though Apple and Samsung were given final rulings on their $1 billion patent infringement case in the U.S. last night, there are still many other lawsuits that need to be hashed out between the two companies in other countries.

Samsung and Apple smartphones via Andy Ihnatko/Flickr

Glossybox made a powerful entrée this morning, announcing that is has shipped its two millionth box and has received $72.4 million (55 million euros) in overall financing.

This European version of Birchbox delivers monthly packages filled with beauty products to its community of subscribers. Upon signing up, women choose their subscription plan and create a beauty profile. They will then receive a curated box of 5 travel-sized products, based on their preferences. A beauty magazine is included in the package along with cosmetics like hand cream, nail polish, perfumes, and so on.

Glossybox appeals to consumers that appreciate the element or surprise and ability to sample beauty products before buying, as well as to brands that want to put their products in the hands of an engaged audience. It was founded in Germany in 2011 and now has a presence in 16 countries.

Along with the fresh, sparkling funding news, Glossybox also announced shipping its 2 millionth box. The service has more than 200,000 customers around the world, and all these demonstrations of traction attracted the attention in investors looking to get in on the action.

German accelerator Rocket Internet, Holtzbrink Ventures, and Investment AB Kinnevik participated in this round, which is a first for Beauty Trend Holding.

Earlier this year, Birchbox acquired its French clone Joliebox in an attempt to penetrate the European market. However, with a presence in Asia and Israel, as well as wider distribution across Europe, Glossybox’s reach is already greater than its American competitor  and this large round of investment will only accelerate its growth. Europe has become a hot space for e-commerce startups this year, such as Zalando, another Rocket Internet company.

Hello Fresh is taking a Web 2.0 approach to Julia Child’s mission. This food startup has raised $10 million to expand its platform, which makes creating tasty, healthy meals at home as effortless as possible.

Each week, the site lets home cooks peruse five new recipes created by professional chefs and nutritionists. The recipes take 30 minutes or less to prepare, only require basic kitchen equipment, and come with step-by-step instructions. The featured recipes for this week included warm sweet potato salad with pan fried tilapia, duck a l’orange salad, and herb garlic beef with watercress, peanuts, and baby carrots. I’d say that sounds significantly tastier than ramen.

The next step is to select the meals you’d like to prepare. Hello Fresh operates a “soft subscription” service, which means users choose how many meals they would like a week and for how many people. Next is the real kicker: One of Hello Fresh’s people on the ground will serve as a “personal sous-chef” by grocery shopping for you and delivering a box to your door with all the recipes and ingredients measured out. The rest, what is left of it, is up to you.

The company was founded in Berlin and currently operates in Germany, the Netherlands, the UK, France, Australia, and the US. Since beginning in 2011, it has grown to more than 100 employees and recently delivered the millionth meal in Germany. This $10 million in growth financing will bring Hello Fresh into new markets. It was led by Vowerk Ventures, a firm based in Germany, with all the old investors — Rocket Internet, Holtzbrink Ventures, and Kinnevik AB — throwing in as well.

Food startups are growing in popularity with consumers and venture capitalists alike as Internet entrepreneurs find innovative ways to help people eat better. Farmigo is an online farmer’s market that also announced a significant investment round this morning. Recipe sharing network Foodily is backed by $5 million in venture capital, and chef-prepared meal delivery service Munchery closed $4 million for expansion last month. There is also LA startup Pop-Up Pantry, which distributes frozen, vacuum-sealed gourmet meals, and world food subscription service Hungry Globetrotter. Not to mention services like Seamless and GrubHub which tackle restaurants deliveries.

Eating is something people have to do every single day. There is an ever-present need for ways to eat tasty, healthy food in a cost-effective and convenient manner. Food, unlike various other consumer products, will never go out of style.

As Bloomberg reports, the search giant routed almost $10 billion in revenues to its Bermuda shell company. And that’s not because Larry and Sergey like to fly their private jets to the island paradise for beach vacations and mai-tais.

It’s because using the Bermuda shell company saved Google $2 billion in taxes, slicing its overseas tax bill in half.

Bermuda is a well-known “tax haven,” making a Forbes list of the world’s best places to avoid paying taxes. Some companies have moved their entire head offices to the island nation because Bermuda requires corporations to pay absolutely no tax. The country began that policy way back in 1935 as an attempt to bring in offshore companies to develop the local economy.

Google and other companies move money to the tax haven via strategies such as the Double Irish, in which one corporation is set up in Ireland but located in Bermuda, thus being tax-exempt by Irish rules. This first company acquires the international intellectual property rights from the U.S. mother corporation and licenses them at an enormous rate to another Irish company, locally resident, which then takes the profits from all the other European subsidiaries.

