There were several fundings that in this space that caught my eye this week:

First, "Qualcomm, Carlyle Invest $3M in Chinese Content Company: Wireless communications company Qualcomm and private equity firm Carlyle Group have invested $3 million in Beijing-based Enorbus Technologies. Enorbus is a leading wireless application publisher and developer of games and entertainment content for wireless phones in China. Press Release

Second, KongZhong, which delivers content via mobile handsets in China, made its debut in the U.S. stock market on last Friday where they managed to raise $100 million from U.S. investors. The interest is in part due to KongZhong's head start in positioning itself to deliver rich-media content via mobile phones.

Third, Mobile messaging infrastructure services company mBlox has raised $10M (USD) in VC funding. The investors of this latest round include Bank of America Ventures, Norwest Venture Partners, Novus Ventures, Duff Ackerman Goodrich, Entrepreneurs Fund and Avanti Capital Ltd. 160Characters

This last investment is the one that threw me a bit. I'm not sure if this is the result of poor information, overhang or exuberant optimism. The messaging platform (SMSC) space in Europe is very competitive with "Gorillas" like Nokia offering solutions to the operators. The solution would have to be very appealing for Vodafone to decide to use their platform, plus with more innovative areas to explore (like the first two examples) I find it hard to believe they are investing in what is, basically, a commodity.

[Update]

I left off JamDat , another American mobile content company. They have filed for an $86 million IPO .

VCF partners has announced they will acquire Advent Fund Managers from Advent Venture Partners.

"The deal may kick-start consolidation in a UK VCT industry that has experienced some turbulent times of late. Said Fairman: “There will undoubtedly be other deals of this nature. As markets develop, the money always moves to the bigger and more successful managers. VCTs are expensive to run because of listing costs and maintaining boards of directors, and you need at least £12 million in capital for it to make sense. I am sure there are other VCT businesses looking for a home.” PrivateEquityOnline

Another point is that there is a real problem of scale with smaller funds- which makes it difficult to fund enough companies for "porfolio theory" to kick in. If that doesn't happen, these early-stage funds must make relatively safe bets on each firm they fund. Larger funds will mean riskier projects can be financed, which in turn fuels innovation in the UK. Consolidation combined with the VCT tax incentives should provide the type of growth Gordon Brown was trying to encourage.

In support of my last post, The Value of Small, I would like to point out two sites that are "micro businesses", do not have Venture Capital funding, nor do the entrepreneurs behind them have any immediate intentions of IPOs... They are small businesses built by passionate people.

Two of my friends have been working really hard on their new companies which have just gone live within the past week or so. The first one is i-yo, which offers customized cards with a twist; they are basically mini-fliers to advertise yourself:



I've been using prototypes for the past few months here in London, and they have been well received and serve as a conversation piece (which is the point). They are noticeably smaller than what you're used to and only include your name, email and telephone number- which is all you really need in a social setting. The target market here is 16-30 year olds, so the idea isn't "power networking". I think this is going to take off like a rocket this summer in the clubs around Spain...

The second company, Viamedius, has been incubating for at least 4 years...I've discussed this idea many, many nights over the past few years. It's a travel guide site designed to offer first-hand knowledge of travel destinations. We've all used Lonely Planet, Frodor's and Let's Go- but Viamedius isn't competing with these types of travel guides. It offers information written by people like you and me about places they know well...it will probably integrate purchasing and making travel arrangements through the site going forward, but for now, it's just content-based.

Congratulations to both Alex and Champi, glad to see your efforts paying off!

(Just so you don't wonder where the English version is, both businesses are geared towards people living in Spain. And stay tuned for more "micro-businesses", I've got a few more friends with companies in the works...)

One comment I made during my presentation at the Eureka! business plan contest this past December was that "You don't have to create a Yahoo! to be a successful entrepreneur. There are other paths to follow."

