The Eight Most Successful Start-ups in Europe
â˘Als PPTX, PDF herunterladenâ˘
10 gefällt mirâ˘5,145 views
The presentation discusses the current Eight European Unicorns (i.e. private start-ups with a valuation of more than $1 billion). It provides information on what they do and their business model. These include Spotify, Delivery Hero, Powa, Adyen, Home24, Shazam, Farfetch and Funding Circle.
Empfohlen
Empfohlen
Weitere ähnliche Inhalte
Ăhnlich wie The Eight Most Successful Start-ups in Europe
Ăhnlich wie The Eight Most Successful Start-ups in Europe (20)
Mehr von Stefan Stremersch
Mehr von Stefan Stremersch (20)
KĂźrzlich hochgeladen
KĂźrzlich hochgeladen (20)
The Eight Most Successful Start-ups in Europe
- 1. The Eight Most Successful Start-Ups in Europe (current value: $20B) www.mti2.eu
- 2. What are Unicorns? Unicorns are venture-backed private companies valued at $1 billion or more Includes companies that are privately held, have raised money in the past four years and have at least one venture-capital firm as an investor
- 5. Spotify: What? Founded in 2008 In Sweden By Daniel Ek and Martin Lorentzon First Product: Music Streaming Service
- 7. How Disruptive are They? Spotify has 75M active users and 20M paying subscribers, but remains unprofitable
- 8. Spotify: There Are No Free Lunches⌠Valuation: $8.5 Billion Total Equity Funding: $1.0 Billion
- 9. Delivery Hero: What? Founded in 2011 In Germany By Niklas Ăstberg, Kolja Hebenstreit, Markus Fuhrmann and Lukasz Gadowski Product: Online Food-Ordering Platform
- 10. Delivery Hero: Business Model
- 11. How Disruptive Are They? Since 2001 (received $90M in funding went public in 2014) Since 1999 (4th-fastest growing private company in the U.S. in 2004) They Were Actually Pretty LateâŚ
- 12. âŚBut Became Local Leaders Around the World
- 13. Delivery Hero: Biting Profits Around the Globe Valuation: $3.1 Billion Total Equity Funding: $1.3 Billion Niklas Ăstberg CEO / Co-founder
- 14. Powa and Ayden: What? Founded in 2007 In the U.K. By Dan Wagner Flagship Product: PowaTag, a Mobile Platform Allowing Interaction & Payment Founded in 2006 In the Netherlands By Pieter van der Does and Arnout Schuijff Flagship Product: Global Online Payment Platform
- 16. Powa: A One-Stop-Shop for Retailers Willing to Sell and Charge to Customers Anywhere, Anytime
- 17. Powa: Transforming a Smartphone Into a Store and Payment Device at the Same Time
- 18. How Disruptive Are They?
- 19. Powa: Transforming the Retail Experience Valuation: $2.7 Billion Total Equity Funding: $156 Million
- 21. Adyen: Connecting the Payment Infrastructure
- 22. How Disruptive Are They? Adyenâs success stems from doing the right thing at the right time, i.e. simplifying international digital transactions at the same time as we witness a mobile payment revolution and a rapid globalization of commerce.
- 23. Valuation: $1.5 Billion Total Equity Funding: $500 Million
- 24. Home24: What? Founded in 2012 In Germany By Domenico Cipolla, Dr. Philipp Kreibohm, Constantin Eis & Axel Hefer Product: Online Furniture Retail
- 26. Home24: Huge Assortment and Short Leadtime
- 27. Source: http://kinnevik.se/Global/Kinnevik%20Rocket%20CMD%202014/Home24_Kinnevik%20Rocket%20CMD%202014.pdf How Disruptive Are They?
- 28. âAmazoning an industryâ to disrupt successful incumbents
- 29. Home24: High Assortment but Low Inventory Valuation: $1 Billion Total Equity Funding: $20 Million
- 30. Shazam: What? Founded in 1999 In the U.K. By Chris Barton, Philip Inghelbrecht, Avery Wang & Dhiraj Mukherjee First Product (2002): Music Identification through Mobile Phones
- 31. Shazamâs Journey to the Top Source: http://www.shazam.com/company
- 32. Source: http://www.wsj.com/articles/music-discovery-company-shazam-valued-at-around-1-billion-1421780459 Shazam: Business Model Shazam Responsible for 1/10 Digital Song Sales âShazamableâ Ads for Info & Special Offers Open Shazam In-Store for Promotions
- 33. How Disruptive Are They? ââŚShazam has spent the past two-and-a-half years pushing forward with a strategy designed to remake the company as a modern-day media mogul. Itâs recently taken to the television airways with Shazam- enable broadcasts and advertisements. But that is only the first part of a multifaceted Shazam media blitz that includes a move into retail and other sectors â in due time.â Source: http://venturebeat.com/2012/08/31/shazam-evolution/
- 34. Shazam: Patience Pays Off⌠Valuation: $1 Billion Total Equity Funding: $170 Million
- 35. Farfetch: What? Founded in 2008 In the U.K. (with Portuguese Origins) By JosĂŠ Neves Product: Fashion Website
- 37. Farfetch: Business Model Enabled $300m in sales globally in 2014 from 450,000 customers in 180 countries Source: http://www.ft.com/intl/cms/s/0/e20f6c92-c1d0-11e4-abb3-00144feab7de.html#axzz3f7hs8yiG
- 38. âFarfetch is a global community of over 300 visionary fashion boutiques offering an inspirational shopping experience to fashion-forward consumers. The boutiques are located everywhere from Paris, New York and Milan to Bucharest, Riyadh and Seattle, but united in one e- commerce websiteâ Delivering local value at a global scale, online â âthe worldâs local boutiqueâ
- 39. How Disruptive Are They? âCar rental company Uber removed friction from the car renting experience. Online luxury fashion marketplace Farfetch removed friction from discovery of the next authentic designer. Personalized sampling service Birchbox removed friction from exploration of the new beauty products.â
- 40. Valuation: $1 Billion Total Equity Funding: $195 Million
- 41. Funding Circle: What? Founded in 2010 In the U.K. By Andrew Mullinger, James Meekings, Samir Desai & Sam Hodges Product: Online Matchmaking for Small/Medium Peer-to-Peer Business Loans
- 42. Source: https://www.fundingcircle.com/how-it-works Funding Circle: How It Works
- 43. Funding Circle: Business Model
- 44. Winning the Trust Economy: More than Just ROI
- 45. Winning the Trust Economy: A Better Player
- 46. How Disruptive Are They? Funding Circle >$1 billion lent by April 2015 >40,000 people & institutions lending >10,000 loans funded
- 47. Valuation: $1 Billion Total Equity Funding: $273 Million
- 49. The Eight Most Successful Start-Ups in Europe (current value: $20B) www.mti2.eu
Hinweis der Redaktion
- http://fortune.com/2015/01/22/the-age-of-unicorns/ The Age of Unicorns by Erin Griffith ,  Dan Primack @eringriffith JANUARY 22, 2015, 7:00 AM EDT The billion-dollar tech startup was supposed to be the stuff of myth. Now they seem to be ⌠everywhere. Stewart Butterfield had one objective when he set out to raise money for his startup last fall: a billion dollars or nothing. If he couldnât reach a $1 billion valuation for Slack, his San Francisco business software company, he wouldnât bother. Slack was hardly starving for cash. It was a rocket ship, with thousands of people signing up for its workplace collaboration tools each week. What Slack needed, Butterfield believed, was the cachet of the billion-dollar mark. âYes, itâs arbitrary because itâs a big round number,â says Butterfield, 41. âIt does make a difference psychologically. One billion is better than $800 million because itâs the psychological threshold for potential customers, employees, and the press.â Sure enough, in Octoberâless than a year after the company released its namesake productâSlack announced the close of a $120 million round of financing. Its valuation? One billion dollars. Butterfieldâs wish had come true: Slack was the tech worldâs newest âunicorn.â It wasnât long ago that the idea of a pre-IPO tech startup with a $1 billion market value was a fantasy. Google  GOOG 1.78%  was never worth $1 billion as a private company. Neither was Amazon  AMZN 2.10%  nor any other alumnus of the original dotcom class. It wasnât long ago that the idea of a pre-IPO tech startup with a $1 billion market value was a fantasy. Google  GOOG 1.78%  was never worth $1 billion as a private company. Neither was Amazon  AMZN 2.10%  nor any other alumnus of the original dotcom class. Today the technology industry is crowded with billion-dollar startups. When Cowboy Ventures founder Aileen Leecoined the term unicorn as a label for such corporate creatures in a November 2013 TechCrunch blog post, just 39 of the past decadeâs VC-backed U.S. software startups had topped the $1 billion valuation mark. Now, casting a wider net, Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists (full list here). And given that these companies are privately held, a few are sure to have escaped our detection. The rise of the unicorn has occurred rapidly and without much warning, and itâs starting to freak some people out. âIt used to be that unicorns were these mythical creatures,â says Jason Green, a venture capitalist at Emergence Capital Partners whose investments include Yammer, which sold to Microsoft  MSFT 0.20%  for $1.2 billion. âNow there are herds of unicorns.â Not content to run with the packâor âblessing,â as a group of unicorns is sometimes knownâventure capitalists have begun targeting even bigger game. Theyâre now hunting startups with the potential to rapidly reach a $10 billion valuationâor, as Green calls them, âdecacorns.â In late 2013 just one private company had crossed that threshold: Facebook  FB 2.33% . Now there are at least eight, including Uber, the on-demand car service worth $41.2 billion. Its valuation is higher than the market capitalization of at least 70% of the companies in theFortune 500. Technology is driving the boom. Smartphones, cheap sensors, and cloud computing have enabled a raft of new Internet-connected services that are infiltrating the most tech-averse industriesâUber is roiling the taxi industry; Airbnb is disrupting hotels. Investors see massive opportunity in the upheaval. Then there are the broader financial trends. A nearly six-year-old raging bull market in public stocks has produced a tailwind for private company valuations and convinced the latest crop of tech entrepreneurs that there will be plenty of time to cash in when they feel like it. Record-low interest rates also have caused some big institutional investors to search for returns in the high-risk, high-reward world of venture capital. Add to that a lack of regulation: After the passage of the JOBS Act in 2012, which aimed to make it easier for small businesses to raise capital, startups could take on many more investors before the Securities and Exchange Commission effectively forced them to go public. Finally, there is the intangible element of perception. In the startup world, a valuation of $1 billion says that youâre no longer a fly-by-night startup with plans to quickly sell out to Google. âIt absolutely gives us credibility and the ability to hire some very important people,â says Apoorva Mehta, the 28-year-old CEO of on-demand grocery delivery service Instacart, which has been in business for only two years but reportedly is valued at $2 billion. âAnd it tells the world that weâre looking to build a long-lasting worldwide brand instead of looking to get acquired.â Venture capitalists justify these soaring valuations by looking backward. After the dotcom crash, a wave of prudence swept over the Valley. Investors kept valuations low and tried not to overcapitalize their companies. That strategy lasted until Hurricane Facebook came along. All of the cautious types who passed on investing in the social network early, because it was too expensive at $250 million or $500 million, were left scarred and paranoid when it went public in May 2012 with a market cap of $104 billion. If a startup is going to be worth billions of dollars in a few years, why quibble over a few million on the entry price? As a result, the median valuation of a Series A round of funding soared 135% between 2012 and 2014, according to the law firm Cooley LLP. This has created an echo effect, with new gains setting the bar higher for each subsequent round of funding. So venture capitalists have recruited unlikely new partners in the form of traditional money managers such as Fidelity Investments (which led the latest deal for Uber) and Wellington Management (which backed DocuSign and Moderna Therapeutics) to support unicorn-level rounds. Call it trickle-up economics. It also doesnât hurt that American corporations have record-breaking stockpiles of cash on their balance sheets. Facebook set tongues wagging when it paid $19 billion for instant-messaging startup WhatsApp last March, then followed it up a month later by shelling out $2 billion for virtual reality headset maker Oculus VR. In 2014, Google paid $3.2 billion for smart thermostat maker Nest, Apple  AAPL 2.67%  acquired headphone maker Beats for $3 billion, and Microsoft spent $2.5 billion to own the Swedish gaming startup responsible for Minecraft. Even health care VCs cashed in, selling Seragon Pharmaceuticals to Genentech for upwards of $1.7 billion. All of this has begun to feel bubblicious, especially to those who lived through the last cycle. âIf you are a CEO today and youâre age 35 or below, you did not go through 2000, which means you have not actually seen the capital markets shut off,â says venture capitalist Marc Andreessen, who nonetheless remains bullish. âPeople who went through 2000 are psychologically scarred and arguably have been risk-averse for the last 15 years. If you didnât go through it youâre in danger of always believing you can raise money at a higher valuation.â Greycroft Partners founder Alan Patricof, who has been investing in startups for more than four decades, is wary. âPeople are buying traffic growth and revenue growth, but itâs the âemperor has no clothesâ theory,â he says. âAt some point all of these companies will be valued on a multiple of Ebitda. If the IPO market goes away, or for any reason thereâs a blip in the outlook, people could be left holding a lot of inventory they wish they didnât have.â Proponents of the unicorn boom posit that this timeâno, seriously!âis different. Many of the billion-dollar startups, they argue, have the actual customers and revenue that companies of the dotcom days lacked. But no one in the VC world is so sanguine as to suggest that, sooner or later, we wonât experience a market pullback. Not surprisingly, many venture capitalists have begun preaching caution to their portfolio companies. A brief swoon in publicly traded tech stock prices last Aprilâparticularly in the enterprise sectorâwas seen industrywide as a warning shot that startups should control their âburn ratesâ and raise as much new money as possible to protect against a future funding drought. Entrepreneurs listened, at least to the second part: U.S.-based companies raised more venture capital in the fourth quarter of 2014 than they did in any other quarter over the prior 13 years, according to the National Venture Capital Association. That explains, in part, why a company like Instacart raised $120 million in new funding earlier this month at its reported $2 billion valuation just six months after raising $44 million at a $400 million valuation. Or why social media company Pinterest raised $625 million over three rounds of funding between February 2013 and May 2014, doubling its valuation from $2.5 billion to $5 billion. But more aggressive fundraising is no guarantee that unicorns will grow into their valuations. âGoing from $0 to $50 million in revenue is a lot different from going from $50 million to several hundred million,â says Green. âA lot of folks donât make that transition. Most donât. Maybe half of those companies wonât fulfill their potential.â (For a look at a startup struggling to break through, read the story onJawbone.) Several unicorns have already experienced a pullback. Open-source software company Hortonworks  HDP 1.83%  was valued at $1 billion by private investors but lowered its market cap to $666 million when it went public last December. (It has since crossed back over the $1 billion mark in market value.) Box, the data storage company credited with making enterprise technology cool, was preparing to hold an IPO just days after this magazine went to press. Its initial valuation was expected to be at least 30% lower than the $2.4 billion it commanded from private investors like TPG Capital last summer. And then there is Fab, the design-focused e-commerce site that said it would generate $250 million in revenue in 2013. It ended up bringing in around $100 million. (At one point, it burned as much as $14 million per month.) Fab shrank from 750 employees to 150, and CEO Jason Goldberg repositioned the company as a custom furniture business. Fab was widely reported to have raised some of its $336 million in funding at a $1 billion valuation, but Goldberg acknowledges to Fortune that its valuation never actually topped $875 million. He acknowledges the company isnât worth close to that today. âIf you allow yourself to believe youâre worth $1 billion after two to three years of being in business, youâre going to get yourself caught up in trouble,â Goldberg says. Even in the best of times, of course, startup investing is high risk. As quickly as the Age of Unicorns arrived, the conditions that created it could reverse and leave entrepreneurs and investors wistful for what might have been. âI think youâre going to see a lot of failure in 2015,â says Benchmark Capital partner Bill Gurley, who sits on Uberâs board of directors. âIf youâre a public company worth $3 billion and your stock trades down to $1 billion, you can survive it because you can still issue options to hire new employees, etc. âIf it happens when youâre private, though, it becomes immediately harder to hire or to get incremental investment.â In the meantime, expect more billion-dollar startups to emergeâat least for now. âYou canât choose not to play,â Gurley says. âIf youâre in the enterprise segment and your competitors are raising $150 million at high valuations and pouring it into sales, you either can do something similar or be conservative and no longer matter.â Which might explain why some VCs continue to invest even as they predict failure. Thereâs always the hope and belief that the value created by a few successful unicorns will offset the losses of those that fail. Butterfield knows the easy venture money will dry up at some point. Itâs one reason Slack has spent only 1% of the money itâs raised. âYouâd have to be in a meteors-hitting-the-Earth scenario before Slack as a business would get into trouble,â he boasts. Staying thrifty is a smart move. The prestige of being a unicorn diminishes with each passing quarter. When itâs gone, heâll have a whole new fantasy to chase: profitability.
- http://www.spotifyartists.com/spotify-explained/
- http://tech.co/what-your-startup-can-learn-from-spotifys-success-2013-04 What Your Startup Can Learn from Spotifyâs Success Giving consumers access to virtually any song theyâd like to hear â at any time and for free â may not sound like a business model tech startups would be quick to emulate. But the truth is that Spotifyâs model is focused on more than free streaming. Startups across the board can learn from the companyâs strategic product launch. When Spotify opened for limited public use in 2008 in Europe, it was a blip on the radar. Listeners could only enjoy the tool with a paid subscription, and it was only available in certain markets. After years of setbacks with record labels, funding, and music ownership rights, Spotify finally launched its U.S. service for listeners in 2011. The success of the music streaming service was hard-won, but in a market of ever-changing variables, Spotifyâs hold is shaky at best. Still, there are a few key lessons that can be taken from the music disruptorâs success. Find the Gap in the Market: Your startup doesnât have to be the first to market; it just needs to find the sweet spot between what is currently available and what users actually want. By leveraging market and industry research, Spotify broke through marketplace barriers by understanding what did and didnât work. The company was entering a space that was full of tough competitors. Pandora, a leader in the category, provided a certain number of free hours of listening per month (with advertising), but it didnât allow users to pick a particular song to listen to. Rhapsody costs $10 per month to begin listening, but users could play specific songs and create playlists. This initial cost seriously limited its user base, making it the choice for only serious music aficionados. So, what did users want? They wanted a social, cloud-based music service that allowed them to listen to any artist or song for free. Spotify worked hard to find a competitive edge by creating a solution that gave both casual and dedicated listeners options, creating a large user base. Create a Buzz-worthy Launch: Press releases, media stunts, and interviews can help push a product launch, but if you want to be successful, you need to get early adopters and influencers to buy into your product and promote it to their friends. Using invite-only access to drive momentum, Spotify created a powerful viral trial audience before it launched to the rest of the world. Users had to receive an invite from a current Spotify user. Twitter, Facebook, and other social media platforms buzzed with people looking for invitations to the service. Spotify let its audience help market and create demand for the service organically. You can emulate this model by searching out those who are in your perfect target market and asking for feedback and suggestions. If early users feel like they are part of the development process, they will be more likely to spread the word. Use Freebies to Drive Paid Subscriptions: When you offer a great product or service, users will multiply overnight. If even a fraction of those turn into subscription-paying customers, you may have a sustainable freemium model. Spotify has garnered strong revenue generation, despite the fact that not every visitor pays for its content. Its dual-tier model is, in fact, the main driver for its rapid growth. The business model banks on the assumption that more and more users will subscribe over time, motivated by the allure of eliminating ads and getting other perks. Eventually, users will start paying roughly $5 to $15 per month. Some users may never convert to a paid subscription plan, preferring to tolerate the ads. However, even these users can act indirectly as a key revenue source. They give Spotify the opportunity to mine data, gather info on an opt-in basis, and monetize this information with advertisers, content owners, and other interested parties. To stay relevant in the future, Spotify will have to continue to launch new models and approaches that resonate with customers. Just recently, there has been chatter that the music-focused service will break into the video streaming industry, competing with companies like Netflix by creating original content for subscribers. Finding new revenue sources and ways to attract a unique audience that is looking to bundle media streaming services â video and music â may be the next step for this constantly evolving music giant. Either way, Spotify will need to continually bring fresh content to its library and provide opportunities for artists to capitalize on additional revenue streams. Spotify isnât in the business of free music; itâs in the business of using free music to drive subscriptions, upsell, harvest valuable data, and ultimately, make money. Any startup can learn from these strategic principles to drive the bottom line.
- https://en.wikipedia.org/wiki/Delivery_Hero Delivery Hero Holding GmbH is a company based in Berlin, Germany, that is an online food-ordering service operating internationally in 29 countries including Sweden, UK, Australia, Finland, Poland, Switzerland, Germany, Austria, Denmark, South Korea, China, as well as several countries in Latin America and the Middle East. Delivery Hero has over 100,000 restaurant partners across the group's worldwide network.[2] The Delivery Hero network enables users to find restaurants in their area, usually filtered by cuisine and browse menus, read reviews and other information like the restaurant operating times and order takeaway food online. Payments can then be made by credit card, PayPal or with cash on delivery. Delivery Hero services are also accessible via mobile app(iPhone, Android, Windows Phone). History Delivery Hero Holding was founded by Niklas Ăstberg, Kolja Hebenstreit, Markus Fuhrmann and Lukasz Gadowski in May, 2011, with the goal of turning Delivery Hero into a global online food ordering platform.[3] Under the leadership of Niklas Ăstberg and Fabian Siegel, Delivery Hero first expanded to Australia, Russia and Mexico in 2011. In early 2012 the enterprise then acquired Lieferheld in Germany and hungryhouse.co.uk in the UK.[4] Delivery Hero then raised âŹ25 million in new funding to finance acquisitions in four European countries: Sweden, Finland, Austria and Poland. In August 2012 Delivery Hero started expanding in both South Korea and China[5] and the Asian expansion continued in 2013 when Delivery Hero increased investment in TastyKhana following a successful cooperation period.[6] In 2014 Delivery Hero acquired a controlling stake in Latin American market leader PedidosYa [7] and in August 2014 the group acquired German market leader and rival, pizza.de.[8] According to TNW Tech5 2014, Delivery Hero is one of Germanyâs top 3 fastest growing start ups [9] and Delivery Hero is now the worldâs largest online food ordering network with over 100,000 global restaurant partners and 1,500 staff in 29 countries worldwide.[10] Investment In November 2011, Delivery Hero received its first investment funding. In this financing round Team Europe, Holtzbrinck Ventures, Tengelmann Ventures, Kite Ventures and ru-Net together invested âŹ4 million. The second funding round took place in April 2012. This time the existing investors raised their investments by âŹ25 million to support the international growth of the enterprise. In August 2012 Delivery Hero received an additional âŹ40 million funded primarily by Kite Ventures and Kreos Capital.[11] A Series D financing round saw Delivery Hero receive $30 million from Phenomen Ventures In the latest Series D financing round, Delivery Hero received $30 million from Phenomen Ventures.[12] In January 2014 Delivery Hero announced a Series E financing of $88 million led by Insight Venture Partners.[13] A further $85m followed in April 2014 and was used to strengthen Delivery Heroâs presence in core markets.[14] In September 2014 a further $350m of investment was secured from existing partners and Swedish fund Vostok Nafta.[15] This was the largest investment in a European start up since 2009.[16] In December 2014 the company raised another âŹ287 Million from Rocket Internet. The total investment size by Rocket Internet was âŹ496 Million in primary and secondary for a 30% stake in Delivery Hero. [17] Three months later Rocket Internet increased its stake in Delivery Hero to 39%. How it works Delivery Hero offers restaurants an online and mobile app ordering alternative to flyer distribution and telephone orders. Users find restaurants by searching via post code and filtering results via cuisine, delivery distance, payment options, customer reviews and guaranteed delivery time. Delivery Hero charges restaurants acommission on orders.
- http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10674323/Retail-revolution-will-be-PowaTag-ged.html Retail revolution will be PowaTag-ged Dan Wagner's technology start-up announces partnerships with more than 240 heavyweight brands, including Reebok, Adidas, Universal Music and Carrefour PowaTag, the app technology built by Dan Wagner's Powa Technologies, is officially unveiled on Tuesday, ending months of speculation. The start-up has built up an investment base of nearly $100m (ÂŁ60m), the largest seed round of all time. Mr Wagner has hinted at applications for the technology, but until now, no one had seen the whole thing in action. Part mobile wallet, part e-commerce plug-in, PowaTag is complicated to explain but intuitive to use. This is one of the reasons Mr Wagner claims that he is building "the greatest technology company of all time". The serial entrepreneur has spent a decade examining why consumers fail to purchase a product or service. PowaTag aims to reduce attrition rates, boost basket sizes and increase customer engagement. It does this across e-commerce, mobile and physical stores. PowaTag is made up of several components. There's a QR code for printed ads that enables instant product purchases. This QR code can also be featured on a price tags so that passing trade can buy products in the window when a store is closed, or have goods delivered when sizes are out of stock. An audio watermark on a TV advert or Youtube clip takes the user to an m-commerce store through the app. "Touch Now" technology allows online shoppers to skip the delivery and payment information stages of the purchase cycle, buying an item on a smartphone in just one touch. Lastly, the app is hooked up to in-store bluetooth beacons (also provided by Powa Technologies), which allows stores to send information and promotions to browsing shoppers. Most of this technology exists already. Amazon fans will be familiar with the e-tailer's one-click shopping option. Paypal is one major digital wallet. Mr Wagner has simply rolled all these various concepts into a single app and partnered with hundreds of merchants, so that consumers sign up once and can pay anywhere, any time, and have products delivered to their desired address. PowaTag charges 25p per transaction, or 10 basis points, whichever is greater. Retailers are queuing up to try his technology: 240 retailers to be precise. When The Telegraph met Mr Wagner at his new offices in the Heron Tower, he reeled of a list of household names. "Please don't mention most of these, stick to the ones in the press release," he said. "This is going to be a rolling thunder. We'll be announcing new names every week." Reebok, Adidas, Universal Music, Carrefour and jeweller Theo Fennell will today be named as official PowaTag merchants. It has taken nine years for Mr Wagner to build this technology but this has been a blessing in disguise, he said. "I've had to fund it all myself but it's very nice to finally come out with a business where everyone says, 'You've got it, Dan. That's what we want, right now.'" He has learned how to be patient the hard way. Mr Wagner has first-hand knowledge of the challenge of innovating ahead of the market: he attracted ridicule when he launched MAID, digitising offline content years before the personal computer revolution took off; his next start-up Venda was arguably the first cloud-based platform, five years before Tim Berners-Lee conceived of the World Wide Web. "Everything is coming together at the right time," said Mr Wagner. "The opportunity is there. You don't win brands like Adidas when you're a start-up business, before you've even launched a product, without having truly transformational technology. Most would say, 'I'll wait and see'." Mr Wagner is forecasting revenues of "hundreds of millions next year, from nothing," he said. "We're going to beat the Americans at this. We're going to beat everyone at this." Powa Technologies currently has 14 offices across the world. In the Heron Tower, the company occupies over 20,000 square feet over floors 34 and 35. This does not come cheap, a testament to investor confidence in the project. Mr Wagner, famed for wearing a Donald Duck waistcoat for the flotation of one of his companies in 1994, the man they used to call Dial-a-dog following the 95pc share price fall of his business Dialog, is no stranger to risky ventures. But this must be his most ambitious punt yet. "It's a big claim," he admitted. "It's not normal for a British company to say that we'll be the best at something, not in technology. But we have built the first British true internet sensation. This is Britainâs first potential Google or Facebook.â ==================== http://finance.yahoo.com/news/loreal-usa-announces-strategic-partnership-150000720.html L'Oreal USA Announces Strategic Partnership with Powa to Deploy PowaTag's Mobile Technology NEW YORK, March 12, 2015 /PRNewswire/ --Â L'Oreal USA, the largest subsidiary of the L'Oreal Group, today announced a partnership with acclaimed mobile platform PowaTag. PowaTag's unique technology can transform any consumer touch point, from print and TV advertising to eCommerce, retail stores and social media into a platform for mobile transactions, promotions and more on a person's smartphone. Alongside interacting with print and electronic advertising, instant purchases can also be completed online through PowaTag on both mobile and desktop. "L'Oreal has led the beauty industry for more than 100 years because of our unrelenting drive to innovate for our customers," said Marie Gulin-Merle, Chief Marketing Officer at L'Oreal USA. "Through this exciting partnership with PowaTag, we see a new way to merge the online and offline worlds of our customers, adding value to their lives and bringing ease and convenience to their mobile shopping experiences." "L'Oreal has recognized the great potential to engage with their customers anytime, anywhere with PowaTag," said, Dan Wagner, CEO and founder of Powa Technologies. "PowaTag provides a way for consumers to deepen their engagement with their favorite brands and being one of the world's largest advertisers, the possibilities of what can be achieved for L'Oreal through a smartphone are endless. Mobile devices have become the go-to method for people to explore and connect with brands and PowaTag is rapidly becoming the standard for the world's leading companies." About Powa Technologies Powa Technologies is an international commerce specialist that creates technologies that enable a seamless consumer experience across all purchase channels: online, offline and everywhere. With its next-generation solutions PowaTag, PowaPOS and PowaWeb, Powa removes the final barriers to instant global transactions through a revolutionary instant mobile payment technology, the first fully integrated tablet POS platform, and advanced cloud-based ecommerce solutions. Significant investment capital has accelerated company growth, attracting the industry's finest subject matter experts to conceive, build and deploy innovative commerce technology at the heart of both merchants' and brands' future omni-channel selling strategies. Powa Technologies is headquartered in London, UK, with offices in New York, Atlanta, San Diego, Miami, Toronto, Paris, Madrid, Stockholm, Berlin, Amsterdam, Milan, Hong Kong, Taiwan, Singapore and Shanghai. PowaTag In Action -Â https://www.youtube.com/watch?v=or0L7UnaP6gÂ
- http://webcache.googleusercontent.com/search?q=cache:FeQWTXgLDHkJ:www.ft.com/cms/s/0/11799596-a2f3-11e3-9685-00144feab7de.html+&cd=1&hl=en&ct=clnk&gl=nl#axzz3f7NHsWSM Tech entrepreneur aims to revolutionise shopping Dan Wagner, one of the most controversial figures of the UKâs dotcom boom and bust, has vowed to save the high street from âtumbleweeds and lawlessnessâ with the launch of a new digital shopping venture that he claims will change the way everyone shops forever. The 50-year-old tech entrepreneur says more than 240 brands have already committed to using PowaTag â a smartphone app that will let users buy products straight from print and audio advertisements by detecting embedded codes. The app is also enabled to interact withiBeacons, a new technology that enables brick-and-mortar shops to send messages to customersâ smartphones depending on where they are in the store. âThis flips the balance from online players to physical retailers,â Mr Wagner said, speaking from his airy west London offices of Bright Station, the company that manages his various businesses. âItâs an omni-channel platform thatâs unique in the world.â With his slicked-back hair, clear blue eyes and iridescent purple tie, Mr Wagner looks like the consummate salesman. It is a role the serial tech entrepreneur knows well. A self-confessed âposterchild of the dotcom crashâ, Mr Wagner became notorious for posing for photographs in a Donald Duck waistcoat as chief executive of Maid, a database aimed at advertisers that ended in a humiliating fire sale to newspaper group Thomson. He went to found Venda, which runs websites for more than 100 retailers including Tesco, JVC, Universal Music and Boohoo.com, thefast-fashion seller set to float. Mr Wagner built Venda using technology bought from Boo.com, an early online clothes retailer that crashed spectacularly during the dotcom bubble. But unlike some of his past ventures, PowaTag relies less on whizzy innovation than it does on versatility and scale. By bundling together various technologies and getting a large number of retailers to access them through a single app, he is hoping to create a ubiquitous purchasing and marketing platform that will become second nature for shoppers. Customers include Universal Music, the worldâs largest music company, British chains Waitrose and Argos, and Carrefour, the worldâs second biggest retailer by revenue, which plans to introduce PowaTagâs audio watermarks into its television advertising. Picking up his phone and launching the app, Mr Wagner took a photograph of a small geometric mark, known as a QR code, in the corner of a magazine advertisement for a peacoat. The app recognised the product and in a few taps Mr Wagner had bought it in the right size. Other uses include letting people buy a product direct from a shop window or from a broadcast advert, to sending special offers to their smartphone based on their purchase history and location in the shop. By merging the digital and physical worlds for consumers, PowaTag is pitting itself against innovative start-ups such as Blippar and Mike Lynchâs Neurence, which use algorithms torecognise real-world objectsrather than relying on embedded tags. But analysts say PowaTag faces an uphill battle to realise its greater ambitions. âNone of the technologies are groundbreaking, and I think the change in user behaviour to make people interact with them will be a hurdle,â said Sandy Shen, an ecommerce expert at research group Gartner. âThe company needs focus on the user value, whether through loyalty points or personalised messages based on consumption,â she added. Apps such asShazamâ which lets people use their smartphones to detect the name of songs that are playing â might help acclimatise people to using audio triggers to buy products on their phones, Ms Shen said. But PowaTag has its admirers. âWhen we saw the technology we thought it was amazing,â said Valerie Dassier, head of ecommerce at womenâs fashion group Comptoir des Contonnier. Comptoir will be including PowaTag marks in its advertising from May. Within six months, it expects to let shoppers scan clothes in the store to see how they look on models and when matched with other pieces. After this, the fashion company hopes to deploy PowaTagâs beacons to send greetings and offers to customersâ smartphones when they enter the shop, according to Ms Dassier. While the iBeacon integration will start with marketing, the ambition was to eventually let it act as a checkout by recognising when the consumer is leaving the store, Mr Wagner said. The app will only be enabled for PowaTagâs beacons, which will go on sale for $99 for three sensors in the next few months. PowaTag has attracted $96.5m of investment in total, mainly from Boston-based fund Wellington Management, for about a quarter of the business. The business will make money by taking a cut of each transaction â whichever is greater of either 0.1 per cent of the value of the sale, or 25p, 40c or 30 euro cents. Mr Wagner expects PowaTag to be enabled in 500,000 physical retail outlets by the end of the year in Europe, the US and China. If he achieves that, he may have a chance to reinvent himself from posterboy of the last dotcom crash to becoming the British face of the sectorâs revival. =============== http://www.telegraph.co.uk/technology/news/9579309/British-Square-rival-Powa-signs-bank-deal-for-mobile-payments.html British Square rival Powa signs bank deal for mobile payments Powa, the British rival to Square, a start-up backed Twitter co-founder Jack Dorsey which allows smartphone owners to take credit card payments, has announced a multimillion-pound deal to provide its technology via a bank. By Christopher Williams, Technology Correspondent 3:32PM BST 01 Oct 2012 London-based Powa, which makes a smartphone app and small Chip and PIN reader that connects to the handset via Bluetooth, said its "white label" deal with South Africaâs First National Bank, was its first and heralded rapid expansion into global markets. The technology is designed to make it much easier for field workers, travelling salesmen, shop floor staff and other mobile staff to take credit card payments securely. Powaâs firmâs chief executive, serial entrepreneur Dan Wagner, said the deal would be the first of several tie-ups with banks in the next few months and that it âvalidatesâ his aim to make the product, mPowa, a white label offering. He aims to help existing financial services firms to make the step to smartphone payments more easily. Mr Wagner said Google and other established technology firms experimenting with mobile payments were merely âpretendingâ to challenge in what remains a young market. Square, his American rival, founded by Jack Dorsey and recently valued at $3.25bn, is the most established player. Like Powa, it produces a small dongle and app that turn a smartphone into a fully-fledged credit card payment terminal. However, unlike, mPowa, Squareâs technology is not capable of taking Chip and PIN payments, which are now standard outside the US. âSquare have been put forward as the winner in this market already,â said Mr Wagner. âTheyâre wrong. Weâre the winner.â The rivalry between the British and American firms recently led to a threat of legal action, with Square complaining that a photograph of Mr Wagner holding the mPowa dongle was too similar to its own publicity. First National Bank is due to begin distributing mPowa devices to its business customers within months. Powa will take a small per centage of each payment taken via the system. The firm already sells its technology direct to British businesses, but a major white labelling deal with a British High Street bank is understood to be in the works.
- https://en.wikipedia.org/wiki/Adyen Adyen is a global multichannel payment company offering businesses an outsourced payment solution, which enables merchants to accept payments from anywhere in the world and provides a global payment solution for mid, large and enterprise e-commerce merchants. Adyen serves over 3,500 customers globally. It reported earnings of $95 million in revenue in 2013, up from $65 million in 2012.[1] It has over ten years of experience in running high-volume payment systems. It is a privately held company. Adyen offers merchants online services for accepting electronic payments by payment methods including credit cards, bank based payments such as debit cards, bank transfer, and real-time bank transfers based on online banking. Adyen's online payment platform connects to 250 payment methods across North America, Latin America, Europe, Asia, Pacific, and Oceania. From international credit cards to local cash-based methods, like Boleto in Brazil) and internet banking methods like iDEAL in the Netherlands. Adyen provides a single solution, available for three payment acceptance platforms. The service is used by international and multinationals companies including Facebook, Evernote, Spotify, Airbnb, Mango,Vodafone, Booking.com, KLM, Greenpeace, Soundcloud,[2] Superdry and Groupon. History Adyen was founded in 2006 by a team of payment industry professionals (the core management team hails from Bibit and have been working together for close to twelve years). Headquartered in Amsterdam the company employs around 250 people in offices in ten countries.[citation needed] Growth In 2013, Adyen processed more than USD14B in payment transactions worldwide, an increase of 40% over 2012. Also in 2013, mobile transactions grew to 19.5% of total payments processed, up from 10.5% at the end of 2012 â an 85% increase. These factors help continue the trend of double-digit annual growth that Adyen has experienced since 2007. In December 2014, the company announced a funding round of $250 million.[3] E-commerce Adyen has designed an online payment solution that offers maximum control by offering single screen payment pages, one-click payments, and A/B testing. Adyen supports plug-ins for the leading international e-commerce platforms. They have integration plug-ins for leading platforms such as Magento, Demandware, Prestashop,Hybris, Amadeus and others. Mobile payments Adyen offers their e-commerce solution for mobile iOS or Android or Windows mobile devices. This allows companies to provide payment methods for customers anywhere around the world. When using Adyen's the companies can offer their customer a one click solution. Companies' small screen consumers can choose to be ârememberedâ on payment pages by storing their payment details on Adyen's secure platform. From then on, customers fill their shopping cart, go to the check out page and click âpayâ. Point-of-Sale payments Adyen has launched a mobile point-of-sale. The payment device allows merchants to accept both chip and pin payments from a mobile device â meaning it accepts all credit and debit cards that are widely used across Europe. The Adyen Shuttle offers face-to-face payment solutions, with payment terminals that work directly with a mobile device to receive payments on the go. ============= http://blogs.wsj.com/venturecapital/2014/12/16/payment-startup-adyen-raises-250-million-at-1-5-billion-valuation/ Payment Startup Adyen Raises $250 Million at $1.5 Billion Valuation In the largest deal of its kind this year, fast-growing payments startup Adyen BV has secured $250 million from investors who valued the Amsterdam-based startup at $1.5 billion. Adyen serves as a middleman for Facebook FB +2.41%, Spotify, Airbnb and other merchants, enabling them to accept Visa, MasterCard and soon bitcoin in nearly 200 currencies worldwide. The eight-year-old company allows merchants to accept payments on the Web, mobile and more recently at individual points of sale. The company has plenty of competitors, from legacy players like Chase Paymentech Solutions LLC and First Data Corp. to the ever-expanding cluster of fresh startups like Square, Stripe, Powa Technologies and Klarna. Along with being a popular sector, the payments and processing sector is also a well-funded one. Venture capitalists and private equity firms have invested nearly $2 billion in payment and transaction processing startups so far this year, according to Dow Jones VentureSource. The new Adyen financing is the largest of the year in the sector, edging the $235 million round raised by Austin, Texas-based Mozido Inc. Growth equity firm General Atlantic led Adyenâs round with participation from existing investors Temasek, Index Ventures and Felicis Ventures. General Atlantic Principal Aaron Goldman said his team has been getting to know Adyen since 2011. During that time, the number of new customers increased as did the volume of transactions by existing clients. Revenue nearly doubled from $95 million last year to $185 million in 2014. âWith any company that is growing at these rates you want to make sure it can continue to scale,â Mr. Goldman said, referring generally to the challenges faced by fast-growing payments companies. If such companies sees their systems go down, even briefly, âthatâs a major problem,â he said. The size of cross border e-commerceâan amount he believes will grow from $1.5 billion this year to $2.4 trillion in 2018âalong with Adyenâs technology and talent prompted him to invest, he said. Most compelling, he said, was the fact that Adyen built its own money transfer lines rather than relying on a third party. Adyen Chief Executive Peter van der Does and Arnout Schuijff co-founded Adyen in 2006. The pair had just sold their first payments startup, Bitbit, to the Royal Bank of Scotland and believed a major problem, namely that the transfer lines sometimes failed, was still unresolved. So, they decided to build their own. Along with enabling payments, Adyen provides analytics and risk management services to merchants as part of the same variable fee that is in addition to standard credit card fees. In addition to using the money to continue improving the technology, expand to Asia and put greater distance between Adyen and its competitors, Mr. van der Does said  a portion of the $250 million round will provide liquidity to early employees and other shareholders. âNow everyone is aligned with the company and not seeking an exit,â Mr. Van der Does said. For the Amsterdam tech sceneâwhich has a smattering of gaming and other startupsâAdyenâs ability to pique investor interest is something of an anomaly. There was just one other funding round for a Netherlands company this year and that was Adyenâs $16 million round reported in June, according to Dow Jones VentureSource. =========== https://www.adyen.com/home/about-adyen/our-story Our story Adyen was founded in 2006 by a team of payment professionals with a single and straightforward proposition â to deliver innovation to the payment industry. Today we have a presence on six continents and over 300 employees. We currently provide advanced payment solutions to more than 3,500 customers including Facebook, Dropbox, Airbnb, Netflix, Spotify, Evernote, Booking.com, Yelp, Vodafone, Mango, OâNeill, SoundCloud, and KLM. Adyenâs technology is developed and maintained in-house. This gives us the control and flexibility necessary to meet the evolving demands of the most innovative businesses and to release new features on an ongoing basis. From creating single-click, single-page payment processing to generating unparalleled insight into conversion metrics and shopper behavior at the checkout stage, Adyen continues to deliver and build on its founding proposition. By offering global acquiring solutions, Adyen makes it possible for its customers to benefit from the best acceptance and authorization rates whilst optimizing costs. We meet the highest standards of security and stability and our payment platform is certified PCI Level 1. Adyen is a privately owned and financially independent company, registered and monitored as a payment institution under the European Payment Service Directive regulation. ========
- https://www.adyen.com/home/about-adyen/press-releases/25-billion-payment-transactions-processed-2014 Adyen Processed $25 Billion in Payment Transactions in 2014 Amsterdam & San Francisco 21-01-2015 Global payments leader experiences over 100% growth in revenue. Adyen, the leading global payments technology company, today announced that it processed $25 billion in payments transactions in 2014 â a close to 80% increase over 2013 â and achieved over 100% growth in terms of revenue and 40% growth in new customer wins. Based on figures from the end of 2014, the company has achieved an annualized run rate of $30 billion in transaction volume processed. The news follows an announcement in December of a $250 million Series B funding round, and builds on 40% growth in payments transactions reported in 2013. Growth has been driven by both a substantial increase in customer adoption and organic growth of existing customers in many key markets globally, including North America, Europe, Latin America and Asia Pacific. New customers that signed with Adyen in 2014 include Facebook, Spotify, Airbnb, airberlin, and Dominoâs Pizza. Additionally, Adyen rolled out its omni-channel payments solution for a number of new and existing clients in 2014, including retailers such as Superdry, Moss Bros, and de Bijenkorf (Selfridges-owned department store), which are now accepting payments across online and in-store with Adyenâs single integrated payments platform. Adyen North America, one of the companyâs fastest-growing regions, saw payment transaction volume of US-based customers quadruple over the past year. In addition to working with some of the fastest-growing brand names across a range of sectors, Adyen now powers payments for 4 of the 5 largest U.S. Internet companies by market capitalization. âThe possibility to operate payments with a single platform and contract across all sales channels worldwide offers enormous benefits to merchants, and our growth over the last year is a testament to how we are meeting that need,â said Pieter van der Does, CEO, Adyen. âLooking ahead, we still see enormous opportunities for growth, particularly through delivering cross-channel insights to merchants, and accelerated expansion in North America and Asia.â Other 2014 company milestones, new offerings and growth indicators include: - Enhanced its global acquiring network with further local capabilities in North America, Brazil and Mexico. - Hired over 90 new employees, including former Netflix Head of Global Payments Kamran Zaki as President Adyen North America, and former Ingenico Management Board Member, Jean-Marc Thienpoint as Managing Director, Point-of-Sale Solutions. Total number of employees globally now stands at 260. - Opened a new office in Madrid, relocated North American headquarters to San Francisco, and significantly expanded offices in London, Berlin, and Singapore. - Added new payment methods including Apple Pay, SEPA Direct Debit (38 European countries), and Dragonpay (Philippines). - Expanded capabilities for payment methods including Alipay (adding mobile and recurring payments), Interac (Canada), Qiwi (adding recurring payments), JCB (for online and in-store), and UnionPay ExpressPay (for online and in-store). - Developed an invoice-based payment solution tailored for airlines and travel merchants in partnership with leading e-commerce company, Klarna. - Won the Best E-Commerce Platform Gateway and Best Alternative Payment Solution Awards at CNP 2014 and Best Omni-Channel Payments Solution for its partnership with Moss Bros at the Retail Systems Payments Awards 2014.
- http://kinnevik.se/Global/Kinnevik%20Rocket%20CMD%202014/Home24_Kinnevik%20Rocket%20CMD%202014.pdf
- https://en.wikipedia.org/wiki/Shazam_(service) Shazam is an American app for Macs, PCs, and smartphones,[1] best known for its music identification capabilities that has expanded to integrations with cinema, advertising, TV and retail environments.[2] Shazam Entertainment Limited was founded in 1999 by Chris Barton, Mark Anthony Hash, Philip Inghelbrecht, Avery Wang, and Dhiraj Mukherjee.[3] Shazam uses a smartphone or computer's built-in microphone to gather a brief sample of audio being played. It creates anacoustic fingerprint based on the sample and compares it against a central database for a match. If it finds a match, it sends information such as the artist, song title, and album back to the user. Some implementations of Shazam incorporate relevant links to services such as iTunes, Spotify, YouTube, or Zune. In December 2013, Shazam was one of the top ten apps in the world, according to its CEO.[4] The Shazam app has more than 100 million monthly active users and has been used on more than 500 million mobile devices, as of August 2014.[5] In October 2014, Shazam announced its technology has been used to identify 15 billion songs.[6] Features Shazam offers two types of applications: a free app simply called Shazam, and a paid app called Shazam Encore. In September 2012, the service was expanded to enable TV users in the US to identify featured music, access cast information, and get links to show information online, as well as added social networking capabilities.[7] In February 2014, Shazam announced a redesign of the app, which included a new look and additional features, including lyric-viewing options, access to music videos and related videos, unique recommendations, improved biographies and discographies, and additional functionality for use with TV shows. The update also featured a News Feed and Auto-Shazam, a feature introduced in December 2013, which runs in the background of usersâ mobile devices to automatically identify media.[8] In July 2014, Shazam announced the launch of Shazam for Mac, a desktop version of the app, which when enabled, runs in the background and automatically recognizes any song played on or near the computer, including songs playing in the background of TV shows or YouTube videos.[9] Appleâs launch of iOS 8 in September 2014 came with the seamless integration of Shazam into Appleâs intelligent personal assistant Siri function.[10] Devices Shazam is a free or low-cost application that runs on Android, iOS, BlackBerry OS, and Windows systems. The application is similar on most phones, and the result is shown on the screen complete with details on Artist, Album, Title, Genre, Music label, lyrics, a thumbnail image of the song/album artwork, links to download the song on the Amazon MP3 or iTunes store, and, where relevant, give the option of playing the song on Rdio and show the song's video on YouTube. Shazam is also available for Mac, as a desktop application.[9] On 24 April 2015, Shazam was also confirmed as a new optional app on watchOS, launching on the Apple Watch App Store. Function Shazam works by analyzing the captured sound and seeking a match based on an acoustic fingerprint in a database of more than 11 million songs.[11] Shazam identifies songs based on an audio fingerprint based on a time-frequency graph called a spectrogram. Shazam stores a catalogue of audio fingerprints in a database. The user tags a song for 10 seconds and the application creates an audio fingerprint. Once it creates the fingerprint of the audio, Shazam starts the search for matches in the database. If there is a match, it returns the information to the user; otherwise it returns a "song not known" dialogue.[13] Shazam can identify prerecorded music being broadcast from any source, such as a radio, television, cinema or music in a club, provided that the background noise level is not high enough to prevent an acoustic fingerprint being taken, and that the song is present in the software's database. History The company was founded in 1999 by Barton and Inghelbrecht, who were students at University of California, Berkeley, and Mukherjee, who worked at a London-based internet consulting firm called Viant.[citation needed] In need of a digital signal processing specialist, the founding team then hired Wang, who was a PhD student from Stanford University. As of September 2012, Wang is the only member of the original team to remain in the company,[3] and serves as Shazam's Chief Scientist.[14] Rich Riley joined Shazam as CEO in April 2013 to increase the companyâs growth,[15] after over 13 years at Yahoo![16] and with more than 17 years of experience as an entrepreneur and leading Internet executive.[17] "I look forward to extending our dominance in media engagement, from our roots in music to our leadership position in second-screen TV and want to ensure that Shazam is the company that helps people recognize and engage with the world around them,â Riley said in a statement at the time.[16] Riley replaced Andrew Fisher, who was hired from Infospace into the CEO role in 2005 to strengthen industry partnerships and grow the userbase.[3] Fisher is now executive chairman. Partnerships The first partnership was with Entertainment UK, part of Woolworths, whom they approached to digitise their music catalogue of 1.5 million songs in return for permission to create a proprietary database. As the service grew to have a worldwide userbase, it needed to keep its database up-to-date, which it does by having relationships with labels globally.[3] By December 2008, the database had grown to 8 million songs.[18] In February 2013, Shazam announced a partnership with the music store Beatport, adding its library of electronic music to the service.[19] On 3 April 2013, Shazam announced an exclusive partnership with Saavn, an Indian online music streaming service. The deal will add nearly 1 million songs in Indian languages to Shazam's database.[20][21][22][23] In July 2014, Shazam announced a partnership with Rdio that allows Shazam users to stream full songs within the app.[24] In addition to music, Shazam has announced collaborations with partners across television, advertising and cinema. In May 2014, NCM Media Networks announced a partnership with Shazam to incorporate Shazam into FirstLook pre-show segments that run in Regal, AMC and Cinemark theaters.[25] In November 2014, NCM and Shazam announced that NCM FirstLook pre-shows are now Shazam enabled on over 20,000 movie screens across the United States.[26] In August 2014, Shazam announced the launch of Resonate, a sales product that allows TV networks to access its technology and user base. The news included the announcement of partnerships with AMC, A+E, dick clark productions and FUSE.[2] Shazam recently announced a partnership with Sun Broadcast Group on Shazam for Radio, a new offering that will allow radio stations to push customized content to listeners on Sun Broadcastâs over 8,000 radio stations in the U.S.[27] Early days of the service Initially, in 2002, the service was launched only in the UK and was known as "2580", as the number was the shortcode that customers dialled from their mobile phone to get music recognised.[3] The phone would automatically hang up after 30 seconds. A result was then sent to the user in the form of a text message containing the song title and artist name. At a later date, the service also began to add hyperlinks in the text message to allow the user to download the song online.[28] Shazam launched in the US on the AT&T Wireless network in 2004 in a joint offering with Musicphone, a now defunct San Francisco-based company. The service was free at launch with AT&T saying that it would charge USD0.99 for each use in future.[29] In 2006, users were charged ÂŁ0.60 per call or had unlimited use for ÂŁ4.50 a month, as well as an online service to keep track of all tags.[28] Smartphone app Shazam for iPhone 2.0 debuted on 10 July 2008, with the launch of Apple's App Store. The free app simplified the service by enabling the user to launch iTunes and buy the song directly if the user was on a Wi-Fi connection [30] (at the time, iTunes did not allow music downloads over 3G). It was also possible to launch the iPhone YouTube app, if a video was available.[31] In 2008, the service struggled to identify classical music.[32] Shazam launched on the Android platform in October 2008. The Android app connected to Amazon's MP3 store instead of iTunes.[33] Alongside the iOS 3 update in July 2009, Shazam updated its app to include a number of new features: marking the tag with GPS coordinates; sending tags to others as 'postcards', enabling them to buy the song; and Twitter integration.[34] The app launched on the Windows Mobile Marketplace in October 2009 as a freemium offering, with the first release of Shazam Encore. The free version was now limited to five tags per month: users typically tagged ten songs per month. Encore, priced at USD4.69, added several features such as song popularity charts and recommendations.[35] Encore first appeared for iPhone in November 2009.[36] By December 2009, Shazam was downloaded 10 million times in 150 countries across 350 mobile operators. Around eight percent of users purchased a track after it was identified by the service.[3] Its success led to a funding round from Kleiner Perkins Caufield & Byers in October 2009.[3][37] In January 2011, Apple announced that Shazam was the fourth most downloaded free app of all time on the App Store, while rival SoundHound had the top paid iPad app.[38] Early adopters of the free application are still allowed unlimited tagging.[39] GetJar, an app store for Android, Blackberry and Symbian, added Shazam in November 2010.[40] In January 2011, Shazam and Spotify announced a partnership for iOS and Android to help users identify music with Shazam and listen to tracks through Spotify.[41] While Shazam already had Facebook and Twitter share buttons, deeper Facebook integration was released in March 2011. With Shazam Friends users can see what their Facebook friends have tagged, listen to the tracks and buy them.[42] With Shazam 5.0, released in April 2012, the app begins 'listening' as soon as it is launched and can take as little as one second to identify media. In addition to music, the app can identify TV programs and ads, if they are Shazam-enabled.[43] In August 2012, Shazam announced the service had been used to tag five billion songs, TV shows and advertisements. In addition, Shazam claimed to have over 225 million users across 200 countries.[44] A month later, the service claimed to have more than 250 million users with 2 million active users per week.[7] The Shazam app currently has more than 100 million monthly active users and has been used on more than 500 million mobile devices.[5] In October 2014, Shazam announced its technology has been used to identify 15 billion songs.[6] The Shazam app was listed among Techland's 50 Best Android Applications for 2013.[45] In August 2014, Shazam announced there would be no more updates for Shazam(RED) after 7 August.[46] Current users are advised to switch to the free version with tags transferred and ads removed (for free). Appleâs launch of iOS 8 in September 2014 came with the seamless integration of Shazam into Appleâs intelligent personal assistant Siri function.[10] In October 2014, Shazam introduced version 8.0 of the app, which features a new and improved News feed, as well as a section featuring Shazam charts and an "explore" option which lets user explore Shazamed tracks near them and around the world.[47] Desktop Shazam announced the launch of Shazam for Mac, a desktop application, in July 2014. When enabled, the app runs in the background of a Mac and automatically recognizes any song played on or near the computer, including songs playing in the background of TV shows or YouTube videos.[9]
- http://www.shazam.com/company
- http://www.wsj.com/articles/music-discovery-company-shazam-valued-at-around-1-billion-1421780459 Music-Discovery Company Shazam Valued at Roughly $1 Billion U.K. Company Raises $30 Million, as New Investors Take Nearly 3% Stake By LISA FLEISHER Jan. 20, 2015 2:00 p.m. ET LONDONâShazam Entertainment Ltd. has reigned for years as a must-download app because of its ability to name that song with just a tap. Over the past few years, Shazam has been among the top 40 free iPhone apps, according to Apple Inc. Since the debut of its first product in 2002, the London-based company has cycled through several business models. The appâs rank among free U.S. iPhone downloads has been slipping along with the growth of the App Store, though the number of people who use the app every month rose to 100 million in 2014 from 70 million in 2013, according to Shazam. Investors poured in $30 million in a deal that closed Tuesday, company officials and investors said. The new investorsâ stake is equivalent to just under 3% of the company, valuing Shazam at roughly $1 billion, according to Executive Chairman Andrew Fisher.He declined to identify the investors, but he said they hadnât previously invested in the company. Shazamâs popularity stems from its ability to quickly scan sound waves from a piece of recorded music, compare the pattern with its database of 35 million songs and return matching information such as the artist, song name, album, lyrics and where to listen to or buy that song. Before smartphones, people could call Shazam, hold their cellphones up to a speaker and get a text message back with the songâs name. The company initially earned money by charging for each match, then started taking a cut of digital-music downloads from services such as Appleâs iTunes. The company says it is still responsible for one in 10 digital song sales. But customers are increasingly turning to subscription music services, such as Spotify Ltd. Meanwhile, the company has had to fend off threats from technology giants such as Yahoo Inc.,Google Inc. and AmazonInc., which have started to try their hands at Shazamâs core function of identifying music. Shazam Chief ExecutiveRich Riley said the company is âintentionally not profitableâ as it invests in technology and staff, growing to 250 employees globally. The companyâs most recent filings in London show that Shazam incurred a loss of ÂŁ5.8 million ($8.8 million) in the six months ended Dec. 31, 2013, on revenue of ÂŁ16.9 million. In recent years, Shazam has moved beyond music recognition. In 2010, the company started making television ads âshazamableâ by adding the commercials to its database. The app listens to and identifies a commercial, pulling up more information about products or special offers. Soon, people will be able to use Shazam to identify print ads, products or stores using their phoneâs camera or wireless sensors. âOur vision is to connect people to the world around them,â said Mr. Riley, who was recruited away from Yahoo in 2013. âIt is still early days. People still arenât yet used to âShazamingâ print ads and soda cans and that kind of stuff, but we think that is where the worldâs going.â Mr. Riley said he wanted people to be able to walk into Grand Central Terminal in New York City and use Shazam to get special offers at stores or pull up a subway map. In November, Shazam announced a deal with Mood Media, which provides soundtracks for retail stores. In Office Depot and OfficeMax stores in the U.S., customers can open up Shazam to receive promotional offers to use in those stores. Shazam also packs a hidden weapon: customer data. If people use Shazam more like a search engine, to find out more about the products and places around them, the company will have valuable geographic and interests data to add to the information about the musical tastes of its customers. But executives feel they have to tread lightly. If customers donât see the benefit, they will delete the app. The company wants the brand to be known as a service that lets people pull up more information while they are watching television shows, attending live concerts or even shopping in a grocery store. Some analysts say it is too soon to tell whether such advertising will be successful. âThe fact that people are using two screens doesnât necessarily mean that theyâre any more receptive to advertising than if they were using one screen or no screens,â said Paul Verna, an analyst with research firm eMarketer. âIâm just not sure that that is going to materialize the way marketers and app developers thinkâor wishâit would.â Mr. Riley says Shazamâs popularity will help it stand out, as smartphone users cut down on the number of apps they keep on their phone. Other companies have to persuade people to download their app, while Shazam is frequently already there, he said.
