Dear Media Deals Readers,

Welcome to the August-September 2011 edition of the Media Deals newsletter, bringing you the latest in mediatech investment news as well as market developments (acquisitions, strategic partnerships, etc.) and announcements of shareholder exits.

We also report on a range of Media Deals activities including our latest Media Deals Investment Forum, which recently took place in Barcelona, and our forthcoming participation in the Closing The Gap: Investment for 360° Content equity investor pitching session in Bergen, the Production Finance Market (PFM) in London, and the EBAN Winter University in Brussels.   

Additionally, our “Spotlight On” section provides an overview of Berlin-based sugarhigh, a daily e-mail magazine and web platform focused on cultural activities and events that is steadily evolving into a unique and monetizable social network in Europe’s creative capital.

We also have a special offer for the Media Deals community. The GAMEplaces International Conference, which brings together people from the game and finance industries and which will take place in Frankfurt am Main at the House of Finance on 27 September 2011, has provided us with reduced-price tickets (EUR 298 rather than EUR 498) for our readers. If you are interested in receiving this discount to attend the conference, contact Marc Robert for the promotional code: marc_robert@peacefulfish.com

Finally, if you would like more specific content financing news, please check out our peacefulfish newsletter. Go to www.peacefulfish.com to subscribe for free.

All the best,

The Media Deals Team

Media Deals Activities

>>> Closing The Gap

On 18-20 October, Media Deals will be taking part in the Closing The Gap: Investment for 360° Content equity pitching workshop, which takes place during the Bergen International Film Festival in Bergen, Norway. The workshop, which is the final part of a 6-month long MEDIA-funded training course for content producers, sees 10 film and TV projects being pitched to a range of financiers including members of the Media Deals network. For more information, contact the course director:

marc_robert@peacefulfish.com

>>> Film London’s Production Finance Market

Members of the Media Deals network will also attend this year’s Production Finance Market (PFM), which takes place in London as part of the BFI London International Film Festival on 19 and 20 October. The event, organized by Film London and now in its fifth year, brings together content producers and financiers for two days of targeted one-to-one meetings. For more, contact:

tbaujard@media-deals.org

>>> EBAN Winter University

On 21 October, Media Deals will moderate a lunch session at the European Business Angel Network (EBAN) Winter University in Brussels. This event will be focused on the advantages of investing in the creative industries and is open to the business angel network representatives and early-stage fund managers who attend the University. For more, see:

www.amiando.com/ebanwu2011

>>> Presentation of The DigiBIC Project

Media Deals took part in the EBN Annual Congress in Toulon, France on 15 to 17 June, where we presented the first demonstration of the DigiBIC project. The workshop was open to BICs, SMEs, DigiBIC partners, associate partners, etc. and took place from 14.00 to 15.30 on 15 June in the Palais des Congrès Neptune. The session was designed for intermediaries supporting the creative industries and focused on the latest trends and technologies to support these sectors in Europe. For more information, see:

www.digibic.eu

>>> EBAN Congress

Media Deals attended the EBAN Congress in Warsaw, Poland on 13 and 14 May. As a member of the EBAN cross-border committee, Media Deals sat on the EBAN Shared Deals jury. The Shared Deals initiative saw six European, technology-related startups already supported by business angels pitching in front of the attending investors in order to find further financing sources in a cross-border environment. Additional details can be found at:

http://ebancongress2011.eu/

>>> Media Deals Investment Forum  

The latest Media Deals Investment Forum took place in Barcelona, Spain on 13 and 14 April in cooperation with Barcelona Activa. Eleven mediatech startups from across Europe were selected and received pitch training prior to pitching their companies to a panel of investors from the Media Deals network. For more about each of the companies, go to:

http://www.media-deals.org/html/barcelona.html

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SPOTLIGHT ON: sugarhigh

What is it?

Founded by Alonso Dominguez and Peter Henssen in 2009, sugarhigh is an email-based culture magazine that sends a daily burst of news to its invited subscriber base about what’s happening and what’s on in Berlin. Fairly low-tech in its approach on the face of it, the magazine has managed to build up a substantial readership since it came out of beta testing in January 2010. This readership, described as “a very tight demographic” by the company’s founders, represents the core value of the company. The software used to deliver the email magazine is not proprietary and the sugarhigh platform itself, at least at present, is more an archive of cultural activities and hotspots in and around Europe’s creative capital rather than a full-blown social-networking site. However, over the past two years, the company’s founders, its five permanent employees, and a range of freelancers are steadily building up a very unique social media platform that has already begun to generate revenue and attract investors.        