A few months later, I'm starting to see this idea in different forms, all making the same point: You don't have to work with world domination in mind. Several recent articles I've read have addressed this issue: The first article is from Clay Shirky about situated software and the second discusses Boing Boing. Give them a read and draw your own conclusions.

Venture Capital seems to be in the spotlight again. This weeks The Economist has a Special Feature on Venture Capital. This month's Wired also has The Roots of Bust 2.0, which addresses the overhang out there.

And if the projected numbers are right, the UK is about to be awash in early-stage funding as well. Some concern has already been expressed that there will be too much money chasing too few opportunities. But, in an ever more mature market, it stands to reason that finding truly good investments will be difficult.

This mirrors the broader market, where even Warren Buffett freely admits that it is becoming significantly more difficult to find undervalued companies. Perhaps this means European, or UK, Venture Capital is maturing after having gone through growing pains during the past 4 years.

In yesterday's budget speech by Gordon Brown, he announced:

" Venture capital is the seed-bed of future enterprise and so for the next two years, Venture Capital Trusts will secure tax relief for investments of up to £200,000 a year not at the lower rate of 20p but at the higher rate of 40p. From 1 April, firms with turnovers under £58,000 will not have to register for VAT ---- the most generous VAT threshold in Europe. And also from 1st April an additional 13,000 businesses will be eligible to benefit from simplified VAT accounting. And from next year in 2000 enterprise areas we will further increase the tax incentives to invest. "

A 50% rise in the tax relief is very good news on the heels of increased investing in early-stage companies. This could really serve to jump-start innovation in the UK. I wonder where the hidden costs are though...

"Fadesa Inmobiliaria, a real estate company, has filed for the first Spanish initial public offering (IPO) for two years in an offer led by Banco Bilbao Vizcaya Argentaria (BBVA), Credit Suisse First Boston (CSFB), and Morgan Stanley."

Ok, so it's not a Google or Salesforce.com IPO, but if it breathes life back into the IPO market in Spain, it's a good thing. However, I'm really concerned about the real estate bubble in Spain, and can't help thinking this is just going to add fuel to the fire... a serious crash is coming (although it seems to be taking a long time to arrive).

Yahoo reports that deal activity is up, although overall investing totals are down. This makes perfect sense when you consider the following:

"The fourth quarter in Europe also revealed a renewed interest in early stage investing. In fact, seed and first round deals accounted for 33% of all deals this quarter, the first time this has occurred in over 12 months."

Glad to see investors' appetite returning for risk...

The exit window in the UK appears to be opening- and I've even seen comments that so many firms are lined up to IPO in the first part of the years that it could cause a glut- and actually dampen investor interest.

"Apax and Hicks, Muse, Tate & Furst Inc. have sold an additional 34% of their stake in Yell.

Apax and Hicks Muse directly invested about £600 million in the original purchase and funded the rest through debt, according to analysts. With this week's placement -- following last summer's successful IPO -- the private-equity firms saw an aggregate net return of about £1.4 billion, or more than double the initial investment." WSJ.com

And in the US, Google has shortlisted the underwriters for its $4bn IPO.

"The last quarter of 2003 is set to become a turning point in the VC funding trend of the past three years in Europe and Israel. Since Q3 2000, each successive quarter showed a decrease in venture capital invested in technology companies. A whopping decrease of 89.3% in quarterly VC funding has occurred from Q3 2000 to Q3 2003. However, the Q3 2003 figure of €618 million will prove lowest since the downturn, even after Q4 has finished.

The market has shown clear signs of stabilization throughout this entire year. After very strong June and July months - July presented most VC activity in 2003 with €311 million invested in 63 deals - the market dropped to an all-time low in August with little more that €110 million reported. However, the gentle quarterly decline this year will be topped off with an increase."
--
VC is not, as many believe, a leading indicator; it is a lagging indicator that tends to follow the markets closely. This announcement shouldn't come as a surprise to anyone. I just hope the market doesn't tank from some external reason...