Venture Capital

Mobile advertising marketplace Apptera has announced that they have raised a new round of funding to the tune of $10.5 million. The funding round was led by existing investors Lightspeed Venture Partners, Alloy Ventures, and Walden International.

The company last raised funding in June 2007 with a Series D of $9.74 million. To date the company has raised more than $33 million. Apptera notes that the funding will be used to fuel growth of the company’s voice and visual mobile advertising network. Apptera is based in California with an office in New York City as well.

In other news, Apptera has also announced the appointment of former Yahoo! senior executive David Karnstedt to its board of directors.

MG over at VentureBeat has more info on the funding.

This following column was provided by Mark Davis. Mark is the author of Get Venture, a column designed to help entrepreneurs raise venture capital. He currently works at DFJ Gotham Ventures, a leading early-stage IT venture capital fund based in NYC.

I recently attended a networking event with Jeff Stewart, one of the founders of both Mimeo and Monitor110 (two of our DFJ Gotham portfolio companies). Over the course of the event, I heard Jeff offer some advice to a group of younger entrepreneurs. I found one of his points to be very compelling and thought I would share it here.

Jeff argued that trying to raise money from venture capitalists early in the life of the company is a great idea. While he thought securing capital was important, however, the money wasn’t the reason he encouraged the young entrepreneurs to engage in the VC fundraising process. The benefits he cited were as follows:

• Enhance the plan: By pitching to VCs and getting feedback, an entrepreneur receives valuable feedback that helps him refine his business model, marketing strategy and other aspects of his plan.
• Make connections: While VCs don’t make introductions for every entrepreneur that they meet, Jeff argued that the entrepreneurs would likely be connected to important customers, partners and future members of their teams through the investment community.
• Learn how to pitch the company: By pitching early in the life of the company and pitching often, entrepreneurs learn how to sell their companies. From his perspective, selling in this way is not only important in fundraising, but is also critical for making key hires, securing partnerships and literally selling the company when the right buyer comes knocking.

Update: I spoke with founder and CEO Dominik Matyka who couldn't share the amount of the new investment but did say that it's a minority stake in the company. He also shared that the founders invested $500k previously.

Berlin-based social recommendations service Plista has announced a round of funding today from the Draper Investment Company. Swiss-based investor Peter Schüpbach also joined the round. The company is not disclosing the total amount raised.

Plista moves into private beta today and the company is planning for a full public release in January 2009. The system uses Collaborative Filtering and is available for Web, mobile and video-on-demand applications.

Rafe has a good review of the service where he notes, "Think of it as Aggregate Knowledge meets MyBlogLog meets Sphere, with a dash of Matchmine." Tom Foremski has a lengthy review of the product and says that he would have picked Plista to win over Yammer at the TC50 event. Tom notes, "Plista's technology creates models of user behavior -- it even has a mood filter. "We can tell if you are in a grumpy mood in the mornings and we can factor that into your ratings," says Mr Dominik Matyka, Plista CEO. Plista also has a social network component so that you can share your recommendations and find and follow people with similar tastes."

I’ve always been a bit harsh on VCs and I do feel that my criticism of VCs has been deserved. If you look at the business of venture capital over the past 10 years, it’s pretty clear that VCs aren’t the sharpest tools in the shed.

That said, there is a place for venture capital and VCs have funded some wonderful companies over the years. The reality is that venture capital is not entirely useless; in recent years there have simply been far too many firms with far too much capital chasing too few good startups.

I think VCs have done a great disservice to themselves and to innovation over the past decade by allowing themselves to get caught up in an irrational exuberance that encouraged investment in overhyped startups that never should have received investment in the first place.

But I feel that the current infatuation VCs have with "cleantech" investments may be far more dangerous to Silicon Valley’s future than the irrational exuberance we’ve seen over the past decade for several reasons.

VC Cleantech Investments Are Being Driven by the Broken Economics of Venture Capital

Even though the ongoing global financial crisis has nothing to do with Silicon Valley directly, VCs have been the beneficiaries of capital glut that fueled one of Wall Street’s most impressive ponzi schemes ever.

As The Deal recently observed, "Many of those same [limited partners] that fattened venture funds are the same pension funds, endowments and other institutions that levered up, piled into hedge and private equity funds, and otherwise made a big problem even bigger."

Earlier this year, Paul Kedrosky argued that "venture capital still has too much money under management" and pointed out that if you took "pre-bubble 1994 figures" and adjusted for inflation, the average fund size in 2008 would be $100 million, not the $200 million that it is.

VCs have been put in an unusual position: many have been able to raise oversize funds but there really haven’t been many good markets to put a lot of money to work efficiently. Although a considerable amount of good money has been thrown after bad consumer Internet plays (especially in the Web 2.0 space), VCs weren’t completely clueless as to the changing economics of their business.

Obviously, investing an oversize fund across a larger number of smaller startups in markets like Web 2.0 isn’t viable. The economics of smaller deals don’t make sense and it’s been clear for some time M&A and IPO exits were not viable for the vast majority of these startups.

