social network – Inorganic Growth https://blogs.451research.com/techdeals The 451 Take on Tech M&A Fri, 06 Mar 2020 21:03:15 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.26 Vertical takeoff http://blogs.451research.com/techdeals/web-20/vertical-takeoff/ http://blogs.451research.com/techdeals/web-20/vertical-takeoff/#comments Tue, 02 Sep 2008 22:16:54 +0000 http://blogs.451research.com/techdeals/?p=91 Continue reading Vertical takeoff ]]> Verticals are all the rage in social networking these days. Last week alone, there were two high-profile acquisitions. Amazon.com acquired Shelfari, the Facebook for bookworms, reportedly for slightly less than $10m. And Lifetime Entertainment Services acquired the parenting social networking portal ParentsClick, with seven employees and decidedly less than $5m in revenue, for an estimated $10m. Both deals sprang from previous partnerships. Shelfari was incubated by Amazon with an initial investment of $1m. According to sources, ParentsClick and Lifetime have had a longstanding technology and Web development relationship. After fielding offers from the usual suspects, ParentsClick saw value in a marriage with Lifetime.

This comes on the heels of other vertical social networking M&A. We believe this uptick in acquisitions, despite growing disinterest in traditional social networks, is a sign of a shift in focus to niche verticals. Venture capitalists have recognized this as well, and from what we hear a large shift in funding, especially among early-stage investors, is taking place. So what other vertical social networking sites are ripe for the picking?

LinkedIn, arguably the most successful among the verticals, springs to mind. The social networking site for professionals has been profitable for two years and is on track to make $100m this year from advertising and subscriptions. Founder Reid Hoffman has indicated to us in the past that he is open to offers if the price is right. Having recently attained the $1bn valuation we alluded to in the past, however, the site is now too expensive for most. And Hoffman seems content to wait for the struggling public markets to recover.

This is the exception to the rule, however; most other sites will be acquired. One such example is Flixster, a Shelfari-like social networking site for movie buffs. NewsCorp and Amazon could want to either eliminate an obvious and growing competitive threat or supplement their own Rotten Tomatoes and IMDB portals. With more than 40 million users, we estimate that Flixster could fetch more than $100m.

Select vertical social networking deals in 2008

Date Acquirer Target Deal value
August 27, 2008 Lifetime ParentsClick $10m*
August 25, 2008 Amazon.com Tastemakers [dba Shelfari.com] Less than $10m (reported)
June 23, 2008 Nokia Plazes $30m*
June 10, 2008 Forticom Nasza-Klasa.pl $42.3m
June 3, 2008 Electronic Arts ThreeSF [dba Rupture] $15m
May 16, 2008 Vodafone ZYB Technologies $48.7m
February 11, 2008 Avid Life Media Hot or Not $20m (reported)
January 30, 2008 Hoover’s Visible Path $4.2m

Source: The 451 M&A KnowledgeBase *Official 451 Group estimate

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Assembling the deliverable http://blogs.451research.com/techdeals/web-20/assembling-the-deliverable/ http://blogs.451research.com/techdeals/web-20/assembling-the-deliverable/#comments Fri, 18 Jul 2008 23:06:38 +0000 http://blogs.451research.com/techdeals/?p=58 Continue reading Assembling the deliverable ]]> Comcast’s digital content delivery software subsidiary ThePlatform made its first acquisition this week, picking up tiny social networking startup Chirp Interactive. Founded just one year ago, the San Francisco-based company has developed an interactive screen saver that collects updates from websites like Facebook and Flickr. Structured as an asset acquisition, ThePlatform will use the VC-backed company’s technology and select employees to build similar social features into its own content distribution and management system.

Comcast bought ThePlatform in 2006, early in its efforts to build a viable online video distribution business, and operates the business as an independent entity. Since 2006, it’s been reported that the cable giant has shelled out nearly half a billion dollars on five online deals since the beginning of 2006, including its purchases of movie review and ticketing website Fandango in April 2007 and social networking site Plaxo in May 2008. Comcast’s VC arm, Comcast Interactive Capital, has also been banking heavily on online startup. One recipient of Comcast’s capital is tiny video and advertising distribution company Revver, which incidentally was picked up by LiveUniverse in February.

Going forward, we ask where Comcast and its VC arm will be setting their sights. Well, mobile content distribution, of course. In fact, Comcast participated in a $12.6m seed-round funding of Boston-based mobile WiMax startup Cartiza earlier this month. It also joined Google, Time Warner and other industry behemoths in a $3.2bn round in WiMax company Clearwire in April. After building up a healthy reserve of content, a video and advertising distribution platform and increasing social networking capabilities, the need to converge these platforms on mobile devices is clear, and Comcast is making the moves to do just this.

Selected Comcast acquisitions

Date announced Target Target description Deal value
May 14, 2008 Plaxo Online address book synchronization $160m*
April 11, 2007 Fandango Online movie tickets & reviews $192m*
June 28, 2006 ThePlatform Digital media publishing & delivery $90m*

Source: The 451 M&A KnowledgeBase *Reported values

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Microsoft makes meaningful buy http://blogs.451research.com/techdeals/infrastructure-software/microsoft-makes-meaningful-buy/ Wed, 02 Jul 2008 20:47:44 +0000 http://blogs.451research.com/techdeals/?p=44 Continue reading Microsoft makes meaningful buy ]]> Since shelling out nearly $10bn in a year and a half to reinvent itself as an online contender, Microsoft, on July 1, confirmed reports of its purchase of online search and natural language vendor Powerset. Microsoft aims to add Powerset’s Web search linguists, engineers and technology to its Live Search division. On the heels of its $1.2bn purchase of enterprise text analytics giant FAST Search and Transfer in January, Microsoft inked this much smaller deal to enhance its consumer Web search.

Founded in 2006, Powerset released its Web search technology earlier this year. In partnership with Xerox’s PARC (Palo Alto Research Center), the San Francisco startup, which has raised some $12.5m in funding, has been developing search software that reads online text and discerns semantics as well syntax. So far, Powerset’s semantic technology has been publicly tested only on Wikipedia and fellow open source encyclopedia Freebase, both of which have a solid structure that Powerset leverages. The company has also been in talks with major publishing companies about an ad-supported service it has in the works.

With Powerset having been sold to an established technology company to realize its plans, we wonder what that will mean for the rest of the semantic technology companies. Currently, the poster child of the market is Radar Networks, which is backed by $18m in VC. It is developing a semantic social networking application, Twine, which is still in private beta and due to be released this fall. There’s also New York-based semantic search engine Hakia, also in private beta, which has landed over $20m in funding. However, if Powerset, which was often referred to as ‘the next Google,’ got picked up for just $100m (as the rumors have it), then what’s the exit picture for the two remaining rivals, both of which have raised more money than Powerset? Maybe we need to Google the answer.

Selected Microsoft search acquisitions

Date announced Target Deal value Target description
July 1, 2008 Powerset $100m (reported) Semantic Web search engine
January 8, 2008 Fast Search and Transfer $1.2bn Enterprise search software

Source: The 451 M&A KnowledgeBase

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