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Flipboard's Mike McCue Confirms $50M Raise, Says Windows 8 App, More International Versions Coming By End Of Year
Flipboard, the mobile-first “social” magazine that lets people tag, assemble and then share collections of stories from around the web, has now raised another $50 million at an $800 million valuation led by Suhail Rizvi, with Goldman Sachs close behind and existing investors like Insight Venture Partners and Kleiner Perkins also participating (KPCP has confirmed this directly with us as well).
The news was first reported earlier today by AllThingsD, and it has now been confirmed to us by Mike McCue, CEO and co-founder of the company, who also gave us some insight into how the company is doing today — “an awesome day”, as he put it — and what it plans to do tomorrow.
But first a little backstory. Prior to today’s news, we had heard that Flipboard was actually raising money at an eye-popping $1 billion valuation. Fast foward to today and $800 million is some degree less than that. McCue says that the $1 billion figure being bandied about was no more than a careless whisper. “There were a lot of rumors about us raising money in the last year,” he says. “They weren’t accurate. We just decided several months ago to put together financing at $800 million.” He notes that one of its earliest investors, Code Advisors, played an important role in pulling the deal together.
McCue calls $50 million “a solid number for us” that it will use in a few key areas: more international expansion, finalizing a Windows 8 app, and monetization by way of hiring out more sales people and turning on some new features. “$50 million is exactly the right number for us” to do all that, he says, with the Windows 8 app and more international moves coming by the end of this year.
Flipboard, he says, is on a roll these days. Since launching its 2.0 version six months ago, which gave individuals, publications and brands the ability to create their own shareable magazines, the company’s growth pattern has changed. McCue says that Flipboard today is adding at least 200,000 new users per day, “sometimes 250,000 or 300,000.” In total there are now some 3.5 million magazines on Flipboard, everything from magazines to travelling in Barcelona (made by an enthusiast) to those on what the future will look like (created by Cisco). McCue says that “hundreds of thousands of readers are getting millions of pageflips” in the new format.
All of that, he says, has given the company a lot of momentum and is what made them fee “it was time to do another round of funding” to tap into that growth.
And that growth is happening outside the U.S. Flipboard is already localized in a number of markets, such as China, where Flipboard launched a native language app as far back as March 2012. Now it will be taking that up another gear. “That is what we want to do more of, not just in terms of local languages but also local curation,” McCue tells me.
First stop will be India, where “we are just starting out now and have a lot of work. Then we will continue to invest in Asia, specifically China and Japan,” he says. In Europe, “the UK is very high on the list,” and I don’t think he said that just because he was talking to me (I live in London), but because it is also such a natural extension for Flipboard’s U.S. content and it taps into a population that is extremely mobile-friendly. Flipboard already has content partnerships with the BBC, the Telegraph, the Guardian and Wired UK “who are all doing exceptionally well on Flipboard. That is a good start.”
The Windows 8 launch, meanwhile, has been long discussed, but it looks like it is finally becoming a reality. Why so long between announcing and releasing? “We wanted to make sure that the app for Windows 8 looked awesome, and it does look amazing, now but we need to make sure that we can polish it and make it even better.” Seems like with the Surface line now getting a major refresh the time to strike the iron is now.
Although Flipboard now has a sizeable number of users reading the web versions of the content being created on the platform, McCue says that mobile is still “by far the primary component” in terms of traffic. So a lot of its monetization efforts to date are focused on mobile.
McCue declined to give me a revenue figure but noted that monetization has been “very good” so far. “We have some o the world’s best brands advertising on Flipboard, such as Gucci and Louis Vuitton,” he boasts.
The trick that Flipboard has pulled off is that they’re encouraging a lot of engagement — the magic word today — between readers and those that are advertising on the platform. They’re doing this by way of the basic building blocks of the service. “When you tap on the ad, it will take you to a brand magazine. With version 2.0, these brands are curating magazines,” he says, thereby giving me and you more opportunities to stare at bags that we may never be able to afford to buy, but may do one day anyway. Other brands that have created magazines include Delta advertising its red-eye flights via a sleep-popsci magazine; and Cisco’s Futurist feed.
McCue notes that this is now “generating revenue for all of our publisher partners,” and currently Flipboard both sells ads on behalf of publishers, and publishers sometimes sell these themselves. He doesn’t say whether that is profitable, but here is both a disclosure and an example of how this works: TechCrunch is a publishing partner of Flipboard’s and our magazine does very well on there. Flipboard sells ads on our behalf and this generates more revenue than our own in-house mobile efforts. “Financing will let us scale out our sales team and drive out more revenue,” he notes.
There will be more money levers to turn on coming soon. Look, for example, at the paywall gates that Flipboard has for the FT and the New York Times. “We’re the only company in the world that enables that for the FT right now,” he notes. “You can become a subscriber directly from Flipboard. Over time you will see us doing more with premium content. You will see us do more there next year.”
Into this comes Suhail Rizvi, who McCue says he got to know through Twitter and describes as having a great combination of expertise on both traditional and new media. As you may know, Rizvi also has large investments in Square and Facebook, along with Twitter and now Flipboard, and so I asked McCue if that might serve as a door into further monetizing partnerships with any and all of them. No comment, but a little laugh from McCue on that question, so another area to watch as Flipboard continues to spin ahead.
BlackBerry Signs Letter Of Intent To Go Private For $9 Per Share In Deal Valued At $4.7 Billion
Today BlackBerry announced a $9 per share offer for its outstanding stock, a deal worth around $4.7 billion. The $9 per share price is a slight premium over its current stock price, which traded at $8.23 before it was halted pending the news.
BlackBerry had declined more than 5% on the day. Fairfax Financial, who offered the $9 per share deal, already owns around 10% of the company’s stock. BlackBerry’s board has approved the transaction, and a letter of intent has been signed. This feels like a pretty much done deal.
However, the board is open to rival offers provided that they are “alternatives superior to the present proposal from the Fairfax consortium.” Fairfax will pursue funding for the deal from, according to the release, Bank of America Merrill Lynch, and BMO Capital.
There is a kill fee of $0.30 per share if BlackBerry backs out and accepts a different bid.
BlackBerry had around $2.8 billion in cash and equivalents at the end of its most recent quarter. That, paired with whatever value its intellectual property might retain means that the value of its business operations is vanishingly small. The $9 per share price for BlackBerry is less than a 10% premium on its closing price, calculated on a very, very bad day for the company’s stock. Expect some investors to be less than enthused to see the company exit for so little.
It’s hard to not view this as the end of BlackBerry as we have known it. Fairfax, to its credit, is putting a brave face on the matter, stating that the deal will “open an exciting new private chapter for BlackBerry, its customers, carriers and employees.” So, it claims to not have plans to break the company into small pieces and vend it off in chunks. Even more, Fairfax intends to “continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers.”
If that is true, and Fairfax has a real plan to turn the company around, and perhaps transmorgify it back into a firm that pushes technology forward instead of reacting to its change in a ham-fisted fashion, more power to it. BlackBerry appears set to join Dell in the hopefully healing purgatory of life as a formerly public and now private firm.
Top Image Credit: Honou
AngelList Beefs Up Syndicates With New Backers Model, Lets Accelerators Raise Funding Too
With the loosening of the SEC’s restrictions around general solicitation or public fundraising by startups, AngelList is launching a whole suite of products that could extend its influence (and its revenue model) in the tech ecosystem today.
Much has been made of how AngelList’s new ‘Syndicates’ program could revolutionize early-stage funding for startups. Regular angels can essentially raise a venture fund on the fly, bring in a group of friends who are accredited investors and provide a startup with an early round of reasonable size. Then the lead angel takes carry from the deal.
This is competitive to the role that more traditional venture firms might play in first round financing. Since the program was launched last month, more than $1.7 million has been raised through syndicates on AngelList (and the number is now higher with a few more deals in the works.)
Today, AngelList is taking that program a step even further with ‘Backers,’ a way that angels can round up financing commitments in their network ahead of investing in companies.
It could give angels even more leverage to pledge hundreds of thousands of dollars in seed-stage capital when they take meetings with companies.
Here’s a hypothetical example: an angel can step forward and say they typically invest $25,000 (see the slide below). Then the 10 other angels they typically co-invest with can also pledge a similar amount, giving their syndicate more than 10 times the angel’s original financing power. With syndicates, the lead setting up the deal takes a 5 to 15 percent carry of the investment’s returns. Then the group of investors pays a 5 percent carry to AngelList.
“This creates a very clean signal,” said AngelList co-founder Naval Ravikant. “You’re putting in money at the same valuation as the lead. They’re only being paid in carry and they have skin in the game.”
With syndicates, follow-on investors are basically betting on a lead angel’s judgment in a specific company.
But with backers, they’re betting on the lead angel’s overall investment judgment.
AngelList will launch a syndicates leaderboard soon, that will show how much angels are able to pool together from their network for a startup and how much carry they typically ask for.
This could make the seed and Series A market for financing much more competitive and transparent. Ravikant shied away from pointing out any firms or investors that might lose out in this environment, saying, “Anyone whose value-add is not commensurate with what they’re charging or offering is going to find it tougher.”
While some of the AngelList syndicates have raised between $200,000 and 600,000 for their companies so far, it wouldn’t be hard to imagine that AngelList could facilitate much larger deals in a few years’ time.
AngelList is also putting out a host of other products today (not to mention the fact that the company itself picked up $24 million in funding from 116 investors including Google Ventures and Atlas Ventures). Accelerators will now be able to raise funding on the platform, provided it goes to all companies in their program so that there’s no problem of adverse selection. AngelPad, for example, has raised more than $1 million on the platform for 12 companies. AngelList has attracted 145 accelerators to its platform.
They’re also launching public fundraising on the site today too, although Ravikant warns startups to be cautious about going down this track.