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NYC-based Crispy Gamer has announced that they have raised their first round of funding to the tune of $8.25 million from Constellation Ventures and company founders. The site offers editorial game content and a community for gamers. No insight was provided into how they plan to use the funding. The site has game reviews, a blog, game videos and a message board. It looks like they have about 800 game reviews.

Crispy Gamer says they have taken a "bold stance" in refusing to accept advertising from game publishers. In my testing, the site showed basically all remnant ads.

Eric Krangel wonders regarding their advertising decision, "Seems like a noble experiment, but with online display ads expected to contract next year, how long can Crispy go on shunning its most lucrative advertisers?"

NYC online video studio For Your Imagination announced this week that they have raised a bridge capital round of financing from OmniReliant Holdings. The amound of the financing was not disclosed. OmniReliant gets an equity interest in For Your Imagination. OmniReliant focuses on direct reponse marketing.

For Your Imagination previously raised $1.3 million in seed funding. Co-founder and CEO Paul Kontonis noted, "The round will provide the company with working capital to continue to deliver a high-quality of service before we complete our Series A round."

For Your Imagination was one of the companies we covered in our NY online video review.

Local events service Eventful has announced that they have raised $10 million in a series C round of funding today. The funding came from lead investor Telefónica and existing investors, Draper Fisher Jurvetson and Bay Partners.

The company notes that the funding will be used primarily for sales and marketing and that they plan to push their mobile offering. Eventful is also exploring international opportunities. Eventful self-reports over 40 million permission-based emails and 100 million widget views each month.

I find that for many west coast tech events, Upcoming is used. On the east coast, for recurring events Meetup is used and for one-time events, I've seen more and more events on Facebook. I am not sure what event tool is the most popular for non-tech events.

Chris Morrison at VentureBeat takes a look at Eventful and their partnership with Ticketmaster. Chris notes, "Eventful will be able to sell Ticketmaster stubs through its website. There’s no indication of what sort of cut Eventful will get, but the two companies are also agreeing to a co-advertising deal that should give them both access to a larger audience."

NY-based Wix has announced that they have raised a Series B round of funding in the amount of $3.5 million. This is in addition to the previously raised $3.5 million Series A round and $1.2 million angel round. The company notes that this new round of funding came from Mangrove Venture Capital and Bessemer Venture Partners. Wix also notes that the funding will go towards marketing and product development.

Wix allows people to easily create Flash-based Websites. The company self-reports that over 1,500 Wix sites are created every day. I'd love to hear about their active numbers. A newly released premium version costs $10/month which removes advertising and offers other features like domain name accessibility.

The Deal spoke with Allon Bloch, co-founder of Wix who said that, "the startup got in just under the wire", as venture capitalists grow risk-averse amid the deepening financial crisis."We were fairly lucky," he says, noting that the funding environment "over the past three or four weeks has deteriorated fairly quickly. We definitely felt a change." Bloch also notes that they will probably head back fro more funding in about 18 months looking for another $5 million.

Check out our interview with co-CEO Allon Bloch from earlier this year.

VCs understand that the fundraising process is time consuming, taking entrepreneurs away from building the company. Creating documents for investors can be one of the most time-consuming parts of the process. While not all of the documents are likely to assist in operations, some of the materials can and should be created with operational purposes in mind to make more use of these efforts.

Here are five ways to make the fundraising process more useful to your operation:

1. Create projections in a manner that makes them easy to use for future planning and budgeting,
2. Design your uses of capital raised analysis to play into your short term budgets by making it sufficiently detailed,
3. Leverage the addressable market analysis to identify the most attractive target customer segments,
4. Revisit your competitive landscape when preparing investor materials to look for best practices and opportunities to enhance your model, and
5. Generate a sales pipelines document that can be leveraged by your sales department going forward (you'll probably need an operational version of this document to share with your board in the future).

Fundraising can be a tedious process – try to get as much operational value out of it as possible.

We initially covered Fitbit when they provided a look at their technology last month. The Fitbit Tracker looks like a large paperclip and tracks a variety of physical activities as you move around with the device attached to your clothing. Today the company is announcing they have raised $2 million in venture capital funding.

Fitbit notes that True Ventures led the funding round with additional investment by Jeff Clavier's SoftTech VC and a group of angel investors. As part of the funding round, Jon Callaghan from True Ventures joined Fitbit's board of directors. Fitbit previously raised $425,000 in angel funding.

The company plans to use the funding to push towards a launch in early 2009. The Fitbit Tracker will retail for $99 and you can pre-order one now. I wish they made it work with wifi; currently you are required to go "home" with the device for it to update itself. Otherwise it's a device I would be interested in because it could just open my eyes to exactly what I am doing wrong. Maybe they could offer a 2.0 version that includes a stunner - eat the donut, get zapped, walk too few steps, get zapped. I'd also like to see them partner with other fitness services including Traineo so that data can be exported to the customer's fitness site of choice.

Here's what the Fitbit device looks like: