TechCrunch
Coub Raises $1M For Its Gif-Like Looping Music Videos Service
Coub, the Russian startup that lets you create Gif-like short looped music videos, has raised $1 million from local VCs Brothers Ventures and Phenomen Ventures.
The site, which lets users upload videos or extract them from YouTube or Vimeo, clip them to 10 seconds and loop them with music, currently claims 8 million unique visitors, up from 5 million in June. Most of those users are from its home turf in Russia, although the service is beginning to picking up a little steam elsewhere.
The new capital — its first external round — will be used to further build out its website, grow the team and to reach new audiences as it aims to take the viral site global. This includes plans to open a U.S. office. Perhaps crucially, money will also be spent taking Coub mobile. As it stands, the service is primarily a desktop web offering, unlike other loop-based video mobile apps such as Vine or Instagram’s new video feature.
Also unlike Vine, Instagram or something like Cinemagram, Coub as it exists today is mainly designed to let users remix or ‘edit’ existing videos, not create new ones from their phones. That’s seen it used by media companies as well as purely User-Generated Content. Coub videos also tend to be quite polished, and due to the emphasis on adding music, have a music video-esque feel. Think more YouTube and less Vine. That said, the site is designed to have the same virality as all of the aforementioned services; Coub videos can be embedded or shared on social networks, blogs, and other websites.
“We discovered this media format and now we are observing its evolution,” Coub co-founder Anton Gladkoborodov tells TechCrunch. “It already has traditions, own memes, genres and sub-formats. We made a tool that you can use in different ways. It could be an artistic tool, a way of self-expression and getting attraction. On the other hand, coubs also have a professional usage, for example, as an illustration in media, or as an animated photo on an online store.”
The potential for media brands or e-commerce companies to use Coub may point to whether or not there is money in those loops. However, for now, Gladkoborodov says the focus is on growing the service’s user-base. “We don’t make money yet,” he says. “We have a product designed to be viral, when we get enough users, we will find the way to monetize it. Of course, we are already developing ways to make money with our service and we have some interesting thoughts about it, but they are at the early stage right now and it is too early to talk about it.”
Follow-On Funding For UK Startups Stalls - France And Germany Accelerate
As most entrepreneurs will tell you, it’s not raising a funding round that concentrates the mind so much as wondering if you’ll be able to raise a follow-on round after that. European startups have continually been at a disadvantage to their US counterparts on that score, but today we get some data comparing how major European markets fair. It suggests that despite the UK remaining the largest country by overall value for VC deals, France has now overtaken for larger follow-on deals, and Germany is nipping at the UK’s heels.
Research carried out by DFJ Esprit & Go4Venture Advisers reveals that while the seed funding of early-stage European start-ups is healthy, there is a scarcity of follow-on capital for later-stage businesses. The data, compiled from the latest Dow Jones VentureSource figures, also reveals that while the UK remains the top European country for tech investment, it has for the first time lost out to France in terms of the number of larger deals completed in the first half of this year. This suggests that the UK regulatory regime is not incentivising VCs or private individuals to invest at a later stage for the majority of deals. While there has been a lot of activity to incentive at the early stage, little has been done for follow-on, and that will mean many startups will eventually fail.
Of the $1.8 billion invested in European venture deals in the year to date, the UK holds the total investment lead at $656 million followed by France ($399m) and DACH ($343m).
But, in larger follow-on deals (over $5m) the UK lost the lead to France for the first time, with 25 versus 28 deals respectively and Germany not far behind with 18 deals in the first half of the year.
Despite the UK’s advantage of average larger follow-on deal size compared to France ($23m vs $11m respectively), the UK’s overall lead of 49 deals is gradually being eroded compared to France’s 46 and Germany’s 18.
Simon Cook, CEO of DFJ Esprit, commented that: “The bulk of the financial returns in venture capital come from the big winners and the major investments that create these companies. What this data clearly shows us is that Europe is successfully launching fledgling businesses but there is a scarcity of available capital for the follow-on funding to get them to the next stage. In Silicon Valley the ratio of large investment rounds compared with smaller ones is over 1 to 1 – in this latest data for Europe it is less than half that level”.
“From a geographic point of view, the UK is often seen as the US gateway into Europe and many of the leading VC funds in London have strong US links. But the UK’s historical position is under threat as Governments across Europe use incentives to stimulate innovation and growth. The UK needs to act now to maintain its overall lead within Europe or risk being overtaken”, added Cook.
The research also highlighted how tax incentives are boosting early stage growth.
According to figures from the UK government tax department (HMRC), in 2010/11, the latest year for which full statistics are available, 1,937 companies raised a total of £525m under the EIS scheme – an average of £270,000 per deal.
But in in 2012/13, there were 2,346 applications under the Enterprise Investment Scheme (EIS). This is a 9% increase from 2011/12. Additionally there were 1,729 applications under the new Seed Enterprise Investment Scheme (SEIS) for seed funding up to £150,000. The increases follow the changes in the 2012 Budget which were welcomed by earl stage investors. Clearly, tax incentive schemes have been affecting the early stage equity gaps for startups.
However, it’s clear from the above figures about later stage, that there is a need for growth capital following the seed and start-up funding stages. Deloitte, for instance, has called for the later stage funding gap to be filled by the financial community and for entrepreneurs themselves to step up to invest in and develop these companies.
Jean-Michel Deligny commented: “The UK Government with EIS/SEIS and the French Government with the ‘Fonds Commun de Placement dans l’Innovation’ (FCPI) scheme have both shown that tax incentives can boost private investment in starting businesses. But the exit data shows that the most successful companies have to raise multiple rounds, from multiple investors including large venture capital funds. Even with the increased £5m limit on EIS in the UK, this is not enough on its own to build these types of companies.”
According to Simon Cook the “investment of follow-on capital has contracted in in the first half of 2013. The UK Government focus has successfully stimulated investment into very early stage businesses via EIS and SEIS, however the challenge now is to ensure and direct the larger amounts of follow-on capital required to grow the winners into global champions.”
It’s clear that Europe has to step up it’s game if it is to be able to create the kinds of companies that can go global. Time and again entrepreneurs tell me that startups in Europe are chronically underfunded compared with their US counterparts. I agree, and at least we have some data to back this up now.
Startups MUST be funded beyond early stage. DFJ is right to point out that the EIS scheme has the key elements in place with EIS Approved Funds but these are not used in practice as they have fallen behind other changes in legislation.
Individuals and institutional funds ought to be incentivised to invest not just at the early stage but at follow-on rounds as well.
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