Who are its potential users?  

Described as “people who consume and produce contemporary culture,” sugarhigh users form a very specific demographic. Well-educated, metropolitan, creative or interested in the creative arts as well as the juncture between the arts and nightlife and events, mainly in their mid-20s to early 40s, and mostly (though not wholly) living in Berlin. While the founders declined to give specific numbers, they said their user base has been growing steadily since the magazine came out of beta. When asked about the invite-only subscription policy, they said that the exclusivity factor actually helped increase the rate of subscriptions, bringing in more readers over time than during the periods when they experimented with opening up to the general public. However, this makes sense when considering the characteristics of the core demographic as a whole.  And again, it is with this tightly defined but expanding network of readers where the company’s true value lies.   

 How does it generate revenue?  

Subscription is of course free, but after fifteen to sixteen months of operation the company began to break even and is now operating in the black, generating revenue through several sources. One of these is brand partnerships, which sees sugarhigh promoting select events to its user base. The magazine has become a bridge from the online to the offline space with bars, restaurants, clubs, event organizers, etc. seeking to attract the attention and patronage of this “tight demographic” that the publication has cultivated. Additionally, the company has recently closed several contracts with clients in the high-end fashion, online startups, and lifestyle sectors to conceive and execute unique content tailored to these clients’ needs to enhance their presence online. Furthermore, sugarhigh is also launching two new email magazines, the Berlin Art Journal and the Berlin Fashion Journal, to provide more targeted content to subscribers.   

 Who are its competitors?  

The founders cite several similar e-magazines or culture-based web portals including Ron Orp’s Mail and Goldstueck as competitors. However sugarhigh’s minimalist aesthetic, “exclusive” subscription base, and social networking approach set it apart from the competition. Add to that their interest in growing their network into a platform that could potentially live-map cultural events and hotspots via mobile applications and the mediatech ambitions of this startup begin to become clear.         

 What makes it attractive for investors?

 It is this business model of growing a readership into a social network into a live-mapping platform that ultimately makes sugarhigh well worth looking at for investors in the mediatech industry. By starting with very focused subject matter and building up a clearly-defined demographic, the company has not only generated revenue through brand partnerships with the likes of Edsor, Schwarze Dose, Belvedere, TEDx, Galeries Lafayette (to name just a few) it has also attracted its first round of investment. In April 2011, European financiers including private equity players, a PR agency, and a social media company have made a strategic investment in sugarhigh, allowing the company to leverage its position in the market and begin to execute on the next phase of its evolution.      

Check out what they’re up to here:

http://www.sugarhigh.de/

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Investment News

Rovio (Finland)

Creator of the hugely popular mobile game Angry Birds, which as of April had reached 140 million downloads via Apple’s App Store and other portals, has raised approximately 30m euro from a round of investment lead by Accel Partners. This new funding was prompted by Rovio’s sharp spike in sales revenue, from 9.3m euro in 2010 to a projected 50m to 100m for 2011. The company’s CEO says that they are planning a stock offering, probably in 3 to 4 years time, with the intention of building Rovio into one of the world’s leading entertainment brands.  

Silk (Netherlands)

Formed in 2009, this Dutch startup offers a platform that refines user engagement with creator-owned video content published on the web. Essentially the software allows users to more effectively sift through a range of content, to find material that appeals to their likes and interests in a more efficient way. With a recent investment round lead by Atomico, the company has raised 320,000 euro to bring the project to market.     

Plizy (France)

Plizy is an app that helps users find and watch online video content through recommendations based on the user’s individual social graph as compiled through search histories, likes, and interests logged on sites such as Facebook and Twitter. A new startup, the company recently received approximately 850,000 euro in angel investment and will launch on the Apple iPad soon.   

Simfy (Germany)

The music streaming service Simfy, which has a footprint in Germany, Austria, and Switzerland has raised a further 10m euro from existing investors including Klaus Wecken, Dumont Venture, NRW Bank, and Earlybird. The company intends to utilize this new round of funding to increase its share in the German-speaking market as well as to expand into additional European countries. 