But because the second company makes very little money (due to the huge IP licensing rates) it pays very few taxes. And the first company, which is incorporated in Ireland but resident in Bermuda, collects the tax-free cash.

The result of Google moving its revenue to Bermuda?

Google payed an effective tax rate of 3.2 percent of its profit earned overseas last year — a ridiculously low number. Most of the revenues moved to Bermuda are from European countries, which, of course, are not entirely satisfied with the arrangement.

This policy is not unique to Google. Apple employs similar strategies, as do Facebook and Microsoft.

While you can hardly blame a company for taking whatever steps it can to minimize tax burdens, it’s clear that the UK, France, and other countries would like to see income earned locally taxed locally.

Expect European Union nations to take steps to try to recapture some of the tax revenue they see as belonging to them.

photo credit: smallscreen via photopin cc

The mission behind the organization is to promote continuous learning and innovation in software. Comprised of 35,000 members, Skills Matter holds training and events where developers can improve their programming skills, collaborate, and make connections. It produces workshops, talks, meetups, hackathons, and training courses, as well as videos and a quarterly open source journal. Subjects include a range of technologies, including HTML5, Android, iPhone, NoSQL, Scala and F#, Java, .net.

Founded a decade ago, Skills Matter seeks to establish the UK as the “#1 place to learn and contribute to software innovation.” London has a burgeoning startup scene, and this announcement comes tandem with the unveiling of the Prime Minister and Mayor of London’s plan to spend £50m building a co-working and startup space. Skills Matter has over 2000 events planned for 2013, and this investment will contribute to spurring London’s technology community, as well as nurturing more engineering talent which is in high demand these days.

The investment was led by Beringea, an international growth capital firm with offices in London.

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Big Data and Predictive/Real-time Analytics startups: Are you looking to jumpstart development & accelerate market traction? Sign up for the SAP Startup Focus program to receive technology, support, resources and community to help you develop new applications on SAP HANA, a cutting edge database platform. Get started here, and enter promo code “VB2013″ on the form.

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Turns out that domestic and Asian suppliers are fair targets as well, as the EU imposed a total of $1.9 billion in fines on Netherlands-based Philips, Korea-based LG and Samsung, Japan’s Panasonic and Toshiba, and France’s Technicolor for price-fixing and under-the-table market allocation deals.

The anticompetitive behavior that actually prompted the fines is ancient history in the fast-paced consumer electronics industry. Focused on yesterday’s fat TVs — yes, the CRT ones that actually aimed electron guns at viewers — the price-fixing actually ended six years ago. But while the wheels of justice may move slowly, they do move, according to EU Competition Commissioner Joaquin Almunia.

“These cartels for cathode-ray tubes are ‘textbook cartels’: they feature all the worst kinds of anti-competitive behavior that are strictly forbidden to companies doing business in Europe,” Almunia said in a statement.

Philips earned the biggest fine, €313 million, as one of the ringleaders, while LG was fined €295 million. Panasonic’s penalty was smaller but still very substantial, at €157 million, and Samsung will be forced to pay €151 million.

Samsung and LG are repeat offenders, having recently been involved in an LCD TV price-fixing cartel.

A very real question for some of the companies is whether they can afford to pay.

While Samsung is flush with cash from the smartphone business, other companies — particularly Japanese ones — have failed to make as successful a transition to newer, higher-margin electronics. Panasonic’s stocks is at a three-year low right now and is fresh off a $10 billion annual loss. Toshiba is also in difficult circumstances, and near a five-year stock low.

photo credit: alles-schlumpf via photopin cc

ISTANBUL – Tantalizing investors and innovators at the crossroads between Europe and the Middle East, Turkey has emerged as an entrepreneurial hub. The past five years prove this, with companies churning out billions of dollars worth of e-commerce, gaming, mobile, and software platforms and products.

Deloitte, an auditing, consulting and financial advisory firm, valued Turkish merger and acquisition deals in the e-commerce space at $29 billion in 2010. When VentureBeat reported on the Turkish e-commerce scene last year, we reported that the market accounted for $16.3 billion in revenue for all of 2010. Since then it’s grown even further: Turkish e-commerce market was $19.7 billion for 2011, and through September, it accounts for $17.7 billion this year.

Yet the breakthrough many in Turkey’s entrepreneurship space are waiting for seems distant. Many in the private sector, particularly investors, worry that even though there are many bright and promising Turkish entrepreneurs, there aren’t enough venture capitalists to back them. Indeed, venture capital in Turkey sits on a razor’s edge, with only a handful of funds available for thousands of startups. The next few years will determine whether that edge cuts lucrative returns to solidify Turkey’s place as an innovation hub or whether it bleeds dry, rendering the county an eternal emerging market.