He says that general solicitation is distinct legal track. It could create more onerous legal requirements for startups, because they have to do more work to make sure their investors are actually accredited. With the SEC changes today, about 1,800 companies on the platform will be able to raise publicly.
In total, all of these products today create a host of new revenue streams for the company. AngelList said it will charge a 10 percent carry fee for whatever an investment returns if the deal is done directly online through its platform. With backers and syndicates, they’ll charge a slightly lower 5 percent carry.
Backed By First Round's Dorm Room Fund, Addy Is A Location-Sharing Service That Goes Beyond Addresses
Khaled Naim, CEO of startup Addy, is hoping to create a new way for people to share their location.
What’s wrong with plain old addresses? Well, they usually get the job done, at least if you live in an urban or suburban area in the United States. But even then, I’m guessing that you’ve had moments where they don’t quite work — say, when you’ve had to explain to someone, “Okay, the address is on Street X, but you actually need to park on Street Y, and the entrance is on Street Z.” Or maybe you’re having a barbecue on the beach and have to tell everyone that they’ll have to find you between Entrance A and Entrance B.
Naim said he grew up in Dubai, and that those kinds of landmark-based directions are “how people communicate locations there” — not just in Dubai but also in developing countries in the Middle East and elsewhere. And it’s even a challenge at Stanford (where Naim is a graduate of the business school), since many buildings are located on roads that aren’t accessible to cars.
To address (sorry, I couldn’t help myself), this problem, Addy makes it easy for businesses and individuals to share their location with a a simple URL. Each URL includes a pin on a map, as well as room for additional directions/instructions, plus options for sharing.
You can already drop and share pins in Google and iOS Maps, Naim acknowledged, but it requires a “roundabout” process, and he argued that, unlike Addy, those maps aren’t really designed for those kinds of directions. Plus, Naim hopes that by turning Addy into the place everyone goes when they want to share their location, he can take advantage of “a really strong network effect.”
Here are some examples that Naim sent — an Addy for a Stanford tailgate, another for Black Rock City at Burning Man, and a third for the startup’s headquarters.
The company is pursuing a two-pronged approach to growth. It’s promoting its tools as a way for businesses, particularly those in emerging markets, to share their location with customers. And today it’s launching a version for consumers to share their locations with friends (Naim said most of the beta testers of the consumer product are actually in the United States).
Addy participated in StartX (an incubator for the Stanford community) and has raised $300,000 in funding from First Round Capital’s Dorm Room Fund and various angel investors.
Poor Indian Sales Force Sygic To Release Navigation App For Free
App developers are struggling to make money in India because of low credit card penetration, according to Michael Stencl, CEO of maps provider Sygic, which has now dropped the $5.58 fee to download its GPS navigation app. As Indian Android owners remain reluctant to purchase apps, mapping providers are turning to features such as offline availability to compete with Google, which has grown in stature since launching turn-by-turn navigation and live traffic updates for Indian smartphone users last year.
Stencl told TechCrunch it was forced to eliminate the fee for the Android version of the Sygic India: GPS Navigation app because of low daily sales in India (~$250 a day) — about a sixth of sales in the United States (>$1,500 a day). Meanwhile, Sygic’s iPhone app, which also uses data from local digital cartographer MapmyIndia, still costs a prohibitive $27.99.
“Our Sygic & MapmyIndia app has been one of the most succesful and top grossing in India on Google Play, but India still has a very low penetration of credit cards, which makes it difficult to monetize there successfully,” Stencl said.
“In order to maintain a competitive marketshare, we have decided to make our app free, and wait until the market in India is more developed.
“Over the past four years, Sygic has witnessed revenue growth of nearly 250%, and we feel that by continuing to invest development resources in key geographies like India, and maintaining a customer focused strategy, we will be able to extend our leadership position globally.”
While Indians downloaded 150 millions apps from the Google Play store by October 2012, only 0.5% of customers paid to downloads these apps, according to the recent “India’s mobile internet 2013” report by Avendus Capital. The average price was just over $1, and Avendus estimates the Google Play store sold about $2 million worth of apps this year. However, the report predicts that the Indian app market will grow five-fold by 2016, to be worth about $30 million.
India’s credit card adoption languishes at around 20%, according to a 2012 HSBC report, but credit spending could pick up in the future as more cards have been issued in recent years.
Sygic’s new free app also works offline, which is a useful feature in a country where the network coverage is sporadic as you move around the city and into the rural areas. TomTom recently released a local version of its Android navigation app, which costs about $30, and also works offline. It also allows users to search for a location based on a nearby landmark or point-of-interest (this is the most popular, and usually the most accurate, way to get around cities in India). So far the TomTom app has been downloaded between 10 and 50 times, compared to over 10,000 downloads for the Sygic app. It’s still a far cry from Sygic’s 30 million global downloads.
The offline availability is a key differentiator from incumbent Google, which is increasingly integrating Waze’s social navigation and traffic data into the Maps apps, following the search engine giant’s recent $1 billion acquisition of the Israeli startup.
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