Pretty Simple (France)

Idinvest, which has already invested in games companies such as Kobojo, eRepubliK, Curse, and Winamax has invested 2.5m euro in Paris-based social games startup Pretty Simple. The company has released one title via Facebook to date, MyShops, which allows users to create, modify, and manage their own online storefront. The game has over 1.7m users, mostly from English-speaking countries, and Pretty Simple plans to use this new round of investment to continue to gain market share as well as to produce 2-4 games per year.    

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Market Developments

WorldTV (Ireland)

With over 1m monthly viewers, 100,000 users who upload content, and more than 1,000 paying customers, WorldTV has launched an add-on products store as its revenue model. The platform, which provides a TV-viewing experience for online video content, has been operating in the black since 2009 and has experimented with several revenue models over the years. The add-on products model will generate cash through single payments by viewers for specific apps or through monthly “app subscriptions,” which the company believes will be more lucrative than an ad-supported model. 

Jimdo (Germany)

With an initial investment of only 500,000 euro in 2007, the website-creation service Jimdo has been building up tremendous momentum over the last years. Approximately 200,000 new sites built using this online tool are launched each month and over 4m sites have been launched so far. Additionally, since the company added a feature that allows users to build an online store, over 40,000 stores have been built. Not only that, these online stores have been used to generate over 7.5m euro in revenue for their users. Currently, Jimdo is adding new mobile and Dropbox features and is working on gaining market share in the U.S.  

ViewsHound (UK)

With over 11,000 unique visitors since its launch in early May, the crowd-sourced news site ViewsHound has announced a revenue-share deal for its contributors. Originally, contributors of news articles, photos, and editorial cartoons competed for daily prizes but now they can also get a percentage of ad revenue generated by the site.

Wikio (Luxembourg) / Trigami (Switzerland)

The social media and marketing group Wikio has merged with Trigami, which is a platform that provides social media ad solutions for Switzerland, Austria, and Germany. Wikio has participated in a range of mergers over the last year and a half, including tie ups with the leading European blogging site Overblog and Ebuzzing, a platform that connects social media users with brands. The motivation behind the merger is to integrate Trigami’s 500 clients into the larger group, allowing them to benefit from the 15,000+ bloggers active within the Wikio community as well as to give the company a presence in German-speaking markets.  

Hipster Ventures (UK/US)

While not yet officially announced, a new venture fund aimed at bringing the best European startups to the US market appears to be in the works. Hipster Ventures is said to be raising an initial fund of around 10.6m euro to set up an office in San Francisco that will facilitate the introduction of EU-based startups to Silicon Valley investors. Headed up by freelance journalist Milo Yiannopoulos, the fund intends to close by the end of the summer.    

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Shareholder Exits

Skype (Estonia/Luxembourg) / Microsoft (US)

In a bid to increase its competitiveness against Apple and Google, as well as to increase its presence in the smartphone market, Microsoft has bought internet voice and video call service Skype. With a purchase prices of 8.5 billion, including paying down the money-losing Skype’s 686m in debt, the US software giant has essentially pre-empted potential deals between the VoIP service and a partner such as Google. Microsoft intends to integrate Skype across its services, with a specific focus on the Xbox and Kinect platforms, to gain presence in the online space.  

Doodle (Switzerland) / Tamedia (Switzerland)

Available in 29 languages, and with over 8m monthly users, Doodle is an online service that allows people to more efficiently manage the scheduling of meetings, calls, etc. Founded in 2008 the company has just achieved an exit for one of its primary investors, Creathor Ventures, with a sale of a 49% stake in the company to Swiss publisher Tamedia. Terms of the deal were not disclosed. 

LinkedIn (US)

The online networking service LinkedIn began offering stock in the company in mid-May, trading on the New York Stock Exchange with a projected value of approximately 2.8 billion euro. Not since Google went public in 2004 was there an internet company whose stock offering garnered such interest among buyers. Through the IPO, the company is expected to raise around 141m euro as well as produce between approximately 88m and 85m for existing shareholders, who intend to sell a percentage of their shares in the company.  

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Talkback

As always, we welcome your questions, comments, feedback, and inquiries. If you have a suggestion about a potential news item for our next Media Deals newsletter please send that along as well.

We are always interested to learn about new company developments and entrepreneurial initiatives as well as investor news in the mediatech sector.

Address all news-related e-mails to news@media-deals.org

Until next time . . .

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