Archive for July, 2010

Big Companies Hunt New Start-ups

Companies have two main ways to innovate: on the one hand some form of intrapreneurship or in-house venturing, and on the other hand a strategy of mergers & acquisitions. Google has a target of buying at least one company a month this year. Facebook just bought Hot Potato for $10 million. Zynga got $150 million investment by Softbank and probably will announce another $150 million investment by Google.

‘Old economy’ tech companies are also at it. IBM has already bought in 2010 a number of companies including Cast Iron Systems, Big Fix and Initiate, and this coming from one of the biggest producers of patents on the planet.

Apple too are shoring up their defences with strategic purchases. Earlier in July they purchased Poly9 Group, which was started in 2005 and had to date not sought any venture money. Poly9 made a browser-based 3D globe similar to Google Earth and may be a replacement for that application on the iPhone/iPad.

Disney just purchased PlayDom, an online social gaming start-up, for $563.2 million plus an earn-out of up to $200 million! It is a relatively ‘old’ company having been around for just over two years. Early in July Disney bought another gaming start-up (iPhone games this time) called Tapulous, for an undisclosed amount of money.

One thing that has changed in the ten years since I worked in venture capital in 2000-2003, companies in particular Web 2.0 companies are being bought a lot earlier. Bigger rivals want to adapt new technology or at the very least ‘take out’ potential future rivals. They are also terrified that a Google or Facebook will go by them without getting noticed. And they don’t want to pay the kind of money the MySpace and YouTube went for. All-in-all it is an interesting time for tech entrepreneurs if they can scale quickly and prove their business model.


Getting an 'A' for being a B Corporation

As we trend towards a new form of capitalism (are you listening BP?), here comes the B Corporation which are similar to the ‘Partials’ that we have discussed here – capitalists with a heart, or an eye on good business practice, depending on your take.

Although around for a while now, the B Corporation idea is starting to take hold. B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.  B Corporations are unlike traditional responsible businesses because they:

  • Meet comprehensive and transparent social and environmental performance standards.
  • Institutionalize stakeholder interests.
  • Build collective voice through the power of a unifying brand.

There are two main reasons companies have become Certified B Corporations; some join the community in order to leverage the influence of their business beyond their industry or geography, and some do so because it just makes good business sense. They also have a B Impact system that allows a company to rate itself, assess a company’s impact on each of its stakeholders and  improve a company’s social and environmental performance using the Tools and Best Practices embedded in the Survey.

And States in the U.S. are taking notice. On April, 13, 2010  the state of Maryland signed the nation’s first Benefit Corporation legislation, Vermont passed Benefit Corp legislation on May 19th, 2010. There are now over 200 companies in over 50 industries represented.

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Irish Govt Infrastructure Projects Give Nod to Green Tech reports that Green tech and energy efficiency will be a focus of the Government’s Infrastructure Priorities Programme to 2016. One area will be reducing energy use in existing building stock and a target of 10,000 new jobs has been set as part of a retrofit scheme, though these type of schemes have had a poor take-up in the past. An energy savings initiative makes good sense in terms of filling the construction-sized hole in employment while also helping reduce electricity consumption.

Almost €3.5bn will be invested in developing water services infrastructure to match existing and future demand, which is vital due to the huge amount of leakage particularly in the piping in the older cities like Dublin. Taking water from the Shannon is all very well, but like the energy refit, we don’t need to take as much as have to with better management.

And a further €480m will be provided for Flood Management and Relief Schemes. As Ireland’s summers get warmer and wetter, and global warming continues to make an impact on human living, such projects will become more a ‘must have’ than ‘nice to have.’

A new €20m International Energy Research Centre will partner with industry to solve energy management problems with global applications. Great idea. Tiny funding. In international terms this alas is a drop in the ocean.

Caltech Funded to Seek Fuels from Sunlight

TechCrunch reports that California Institute of Technology or Caltech, that small but innovative engineering-oriented technology college, has been award up to $122 million to create a Fuels from Sunlight Energy Innovation Hub. The report states that the Hub’s goal is to develop ways to convert solar energy into chemical fuels and scale the technology for commercial use.

The project is in part inspired by the way plants produce energy, and will use artificial photosynthesis to turn sunlight, water and carbon dioxide into clean fuel. Researchers will be charged with finding ways to use technologies like light absorbers, catalysts, molecular linkers and separation membranes to transform sunlight into fuel, and the US Department of Energy wants to turn this research into a viable product in the form of fuel that can go directly into cars without any additional processing. It is increasingly obvious that there will be many alternatives to the energy issue in the future rather than just one or two.

Apple iPhone and Darth Vader – Humour for a Friday

Ah that Friday feeling and we will leave you this week on a semi-serious note. Why is it that in the early part of the 21st Century large companies still can’t admit when they are wrong?

Looking at BP’s gulf debacle and Apple’s recent new iPhone cock-up, it is amazing to think that public relations is actually taught in any college in the world. Wise up folks, you make a mistake it is always better to take the hit early. You always get caught out.

And on that, here is a little bit of humour from YoutTube (where else) which sees Darth Vader calling the Apple customer service desk about his antenna problems….I particularly like his question about his App Store hold-up. Enjoy.

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REDF Gets More Money to Create Social Enterprise Jobs

REDF, one of our favourite social venture capital funds, has just announced a two-year $3 million federal Social Innovation Fund  grant from the Corporation for National and Community Service (CNCS) in the US. The support has been welcomed by REDF’s management and they will use it to expand their San Francisco Bay Area social enterprises, and to take their work to other parts of California. They were  the only California-based organization among the eleven groups selected.

REDF (formerly The Roberts Enterprise Development Fund) is a San Francisco-based high-impact venture philanthropy organization dedicated to transforming lives through the creation of jobs and economic opportunity.

REDF believes that nonprofit-run social enterprises can create the jobs that offer a way into the workforce for young people and adults who would otherwise face almost insurmountable barriers due to histories of homelessness, addiction, mental illness or incarceration. This ties in nicely with the messages in the recent Social Enterprise Taskforce report that was presented to government here in Ireland.

Triodos Pulls Social Enterprise Fund

Triodos Bank in the UK is pitched as one of the world’s leading sustainable banks. Their mission is to make money work for positive social, environmental and cultural change. In June 2010 the £3m fund (Social Enterprise Fund) that Triodos had set up to invest equity venture capital in social enterprises closed after two years and only one £320,000 deal.

Triodos has reported that they had not found the appetite for equity that was expected, or enough social enterprises in a strong enough position to take on equity.  Triodos’s lending to social enterprises remains strong with record levels of lending to the charity and social enterprise market. Investment readiness, which is also an issue in the commercial venture funding sector, was cited as a cause.

As the UK has a range of funding mechanisms and organisations from CAF to VentureSome, it perhaps is not surprising that the capital market is overloaded. Ireland on the other hand has the opposite issue at the moment, with credit finance from the banking sector adding to the sectors woes.