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.

I would like to profile a few interesting web 2.0 start-ups I have come across over the past month or so (in no particular order):

ZipLocal (www.ziplocal.com)

ZipLocal is a new hyper-local search directory, focused initially on the Greater Toronto Area and Montreal with future plans to expand to 45 metropolitan markets across Canada. The service aims to be a user-powered next-generation local directory that will provide a rich, self-defined experience. Essentially, the site provides directory-based listings, plus rich community-level search. The data itself is being pulled from existing directory databases. Expect new features, such as tagging, to be added in the coming months.

CrispyBlogPosts (www.crispyblogposts.com)

CrispyBlogPosts is essentially a social bookmarking site strictly for blog posts. The site allows you to share, rate and discover the best blog posts on the net. You can also submit a blog post, create a new channel, and view popular content. Kudos for the clean, slick interface.

VBS TV (www.vbs.tv)

VBS TV is a new broadband television network (IPTV), creatively directed by Spike Jonze. The site streams free VICE-produced content that is updated daily. The service claims to use an advanced video player technology to optimize the viewing experience. Content covered on the site ranges from heavy domestic and international news, to underground cultural coverage, to music, and more. All content is available on-demand and enabled for sharing and embedding.

AutoRoll (http://widget.criteo.com)

AutoRoll is a widget that showcases the blogroll of your readers. In essence, it displays links to blogs your readers are visiting the most often. The service traces the number of visits of each unique reader on each blog that has installed AutoRoll. The more often a reader visits a specific blog, the greater his affinity is with this blog. The benefit to the publisher is highly qualified incoming traffic from other blogs, as well as a useful, pertinent blogroll. 

SeekSift (www.seeksift.com)

SeekSift is a simple way to personalize and track syndicated web content. The service only tracks up-to-date information on local events, travel deals, job listings, and your blogs (to name a few). Content can be accessed via an RSS, e-mail, or both. The service is free.

Clipperz (www.clipperz.com)

Clipperz is an easy way to store and manage your passwords and credentials online. But it is more than a password manager. Not only does it simplify the sign-in process across numerous sites by remembering your user names and passwords, but it also protects confidential and private information. The service is free and completely anonymous (no e-mail is required).

A true leap in the evolution of the Internet will occur when the line between online and offline is blurred. As we stand, there is a gaping void between the two worlds. A business usually classifies itself as an Internet company or an offline business. Having said that, I do not know how this transformation will take place, but it will be a magical moment and a step forward in the history of technology.

When online actions begins to have offline consequences, we will be moving in the right direction.

Some organizations with an online presence, such as charities and non-profits, benefit not only from the added exposure and awareness, but also via a more streamlined fundraising effort. These groups are a good example as they essentially do not ‘exist’ offline (offices aside). Therefore, online and offline collaboration are very important to them. This may be one of the few examples where the void is starting to be filled.

Shopping is a totally different story. Research has shown time and time again that consumers research products online, then purchase offline. Tracking this discrepancy is nearly impossible. How is a company to know that an offline purchaser performed research and due diligence online before making the ultimate purchasing decision? Without some sort of questioning or survey, it is impossible. I expect big changes to occur in this industry. Offline conversion tracking will be the Holy Grail.

Once the integration and interaction between these two seemingly separate worlds can occur, expect behavioural changes to be next. Just like any action, there is an equal and opposite reaction. Opposition to the new changes may result. Furthermore, adaption and education around new systems will be necessary. But in the end, offline may very well be the last piece of the online puzzle.

As a consultant, I do a fair amount of work around web strategy and creating ’sticky’ web experiences. After all, this is key to creating loyal, repeat customers/users. Subsequently, every once in awhile I come across an idea or theory that boggles my mind to no avail. Having said that, one of the best ways to create a strong user base who return on a regular basis is by leveraging the power of the unknown. 

Why do we check our e-mail everyday? Every hour? Even every 5 minutes sometimes? Because there just MIGHT be a new message waiting. We do not know for sure. But it is fair to say that we are internally motivated by what is unknown to us - we are a curious species, always looking to delve deeper and uncover the mystery.

RSS feeds work in much the same way. I, personally, open my reader numerous times a day as new blog posts are cropping up at all times. This movement toward ‘dynamic updates’ is what drives repeat visits to a given web property. Stale content is a thing of the past. Why is Digg so successful? Fresh, frequently-updated articles. It keeps the kids coming back for more.

Another great example of this phenomenon can be witnessed in the form of Facebook. Why has it vaulted into the top 25 sites (according to Alexa)? It is driving a tremendous amount of page views thanks to its ’social feeds’. These irregular, unscheduled tidbits provide a detailed picture of your social networking activities and behaviours, as well as those of your friends and colleagues. Those unfamiliar with Facebook note that these feeds provide information updates with respect to events, friend statuses, profile changes, groups, photos, etc… These snippets of information help provide a detailed map of users’ lives. Finally, due to our human nature to stay current and ahead of the curve, many users frequent the site 10+ times per day to be ‘in the know’ at all times.

Funny enough, as more people are able to add old friends and classmates, grad reunions may become less exciting as you can passively follow the life paths of your friends via a social network feed.

This concept just just makes sense. It leverages our psychologic habits and yearns. After all, who wants to log-in and see their own profile? Lame. That was sooooo web 1.0. It’s not sticky. It won’t work nowadays. Perhaps web 3.0 is what we believed it was all along… unknown. 

Is it just me or is anyone else puzzled as to why 37signals hasn’t been bought over yet? Their compelling story, ingenious management team, and legendary product line are more than enough to wet the appetite of any major investor or large company. Let’s take a look at their current state:

Their product suite looks as follows:

• Basecamp - Project management and collaboration
• Highrise - Track leads, clients, vendors, and more
• Campfire - Real-time group chat
• Backpack - Information organizer and calendar
• Ta-da List - Simple to-do lists
• Writeboard - Collaborative writing

To read more about other company offerings, read The 37signals Way.

With such a diverse suite of productive offerings (that actually produce revenues) it’s no wonder a large software application company like Microsoft, SAP, or Computer Associates hasn’t scooped them up already.

Several software giants have tried to create web-based apps, but failed miserably. The simple, clean approach taken by 37signals seems to be forming the basis for a new generation of web-based software.

Furthermore, the interfacing is congruent among 37signals products, decreasing the learning curve and familiarization time for existing users of their new products. Hence, this is a great way to garner a loyal user base and maintain their business. 

One reason the company hasn’t been acquired thusfar may lie in an expensive price tag. My guess is that this new web gem would be looking for several hundred million dollars in order to seal a deal. What’s funny about this is that they may actually deserve it. As opposed to many hyped web 2.0 fly-by-nighters, 37signals has:

• A loyal customer base
• Industry acclaim and credibility
• A diversified, compelling product line
• An actual revenue generation model that doesn’t involve Google AdSense

All of this points to one thing: this is an ACTUAL company with ACTUAL products. The same cannot be said for a majority of new web start-ups.

Once again, the prospects and future of this company look salivating, even to the most amateur observer. Their formula has worked time and time again. With all this momentum, it is only a matter of time before someone steps in and makes them an offer they can’t refuse.