Impatient capital

Last year venture capital godfather Kleiner Perkins, along with Tiger Global, injected a surge of optimism into the Turkish startup scene when it invested a combined 26 million into Trendyol, a Turkish version of Gilt Groupe, an online flash sales site. Other investments by Amazon, eBay, and Intel Capital into several e-commerce sites — online flower and chocolate marketer Ciceksepeti, online auction clone GittiGidiyor, and daily deals namesake Gruponya — has fueled the sentiment that Turkish venture capital has arrived. But as with any venture capital investment that must wait out the possibility of successful exits, only time will tell. Time is exactly what has many worried.

The Turkish economy, which has grown at an average between 5 percent to 7 percent over the past five years, is slowing down. The International Monetary Fund expects the country to grow by 2.3 percent in 2012, a dramatic drop from the 8.5 percent it grew last year. Turks want returns today, which is why e-commerce clones dominate much of the country’s startup scene. Online copycats have a low barrier to entry, have already demonstrated proof of concept, and can be easily “flipped.” Therein lies the danger, as Cem Sertoglu, an Istanbul-based venture capital partner with Earlybird Ventures, points out.

“E-commerce is cheap to start but expensive to keep up because once it gets going it requires a lot of backend operations and logistics. Building a website is easy. Getting the product out is costly,” Sertoglu says. He notes that it takes an average of $25 million to bring an e-commerce company to full scale. That is why, he notes, it is sometimes the “big established retailers” such as Macy’s and Nordstrom that dominate the online market, not the “upstart” flash-sales sites or pure play ventures.

Despite having “a strong payments system,” a sophisticated banking structure, and a credit card penetration rate of 62 percent, Sertoglu is skeptical that many of Turkey’s e-commerce platforms will succeed against eventual entrants who hold strong supply-chain positions. However, noting that “the number of people who have ever completed a commercial transaction online in Turkey is around 5 million, a mere 10 percent of Internet users,” he remains, “overall bullish” on Turkish entrepreneurship and, thereby, Turkish venture capital, noting that even if some e-commerce companies fail, the Turkish tech scene is strong and promising, especially with a highly educated talent pool and reverse brain drain coming back to the country.

Jose Romano, an investor with the European Investment Fund (EIF) and the head of the Istanbul Venture Capital Initiative (IVCI), agrees. He says that e-commerce is not where “the true potential of Turkey lies.” He is more interested in “catalyzing” what he calls the “third generation” of business models that take advantage of technology transfers from universities and that have been “built locally and can expand in the region and globally.”

Uncharted territory

Turkish e-commerce showed its first visible signs of distress in August when the German-based tech “clone factory” that reproduces successful Internet sites in many countries, Rocket Internet, shut down its 400-person operation in Istanbul.

Turkey has seen less obvious indications as well. Skype cofounder Niklas Zennstrom last year made Istanbul the European headquarters for his venture arm, Atomoco. It has not made a single investment in a Turkish enterprise, choosing to act as a base for its existing portfolio companies such as Fab, Rovio, and Wrapp that are interested in launching in Turkey.

While other marquee VCs have shown interest in rolling out a presence in Istanbul, including Accel Partners and Intel Capital, they have not made a lot of active investments here. Back in 2010, a former Silicon Valley hand and major player in Turkish angel investing told me he thought all of this was “tire-kicking.”

“Quite a bit are interested in the (Turkish) Internet business but most of them are afraid of making investments,” this investor told me.

So too are banks who have hesitated to extend capital to small and medium businesses Larger, more established family conglomerates have avoided taking on equity, refusing to yield their corporate governance to outsiders. The result has been stunted Turkish capital markets and deal flow.

Turkish investors and entrepreneurs have no sense of how venture capital investments end. We’ve seen a few exits from angel investments in Turkey, but few of any serious significance.

“We’re seeing the first chunks of wealth made from the Internet,” says Earlybird’s Sertoglu, who himself saw returns from angel investments he made in Yemeksepeti.com. “But no one has made it really rich.”

Despite having a capital markets board that oversees the Istanbul stock market, investment banking and private equity, the lack of laws regulating venture capital and outlining tax incentives for investors in Turkey only fuels investors’ fear.

Nonetheless, venture capital has managed to lay down roots in Anatolia.

Sowing VC seeds

The Turkish government has, for the past decade, extended credits to small business owners and awarded research and development grants for technology projects with the support of the World Bank.

The global financial body helped to establish the independent Turkish Technology Development Foundation (TTGV) in 1991. Though headquartered in the Turkish capital, Ankara, TTGV’s mission has been to support “technological innovation activities in Turkey.” It has provided $300 million to 950, largely R&D projects, carried out by 800 companies. It also contributed to the establishment of investment firms, Is Girisim and Turkven, both of which launched in 2000. Though largely focused on private equity for established companies in need of later stage growth capital, Is Girisim and Turkven have made combined investments over $3.5 billion, in predominately larger buyouts of brick-and-mortar companies. While both are on their third funding rounds, neither has yielded significant returns.

What they have done, however, is create a precedent for others to start funds. In 2000, Access Turkey Capital Group established a venture arm, iLabs. The Istanbul Venture Capital Initiative (IVCI), a EUR 160 million fund of funds launched in 2007.

IVCI director Jose Romano describes it as being a “catalyst to advance the development of the [Turkish VC] industry.” It has inspired a number of largely European and some Turkish investors to set up investment funds. IVCI has not given any money to any venture capital firm.

212 Capital Partners is the latest risk-taker to dive into the Turkish entrepreneurship. Launched this year with a first round fund raised among Turks totaling $30 million, it is eyeing early stage investments in tech startups in e-commerce, gaming, and software applications.

“What we’re trying to do is more entrepreneur-friendly,” says Ali Karabey, a general partner at 212. His idea of entrepreneur friendly is “providing equity where there is no debt” and transforming the Turkish entrepreneurial landscape that, as Karabey describes, is made up of either small firms that rarely scale or large conglomerates that dominate industry verticals. He and partner Numan Numan are trying to mitigate risk and jumpstart deal flow, which is woefully absent in Turkey.

“The risk appetite of investors [in Turkey],” says 212 backer Emre Kurttepeli, “is not one you’d find in Silicon Valley.” In Silicon Valley, he notes, “you have a certain amount of money that gets dispersed into anywhere between 50 to 100 investments and maybe five of them makes a return.” In Turkey, investors are all about collateral and hard numbers. Early stage and seed funding that rely on projected valuations is an uncomfortable concept for these financiers already frustrated with a valuation and due diligence process that depends on weak accounting and auditing practices. It is not uncommon for a Turkish company to keep up to three sets of books.

Projected valuations are tricky and have become a controversial topic in the Turkish startup scene. “The Turkish market has become a bit frothy,” Pamir Gelenbe, an investor with Belgian-based Hummingbird Ventures, recently said in an interview. “Frothy meaning the valuations are starting to creep to unreasonable levels.” He notes that he and his colleagues “find it more difficult to find attractive deals from a valuation stand point.” Another venture capitalist, who asked to stay anonymous, echoed the same point, noting that Turkish entrepreneurs are overvaluing their companies.

Jose Romano chalks this up to the “hype” in the Turkish market. “There have been successful experiences of very strong individuals raising large funds, so many people think this is normal. Just because the economy is doing well and Turkey is in the emerging-country pot, they try to do the same,” he says. Romano is split on the advantages and disadvantages of this. He says it is a disadvantage “because these things take time and many people will be disappointed with the high expectations that have been raised with no results in the short-term.”

“It is an advantage because it brings forward the concept of entrepreneurship, more discussion, more talent, more people coming in from abroad to share experiences, and more money looking for deals,” Romano says.

Going big

Everyone agrees that there is plenty of money in Turkey. The challenge is to couple it with risk. Romano says that one thing that the Turkish VC landscape needs is “strong local limited partners.”

212’s Ali Karabey agrees. “The future of venture capital is on us,” he says and then pausing for a moment. “Big things will develop here. They will be so, so big that we’ll forget about all the problems that we had before starting.”

Photo credit: chrisschuepp via photopin

Torch is an international investment bank that focuses on technology, media, and telecom. It is based in London with offices in Berlin and primarily works with European companies and deals. The decision to set up shop in America is in an effort to strengthen the ties between its European clients and Silicon Valley.

“With the proliferation of entrepreneurship and startup culture around the world, we saw a vacuum of talent helping the global tech community,” said Sanu Desai, Managing Director.   While Silicon Valley remains the startup capital of the world, places like London and Berlin have become tech leaders in their own right.  The flow of ideas is outpacing the flow of capital.”

The firm provides strategic investment banking services on mergers and acquisitions, fundraising, IPO advising and any other financial concerns. Desai said that the time is ripe for a firm like Torch, because the entrepreneurship is heating up in Europe and startups are beginning to see the value of hiring on investment bank to act as a middleman.

“The bigger story here is the rise of a new generation of firms advising tech companies,” he said. “In the last five years, things have gotten very interesting as the bigger banks blew up and it created opportunities for a new generation of boutique firms to provide support for the best new companies trying to grow. The idea of startup culture has spread all over the planet and companies around the world want to make deals in the US and companies here want to be international. There is a need for people like me to bridge that gap.”

Torch Partners was founded in 2003. It has served clients including online travel business Secret Escapes, collaboration leaders Huddle and Workshare, data center company TelecityGroup, equity investor Summit Partners and food ordering service JustEat, which secured one of the largest fundraising rounds in Europe this year.

PC optimization software Soluto helps over three million people in 182 countries get more out of their PCs. Along the way, the company learns a lot about what people do … and how their software works. Fortunately for us, the company shared that data a couple of days ago.

Here are some of the highlights:

European nations such as Hungary and Portugal are adopting Windows 8 quickly, with almost 9 percent adoption in Hungary and 5.29 percent in Portugal. China is also moving quickly, with more than seven percent of Windows users already on Microsoft’s new operating system. Americans, however, are adopting more of wait and see approach, with only 3.4 percent of Windows users updating.

In addition, with the touch-friendliness of Microsoft’s new operating system, Windows 8 is penetrating the tablet market much more effectively than Windows 7. For example, while less than two percent of Windows 7 machines are tablets, almost five percent of Windows 8 machines are, in fact, tablet computers — before Surface has really had a chance to make an impact yet.

Not actually a Windows 8 install disc

Interestingly, desktop use is also slightly higher, with almost 51 percent of Windows 8 installs being on a desktop PC, versus 48.5 percent of Windows 7 installs being on a laptop.

Some apps, Soluto found, crash less frequently on Windows 8.

That includes Google Drive, which is the most common app crash culprit on Windows 7, crashing for almost a third of all users (I guess companies can be great at everything). In Windows 8, however, Google Drive crashes for only one percent of users. TuneUp Utilities is another in the much-improved category, moving from crashing for 20 percent of its users on Windows 7 to five percent on Windows 8.

Some apps, of course, crash more on Windows 8. Facebook Video Calling, for instance, crashes at least once a month for a rather unlucky 13 percent of its users, compared to just one percent on Windows 7. And Apple’s iTunes software, often maligned for being bloated, crashes almost twice as much on Window 8.

Soluto also tracks PC brands that users have purchase. The top PC brands being used by Windows 8 early adopters are HP and Dell, with most than 30 percent of the market, followed in fourth and fifth spot by Asus and Acer:

1. 16.83% – HP
2. 14.65% – Dell
3. 10.71% – Gigabyte
4. 10.32% – Asus
5. 8.72% – Acer

One thing about crashing apps: Third-party developers don’t have a lock on them. Microsoft’s own Internet Explorer still crashes about the same amount on Windows 8 as it always has.

photo credit: gynti_46 via photopin cc, Robert Couse-Baker via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

iPad Mini models and prices have been revealed by someone with access to the internal system of Europe’s largest electronics retailer, Media Markt.

According to the screenshot, there will be 16 different iPad Mini configurations, starting at an 8GB WiFI model for approximately $250 U.S., rising to a 64GB version with cellular — presumably including 4G LTE connectivity as well as 3G.

The prices are an interesting comparison to an iPod Touch, which starts at $299 for 32GB, an iPad2, which starts at $399 for 16GB, and the newest retina iPad, which begins at $499 … all of which will force consumers to think hard about the exact mix of portability and product they want when purchasing. And they provide Apple a tablet price point at least within shouting range of Amazon’s we-sell-at-cost Kindle Fire, at $159.

But, in a very Apple-esque move, they are not aggressively challenging the $200 mark.

Here are the models, which anyone who’s looked at the current iPad versions will recognize. For each I’ve roughly translated the price from Euros to U.S. dollars, minus Germany’s 19 percent value-added tax.

• 8GB WiFi Black/White, $250
• 8GB Cellular Black/White $350
• 16GB WiFi Black/White $350
• 16GB Cellular WiFi Black/White $450
• 32GB WiFi Black/White $450
• 32GB Cellular Black/White$550
• 64GB WiFi Black/White $550
• 64GB Cellular Black/White $650

This is the screenshot, from a German blog. If you want to read the original, but don’t speak German, Google Translate is somewhat helpful.

Source: Flo's Weblog

iPad Mini models and prices

October 23rd seems to be the day for the big announcement, two days before Apple’s quarterly earnings will be released. Assuming these numbers are correct, we’ll see then what kind of value Apple is packing into the iPad Mini in return for $250 to $650 dollars.

photo credit: methodshop.com via photopin cc