- http://www.ft.com/intl/cms/s/2/88df8fa6-893e-11e3-bb5f-00144feab7de.html Shazam: the app that calls the tune How did a quirk music identification app, invented in Silicon Valley and nurtured in the UK, become a global business? At the end of last year, Banks, a young musician from suburban Los Angeles who sings floaty, R&B-infused melodies, was selected as one of 2014âs acts to watch by the BBC. The broadcasterâs longlist, compiled by music media insiders, has a good track record: in recent years it has helped boost acts such as Adele and Jesse J. But while Banksâ manager, Trevor Skeet, was grateful for the BBCâs endorsement, he was even more excited that she was selected as a rising star by Shazam, the music identification app. â[Itâs] a new medium for gauging the stickiness of a song and itâs pushed radio programmers to add songs they otherwise wouldnât have,â he says. Skeet believes Shazamâs list â which combines criticsâ reviews and data on the number of people who have used the app to find a song â is a more accurate reflection of consumer behaviour and the popularity of artists than radio airplay. The data it accumulates can also be used to predict which artists will be successful. âDiscovery is at the root of all musiciansâ careers and Shazam is a really popular way for people to discover artists,â says Skeet. Shazam began life as a music identification service on early mobile phones. It was initially a text service â users could type in a number, hold their unwieldy phone to the source of the music, send a text message and wait for a reply with the song title and artist. Now, in the age of the smartphone, users can open the app, hold their phone or tablet to the radio or television to âlistenâ and identify the song and, if they want to, download it. The company says it generates more than $300m annually in digital music sales, largely through iTunes, and for which it receives a small percentage commission (it declines to disclose the exact figure). More than 420 million people use the service in over 200 countries or territories, and 15 million new users are added every month, making Shazam one of the 10 most downloaded apps for the iPhone worldwide. Last summer, AmĂŠrica MĂłvil, the telecoms operator controlled by Mexican billionaire Carlos Slim, invested just under $40m in the London-based company. Slimâs involvement means that the app is now installed on two million Android handsets sold by his company across Latin America. Despite making a profit only once in its history, through selling its intellectual property portfolio, Shazam wants to be one of the first British technology companies to float in the US for at least $1bn. Occasionally, gripped by nostalgia, Shazam co-founder Chris Barton flips through the PowerPoint presentations he used to pitch the idea in 2001. In the wake of the dotcom meltdown, however, investors werenât interested. âIâd missed a period of hyper-optimism and felt frustrated,â he says. âVenture capitalists were focused on fighting fires in their existing companies. It was really tough.â Occasionally, gripped by nostalgia, Shazam co-founder Chris Barton flips through the PowerPoint presentations he used to pitch the idea in 2001. In the wake of the dotcom meltdown, however, investors werenât interested. âIâd missed a period of hyper-optimism and felt frustrated,â he says. âVenture capitalists were focused on fighting fires in their existing companies. It was really tough.â Barton, who now works at the file sharing service Dropbox, came up with the idea while doing an MBA at Berkeleyâs Haas School of Business. Inspired by his scientist parents, who had established a nuclear physics consultancy, and a fellow student who had set up real estate company Ziprealty, Barton became convinced that he was an entrepreneur in the making. Of his top three ideas, he turned down one because it was too boring: âBuying contact lens solution over the internet â I couldnât see myself ploughing hours into that particular business.â Another because it was too stupid: âI wanted to harness some celebrity appeal to the internet. Youâd be on Amazon and a message would pop up, saying âStingâs also on Amazonâ. I donât think Madonna would really let you know what websites she was looking at. My friends called it âe-stalkerâ.â But he thought his third idea might work: a service to identify music over mobile phones. âI liked music, but I didnât invest the time in keeping up with the latest bands,â he says. There were already a few tech start-ups in this area, but they focused on recognising songs played on the radio. Barton wanted to enable users to do so in noisy environments, like chatting in a bar. He went in search of an audio technology expert, and came across Avery Wang, who had completed a PhD in audio analysis at Stanford University. âI saw the problem as unsolvable,â recalls Wang. âSpeed was important â you couldnât have a super-computer crunching the song for an hour.â He initially dismissed Barton as âa naive business school studentâ, but later realised, over lunch in Palo Alto, that this naivety was in fact âbright-eyed enthusiasmâ. Wang had also become tantalised by the âinteresting problemâ. Barton went on holiday leaving strict instructions: Wang had to invent the technology by the time he got back. âI dreaded hearing from him. I was behind schedule,â admits Wang, who is now Shazamâs chief scientist, overseeing innovation and intellectual property. But he soon realised the solution was to turn a piece of music into a âfingerprintâ or ânumeric signatureâ. When a song is played, the algorithm he created identifies frequencies of peak intensity, matching this fingerprint or numeric signature with one of the tracks from Shazamâs database. In the early days, Barton recalls, âwe were particularly lucky. For the core service [identifying songs] we did not need to have partnerships with the music labels, [because] it was reliant on music fingerprints, which did not require licences or rights, as they are not actual music.â Later, partnerships were required in order to develop some of the additional services, such as sending songs by email to a friend. That was to prove much more difficult, because music companies were suspicious of digital services cannibalising their revenues (this was the era of Napsterâs free peer-to-peer sharing service). Eventually, as Shazam became more established, it became easier to do deals. Once the technology and infrastructure was in place, next on the list was investment. This was no small task. âThose initial years of Shazam were the worst years in the past couple of decades to raise money,â says Barton. âA few years earlier, the money would have rolled through the door.â Wang, who sold his company to work full-time at Shazam â joining Barton and his fellow MBA student Philip Inghelbrecht â agrees: âWe were either two years too late or five years too early. If we had started in 1998 we would have got millions and gone public.â Barton says they were sustained by the belief that one day âthere would be a world of wonderful things to do with mobile phonesâ. That, however, was still years away: Shazam was launched in the mobile phone dark ages, five years before the iPhone. It was a clunky service on clunky devices. âI donât think we realised how long it would take to really get there, but we knew it was coming.â Just before September 11 2001, after hundreds of pitches and persistence, Shazam finally secured its first round of funding, raising about $7.5m through three venture capital firms: Lynx New Media (a joint venture between Bear Stearns and Virgin Media), IDG Ventures Europe, and FLV, a Belgian fund investing in speech recognition. By this time, Barton had moved from Silicon Valley to London. Barton, whose father is British, was attracted to the London lifestyle (he studied finance at Cambridge). âWe stumbled across business reasons rather than planned it. It was serendipitous â once we moved, we realised that London was the perfect place.â Europe was a far more advanced mobile market than the US, where you âcouldnât even send a text message to a friend on a different carrierâ, he says. In 2000, the auction for next-generation mobile phone licences in the UK produced a windfall of ÂŁ22.5bn for the UK government. This made London a more compelling place to find investors for a mobile-based offering. Shazam also recruited a fourth founder, Dhiraj Mukherjee. However, the experience of launching was brutal. Within three years, three of the four founders had left: Barton joined Googleâs mobile division, Mukherjee moved to Save the Children and Inghelbrecht went to YouTube. All say they were burnt out. Mukherjee describes the early years as âlike running up a down escalatorâ. Barton says he still spends âat least 20 hours a weekâ thinking about the company he started, and despite the awful investment environment when he launched Shazam, he now thinks âthe toughest times can be the best years to start a company. There is less competition for talent. Itâs easier to get office space, and big companies canât copy your ideas because theyâre too focused on the core business. If you can survive, a downturn can be a great time to start a business.â Shazam is headquartered in an unremarkable building in Hammersmith. Aside from a pool table, there are few of the quirks associated with tech company offices. Instead, the company has a slickness that shows its transformation from vulnerable start-up to one preparing for an IPO. Compared with the founders, who still bubble with enthusiasm about their start-up, the current leadership team are guarded and on-message. Andrew Fisher, Shazamâs executive chairman, who joined in 2005 from internet content company InfoSpace, says one of the biggest mistakes founders make is to âunderestimate how long it takes to change consumer behaviour: it always takes a year or two longer than you anticipate.â He believes that an app only works if it gains social currency. âPeople will help you [expand] your business through word of mouth,â he explains. âPeople think itâs a fun service; they tell all their friends about it.â Fisher admits that luck also played a part. Not only did Barton inadvertently choose to move to the right market, but the launch of the iPhone, and in particular iTunes, also helped transform a gimmicky service into a ubiquitous app. Rich Riley, the former Yahoo executive who joined Shazam as chief executive last year, and is based in New York, says: âThe smartphone phenomenon is one of the great tech trends in our lifetime â most people have, in effect, a supercomputer in their pocket.â But like many consumer tech companies, including Twitter and Facebook, Shazam was also a product in search of a commercial proposition. Fisher says the company âzigzagged through business modelsâ, pivoting in a way that is typical of many technology start-ups, which are frequently iterating, building brand recognition, and then figuring out how to make money. âWe took a big risk: we went free. Then we changed to a freemium model â part paid for, part free: you could use the service five times a month and then pay for it. Weâve gone back to being free.â Mike Butcher, co-founder of TechHub, a London-based community for tech entrepreneurs and investors, says Shazam has been good at constantly adapting: âYouâve got the magic in terms of recognising a song â what models do you layer on top of that? They have been pivoting, testing models.â One such shift has been to the US, where Shazam is known more for TV advertising than as a music recognition app. Brands pay the company to make their ads interactive. Shazam declines to disclose how much it makes from advertisers, but says this is its fastest-growing source of revenue, and the potential is much bigger than that in music. âTV advertising is worth about $300bn a year and digital music sales are incredibly small,â says Fisher. âThe total music market is worth about $10bn now.â During last yearâs Super Bowl, advertisers enticed viewers to use Shazam to enter sweepstakes, unlock exclusive online content and participate in polls by pointing their phones and tablets â with the app open â at a Shazam logo on screen. Fast-food chain Jack in the Box integrated Shazam into its advert for a Hot Mess burger. After âShazamingâ it, viewers were able to watch a music video, complete with long-haired guitarists and Pat Benatar theme tune. At this yearâs Super Bowl, all of the ads will be Shazam-enabled, and viewers will be able to replay their favourite spots and share them on their social networks. Fans will also be able to access other exclusive music features during the half-time show, which features Bruno Mars and Red Hot Chili Peppers. âWhy would somebody want to Shazam a shampoo ad on TV? Because they can get styling tips,â says Fisher. âSo, if you Shazam the ad, yes, you can get the voucher to buy the shampoo, but you can then watch videos of how to style your hair like the models in the TV ad.â This behaviour also generates valuable data that can track and predict consumer patterns. The company says it does not share personal data with advertisers unless a Shazam user specifically opts to receive further information. But it does use its knowledge of what has interested a user to serve both ads and content in the app. If, for example, a user Shazamed a specific artist, he or she would be notified of a new album or upcoming tour dates. Some in the advertising industry, however, are sceptical that simply enabling television viewers to interact with brands will generate much income. Richard Spalding, chief executive of The 7th Chamber, which creates and seeds video content for brands, says âgenerally, people donât interact with ads: interactive advertising has failed to make any significant impact on peopleâs lives. There is value in creating awe around a brand, but ultimately, advertising is about sales.â Despite not being profitable (last year, Shazam posted a pre-tax loss of ÂŁ3m, on revenues of ÂŁ21.8m, up from ÂŁ15.6m), and talk that the company could be acquired, Riley remains bullish that a high-value listing is within reach. âProfit is a nice-to-have, not a must-have,â he insists. He will not be pinned down on a figure for an IPO valuation (Fisher has previously said Shazam was âlooking at $1bn and beyondâ), but suggests that the likes of Twitterâs $18bn listing will push his own companyâs value higher. âVarious companies have floated and not made a profit,â he says. âWe are investing in the future. Weâre choosing to reinvest rather than give returns to an investor.â He adds that in fast-growth sectors, people are âless concerned with profits today and more concerned with profits tomorrowâ. Nonetheless, the fact that the date for a Shazam IPO has been pushed beyond this year (2014 was mooted by Fisher last summer), in order that the company can strengthen its finances, suggests that it recognises that the financial underpinnings need to be bolstered. Ultimately, says Fisher, Shazamâs success will be âmeasured in three yearsâ time by how often people use Shazam as part of their everyday lives: whether they go to an internet browser and type in www when they want to engage with a brand or a [television] programme, or whether they just point and click and use Shazam.â Meanwhile, Barton, who is now based back in Silicon Valley, says he couldnât âbe more pleasantly surprisedâ by Shazamâs performance. âI always thought it could be popular, but never anticipated the extent of its popularity. We under-predicted how many people would use it.â If the company does float, Barton stands to become a millionaire. Does he ever regret diluting his stake in the company? âI wonât be so rich I can buy a yachtâ.â.â.âbut Iâll have enough for it to be meaningful. There are entrepreneurs who end up with nothing.â =============== http://mashable.com/2015/06/29/shazam-social/ Shazam is adding social features to try to become more than just a blue button For many, Shazam is just a magic blue button that tells you what song is playing at the bar or on the radio. Considering how daunting a task being able to identify the world's music is, it does this very well. But, the company wants to be more than this. At a event in TriBeCa Monday, the company announced a new feature where users of the app can follow their favorite artists and see what they're Shazaming. Alicia Keys, One Direction and Maroon 5 are part of a group of 30 artists participating at the launch, with more musicians, and possibly non-musicians to follow. It's all part of a big push to drive up engagement within the app: Shazam currently is a bit of a one-stop shop where you come in, identify your song and leave. This feature works great, but the company needs users to stay inside the app for a longer time to increase revenue from advertising and referrals. The company is calling this a transition from a pure "discovery" experience to a "shared discovery" experience. Artists will be able to choose what music they share with their followers and users will be able to "like" the tracks they share. Shazam will also now show how many times a track has been Shazamed, in addition to the charts it already has. Last year, Shazam launched a feature to help users discover new music, based on the most Shazamed songs in their local area and around the world, augmenting its music identification service. Shazam drives revenue through referrals and ads on the app. Referrals occur when a user taps on a song within Shazam â both identified and discovered â and is given a link to listen in Apple Music, rdio or Spotify, build a radio station on Pandora and find out when an artist is performing in their city. In an interview with Mashable, Shazam's Chief Product Officer Daniel Danker said that Shazam referrals were responsible for 8% of all digital music sales in the world. You might be led to believe that with Shazam launching a new social element to its platform, it would be a competitor to Apple Music, but Danker said it's nothing of the sort. Shazam worked closely with Apple and it's one of the first apps to launch with Apple Music integrations. "It's got to be a 'better together' strategy, because, put yourself in the shoes of the user: they don't want strong lines between these services, they want smooth movement, and that's what delivers the best consumer experience," Danker said. So think of Shazam not as a competitor, but a companion to Apple Music or your streaming service of choice. For artists, this product gives a new way to interact with fans. In an interview with Mashable Singer Adam Lambert said "I'm on social media blasting out [to fan's] songs all the time, so I think this will be a more practical hands-on thing." Lambert also notes Shazam is an interesting means of discovery for artists because listeners come to the music without any preconceived notions. It "lets the music be front and center." 30 musicians will be "verified" on Shazam with the launch, and Danker says that 100 more are waiting to be verified. Independent musicians will also be able to become verified, so it's not just a feature for the upper-echelons of artists. "I want every single artist on Shazam to be verified. I want every artist to be reaching their fans in this way," Danker said. He even thinks that this feature could be expanded to include non musicians as well: "You could easily see a world where someone like Ryan Seacrest is verified." This product comes at quite an interesting time for the music industry. Danker said that "we've been seeing quiet in the music industry for a while, and now I think it's revitalized. I love that because it's changing the way people discover music, it's changing the way that people consume music and it's changing the way that people talk about music. It's going to be a really interesting year for music." It's tricky to predict how well the social aspect of Shazam will be received. The only real precedent for social networking being rolled into a music app would be iTunes Ping, which Applepulled the plug on in 2012. The industry seems to be headed in that direction, though, with Apple Music's Connect platform and Tidal's exclusive content from its artist-investors. Users will be able to play with this feature when the latest update goes live Tuesday morning. ==============
- http://www.ft.com/intl/cms/s/0/e20f6c92-c1d0-11e4-abb3-00144feab7de.html#axzz3f7hs8yiG Luxury online fashion retailer Farfetch valued at $1bn Online luxury retailer Farfetch, no stranger to high charges, has earned a whopping pricetag of its own. The London-based group, which sells clothing for high-end, independent fashion boutiques, has raised new investment valuing it at $1bn, in another sign that foreign investors are givingUK tech start-upsthe big money and large valuations usually lavished on Silicon Valley groups. The company, which is not profitable, has received $86m in a funding round led by DST Global, a leading venture capital firm run by Yuri Milner, an early backer of Facebook, Airbnb and Alibaba. Previous investors in Farfetch, including the publishing group CondĂŠ Nast International and private equity firm Vitruvian Partners, also participated in the fundraising. In total, the six-year-old company has raised $195m. The deal is another illustration of how Londonâs tech scene is beginning to attract large cheques to back its global ambitions, particularly from Silicon Valleyâs top investors. In January, TransferWise, a money transfer company, wasvalued at about $1bnafter receiving $58m in funding, led by Andreessen Horowitz, the Californian venture capital group that has previously backed Facebook and Twitter. In the same month, Shazam, the music discovery app, announced it had gained a $1bn valuation,raising $30mfrom unnamed investors. But like those two companies, Farfetchâs lack of profits has led to concerns that Londonâs tech market may be overheating. Nick Bubb, an independent retail analyst, said that he was âstaggeredâ at the valuation, given the recent troubles of other UK fashion ecommerce companies, including as Asos and Boohoo.com. He also pointed to others luxury retailers, such as Net-a-Porter, which sold a controlling stake toRichemont, the Swiss luxury group in 2010. That deal valued Net-a-Porter at $550m, while bankers said recently that an initial public offering could value it at $3.4bn. âIf Farfetch falls into the big global, international camp, you could maybe see [it being worth $1bn],â he said. âBut you would have thought investors would be much less confident with attributing very high valuations to these things, given that there has been the feeling that the bubble has slightly burst, so Iâm staggered about that kind of valuation.â JosĂŠ Neves, FarfetchâsPortuguese founderand chief executive, told the Financial Times that, unlike other tech groups, its business was built on firmer ground. âWeâre very different from the traditional social media player that raises hundreds of millions of dollars with no revenue and have a massive fund raise,â he said. âWeâre fundamentally an ecommerce company. Weâre valued and scrutinised by investors as a company that has sales, has margins and has revenues.â Mr Milner said he invested because Farfetch has âa strong team, impressive growth and great potentialâ. Farfetch describes itself as a âdigital co-operative for the 21st centuryâ. The company provides various services to more than 300 independent fashion boutiques, such as photographing clothing for the site, processing payments and negotiating shipping rates with couriers. It features items from shops in Bucharest, Mumbai and Riyadh, but adds that its model allows a small store in Tunbridge Wells to sell items to customers in markets from Los Angeles to Tokyo. Customers pay the same price as they would in-store. Farfetch takes a cut, in the double digits, secured from the boutiqueâs margin from each sale. The company says it enabled $300m in sales globally last year from 450,000 customers in 180 countries.Farfetchadds that sales through the site have doubled each year since its founding. Farfetch intends to use the new investment to expand further internationally, with plans to spread operations to Germany, South Korea, Spain and throughout Latin America. The companyâs two largest markets are the US and UK. Last year, it launched in Russia, China and Japan. Mr Neves accepts his company still needs to âmatureâ, ruling out an IPO in the next couple of years. But he defended the business model, saying it had advantages that mark it out from other fashion eretailers. The company does not have expensive overheads, such as the cost of housing inventory, as individual stores keep hold of the stock then selling them on Farfetchâs website. He says it also benefits from its large scale, which enables it to negotiate deals with logistics groups that benefit the boutiques. Farfetch also worries less about the price of its deliveries compared with other retailers. Mr Neves says the average customer spends $650 per basket, leading them to be less price-sensitive that the typical online shopper. âThere is a difference in [shipping] price, but when youâre dealing with luxury goods, its completely immaterial,â he said. âFor an Amazon customer, itâs a disaster to add another $2 or $3 to the price.â But Farfetch may struggle if established ecommerce groups, such asAmazonandeBay, both of which have ramping up its fashion operations in the past few years, manage to crack the luxury market. Mr Neves is not worried. âWhat is the equivalent of Amazon in the offline world?â he asks. âProbablyWalmart. Then I ask you, does Walmart store any of these [designer] labels?â âOn trendâ founder aims to look beyond Silicon Valley Sporting a stark-white Givenchy shirt, dark Demeulemeester trousers and shiny black Saint Laurent shoes, JosĂŠ Neves strides up to meet the Financial Timesdressed on trend, writes Murad Ahmed. Every article of clothing, save the expensive-looking Cartier watch, were purchased with the click of a mouse on FarFetch, Mr Nevesâ high-end fashion site. âJewellers are not very open to online,â he explains. With long hair and a healthy beard, the 40-year-old â who is married with four children aged 16 and under â would not look out of place strutting down a catwalk, but he could not think of a worse place to be. âI try to avoid fashion shows,â Mr Neves says, âIâve been running fashion businesses for 20 years now, so it is a luxury not having to be there.â He founded Grey Matter in 1994, a software business, while studying Economics at Universidade do Porto. Two years later, he switched to retail, establishing the shoe brand Swear in London, followed by B-Store in 2001. His next venture, Farfetch, combines his interests in technology and fashion. But like Mr Neves, Farfetch needs tostraddle bothof these worlds. He notes that, for all the cash sloshing around Silicon Valley, its richest entrepreneurs and venture capitalists all drive the sameTeslaelectric cars and are dressed in clothes Mr Neves considers unstylish. Instead, he needs to build an online business that courts the individualistic, beautiful people of Los Angeles, more than the scruffy, casual coders of San Francisco. âOther internet companies are really data driven,â he said. âThey think, letâs make this button on the site orange, because it sells better than black. We wonât do that. We have a respect for aesthetics and the ethos of the industry we are in. We are champions of the best curators of fashion.â ============
- http://fashion.telegraph.co.uk/article/TMG9946984/What-if-the-internet-turns-out-to-be-the-saviour-of-the-high-street.html What if the internet turns out to be the saviour of the high street? Farfetch.com has developed a model that seems to be win-win-win, for consumer, retailer and e-tailer. Word reaches this desk that Robert Peston is about to embark on a three-part documentary about the history of shopping. Yes, shopping, until recently derided as the opiate of fluffy airheads, is now commanding the attention of serious (ie male) reporters. Radio 4 seems to carry reports on the desolate state of our high streets every other day. Almost everyone agrees that e-tailing is slaughtering retailing. But what if the internet could help preserve the high street? That's the vision of JosĂŠ Neves, a 38-year-old Portuguese geek-meets-chic entrepreneur who set upfarfetch.com, a virtual market-place for upmarket boutiques across the world. The idea - that a customer can type in key generic words such as grey trousers, or, more specifically "Stella McCartney white waistcoat" - and instantly access their heart's desire from a small independent retailer in Antwerp, or a large established emporium in SĂŁo Paulo - is an idea of dazzling, why-didn't-anyone-do-this-before simplicity. The logistics however, are more complex. To service the 240 stores that currently sell on farfetch, the company employs more than 100 people just to work in the 25 photographic studios in Lisbon, SĂŁo Paulo and LA where 80,000 pieces are shot each season. Then there are the eight full-timers who monitor card fraud, the 4million euros it currently spends annually on shipping and the search engine optimisers that ensure that when you type in "Vanessa Bruno black jackets" the first name that pops up isn't always net-a-porter. There's also a team that monitors stores to check they're sufficiently chichi and that the AlaĂŻa and Balenciaga they say they stock isn't four years old. Although farfetch's swat squad visits boutiques incognito, there's nothing sinister afoot, according to Susanne Tide-Frater, brand and strategy director for farfetch. "We're there to support these shops. Some have a dark, moody and battered aesthetic, others are super-culty - and that's great. We're there to help them understand what's unique about their offer, because there's a lot of sameyness on other e-tailer sites". A competition farfetch ran last year to find the youngest, coolest boutique, awarded the winner, Voo in Berlin, six months free "rent" on the site. The single uniformity is service. Purchases are dispatched directly from each shop to customers in a farfetch box, inside which is the store's personalised wrapping, with, perhaps, a postcard from the city or a free gift. "What's amazing," says Tide-Frater, "is how much customers care about where their purchase comes from. They really like finding that hard-to-get piece from a small shop in Finland." "An amazing number of retailers don't have any kind of internet presence," says Neves. "You can set up a site for less than ÂŁ2,000 but there are a billion of them. How do you get noticed? How do you organise a reliable delivery service if you're a small player? How do you sell to a country like Brazil where consumers are used to paying in instalments and in local currency? Some shops we represent have tried e-tailing and didn't have the resources to make it work. Or they're old family businesses who felt alienated by the whole concept. Or they're just looking for an international client base". The idea came to Neves during Paris Fashion Week in 2007 when he was wholesaling a brand he'd developed to other retailers. "Dozens of boutique owners had been through our doors and what they were saying was really sobering. Business was bad, they couldn't rely on local custom any more but they didn't have the experience to do e-tailing either. They had amazing taste levels but they were having to play it increasingly safe." Farfetch's revenues - 130million euros so far this year - are commission-based from the boutiques. In turn, shops accepted on to farfetch's site increase their annual turnover, on average, says Neves, by 30 per cent. It seems to be win-win-win, for consumer, retailer and e-tailer. CondĂŠ Nast liked the business model so much that it invested more money in farfetch than it has in any other e-commerce venture outside the US. "It's not that publishing isn't viable," says James Bilefield, president of CondĂŠ Nast Digital, "but it's clear the future lies in making the experience of reading content and shopping more seamless. We're coming at this from the opposite side of Net-a-porter [the e-tailer now publishes a weekly magazine]". Unlike other market places such as Amazon, the emphasis at farfetch isn't on driving down prices or competing with bricks-and-mortar stores. On the contrary, retailers have to have a shop to be part of it. Listening to Neves, who was once a boutique owner himself (he launched B Store, a niche shop selling up-and-coming designers on Savile Row in 2001), it's clear that the store is really a love letter to the old-fashioned virtues of independent retailers. If retailers have any sense, they'll write back. ================= http://techcrunch.com/2015/03/04/farfetch/ Fashion Marketplace Farfetch Raises $86M Led By DST At A $1B Valuation Some big news today in the world of fashion e-commerce. Farfetch, the London-based online marketplace for high end fashion retailers, is announcing a raise of $86 million. The funding vaults Farfetch into the unicorn club with a valuation of $1 billion, and it is notable for another reason: it is led by DST Global â the VC firm founded by Yuri Milner that has invested in the likes of Facebook, Twitter, Xiaomi, Alibaba, Flipkart and many more. Other investors in this round include existing investors Conde Nast and Vitruvian Partners. The funding brings the total raised by Farfetch to nearly $200 million. Jose Neves, the founder and CEO of Farfetch, tells me that the funding will be used to continue to expand the companyâs operations globally. Farfetch, which was originally founded in 2007, last year expanded to China, Russia and Japan from its core markets of Europe and the U.S., tapping into a growing population of well-heeled consumers who have money buy fashionable clothes but fewer places locally to spend it. The plan is to continue building up those markets as well as tap into further regions like Latin America that fit the same mold, in addition to other, more mature markets like Germany, South Korea and Spain. The companyâs gross merchandise value currently is at around $1 million per day, with the average basket for each customer at between $600 and $700 (a total value that typically covers several items). Itâs not clear if the company is profitable right now but it is investing in growth right now. That growth has been very strong up to now. In 2010, when Farfetch picked up its first funding from Advent Venture Partners and Frederic Court, its GMV was only $25,000 per day. âFarfetch has a strong team, impressive growth and great potential to capitalize on the fast growing luxury fashion e-commerce market,â Yuri Milner, founder of DST Global, noted in a statement. DST has put a lot of its investments to date in juggernauts in U.S. and Asia and itâs rare, but not unprecedented, for the company to invest in Europe. Klarna is also in its portfolio. The payments company Klarna is also in its portfolio. Farfetchâs business follows a classic marketplace model, similar to others like Snapdeal in India. No inventory is held by Farfetch itself: rather, its power lies in how it connects retailers who sell clothes with consumers who want to buy them. âWe have no plans to launch a private label or add any inventory,â Neves tells me. âThe plan is to continue to be a marketplace and connect global retailers.â And while Farfetch started out by focusing specifically on smaller businesses that could not build the same experience on a smaller scale, today that funnel has grown considerably. âWe have businesses with 20 stores and large department stores like Galleries Lafayette [in France]. We have very large companies on the platform as well as quirky boutiques. The plan is to roll that out more,â Neves says. This is also one of the reasons why Farfetchâs investors believe it will not go the way of other e-commerce startups that have tried to play on the marketplace model and fallen. âI think Farfetch is very different from a Gilt or Fab.com,â Court tells TechCrunch. âThe main reason those lost their way was the lack of curation and trying to shift too much stuff.â And there is logic behind why large department stores have followed in the footsteps of smaller ones in coming to Farfetch, Neves says. âI would say that building an e-commerce site is easier than it has ever been with companies like Shopify, but building a successful commercial operation is harder than it has ever been,â he notes. Part of the reason is because large search engines like Google favor sites with the most interesting content, and Farfetch ticks a box with an approach that mixes curation with a very revolving stock. On top of that there is the issue of logistics. âWe get rates and service levels that no one else gets,â he says. âThis is impossible to crack even for medium sized companies. So many U.S. retailers still do not ship to South America.â Today, the company says it brings together some 300 businesses with 450,000 users, numbers that Farfetch hopes to take up a couple of dress sizes with the new capital injection. As for what the next step will be for the wider business, the funding will, for now, help the company to remain private for the moment. From what we understand, the idea will be for Farfetch to consider a potential IPO at some point down in the next couple of years too, if it doesnât get snapped up by another e-commerce giant first. ================= http://adage.com/article/digitalnext/luxury-brands-innovate-die-digital-age/298149/ Luxury Brands Must Innovate or Die in the Digital Age Four Ways Luxury Brands Can Win by Focusing on Consumer Behavior By Ana Andjelic. Published on May 13, 2015. Luxury brands, faced with an historic disruption thanks to the collision of media and technology, must shift from playing defense to taking the offense, even if that means discarding formerly successful approaches. To win in the new luxury landscape -- where Apple is as much a force as Chanel -- established luxury brands need to think like disrupters by placing human behavior firmly at the center of their strategies. Instead of trying to predict the future, disrupters focus on "jobs to be done" in the present. This framework, coined by Clayton Christiansen, focuses on consumers' social, emotional or functional problem, and turns business into its solution. Christiansen's framework doesn't narrow innovation to the latest technology or the hottest new gadget. Instead, it roots it firmly in human behavior. "Will we use iPhones in 20 years?" asked Antoine Arnault, director atLVMH (Louis Vuitton MoĂŤt Hennessy), at the recent CondĂŠ Nast International Luxury Conference. "Who knows. But in 20 years, people will still drink Dom Perignon." Consumer behavior is the best starting point in thinking about the future. It offers a roadmap for survival for established luxury companies. Luxury brands need to look at how the next generation of their customers behave and zoom in on the points of friction in their brand experience. Then, they need to become a solution to this friction. Car rental company Uber removed friction from the car renting experience. Online luxury fashion marketplaceFarfetch removed friction from discovery of the next authentic designer. Personalized sampling serviceBirchbox removed friction from exploration of the new beauty products. Here are four ways established luxury brands can win by staying close to their customers. 1. Create a seamless path from inspiration to purchase. Smart luxury retailers like Net-a-Portermerge content and commerce, as well as digital and physical touchpoints, to create an innovative purchase path that firmly integrates points-of-sale with marketing. Net-a-Porter understands that the contemporary consumer demands a strong omnichannel approach where service, experience and products interact. 2. Make your brand narrative attainable, intuitive and immersive. Modern luxury is about conveying a lifestyle; it is about creating an overall experience that products are a part of. A strong brand narrative combined with technology, which has become signature of theBurberry brand, gives consumers attainable, "no purchase necessary" entry points into brand experience at every touchpoint and price point. 3. Evoke in your customers the feeling of belonging and being special. New luxury consumers gravitate toward brands that have a strong point of view, convincing beliefs and compelling values that they express with passion. Communities gather around an idea or cause -- be it culture, arts, nature or a social good. Louis Vuittonputs artists at the forefront of the brand. So do Celine and Saint Laurent. 4. Serve and reward. A wealth of consumer data allows smart luxury brands to surprise and delight their customers via personalized offers based on their individual browsing and buying history. Increasingly sophisticated consumers demand excellence in all parts of their non-linear purchase funnel through increased seamlessness and convenience. ============
- https://en.wikipedia.org/wiki/Funding_Circle Funding Circle is a Peer-to-peer lending service which allows savers to lend money directly to small and medium sized businesses.[1] Funding Circle was the first site to use the process of peer-to-peer lending for business funding in the UK,[2]and now operates in both the UK and US markets. As of April 2015, Funding Circle has facilitated over ÂŁ600 million in loans to small and medium sized firms.[3] History Funding Circle was set up in the UK in August 2010.[1] It was launched at a time when small businesses were struggling to obtain finance from traditional channels.[4] In its first 10 weeks lenders used the platform to lend more than ÂŁ1 million to small businesses.[1] It received ÂŁ2.5 million in funding from Index Ventures in April 2011.[5] In March 2012 Funding Circle closed a series B round of ÂŁ10 million led by Index Ventures and Union Square Ventures.[6] A report published by Nesta in April 2013 found widespread preference for online lending over traditional banks among existing Funding Circle users. 77 per cent of businesses that borrow through Funding Circle said they were âlikely or very likelyâ to approach the peer-to-peer lender for a loan first, rather than go to a bank.[7] By September 2013 Funding Circle had trebled in size and announced it had facilitated over ÂŁ150 million of loans since it launched.[8] In October 2013, Funding Circle announced that it had raised a $37 million investment. Accel Partners led this round of funding, which brings the companyâs total to $58 million. New investor Ribbit Capital contributed, along with existing investors Union Square Ventures and Index Ventures.[9] Additionally, Funding Circle announced it was launching in the US and joined forces with Endurance Lending Network. Endurance now trades under the Funding Circle name.[10] Since launching more than 50,000 people have registered at Funding Circle. Investors now include local councils, universities and the British Government.[11] Business Model Funding Circle provides a platform where investors can browse businesses that Funding Circle has credit assessed and approved for lending.[12] Businesses submit an application which is reviewed by Funding Circle credit assessors. Businesses can borrow between ÂŁ5k and ÂŁ1m (ÂŁ3m for property development) to finance working capital, expansion capital, asset finance and one off business expenses.[13] In the UK, loan lengths start at the 6 month mark and go up to 5 years. Once approved, loan requests are posted on the Funding Circle marketplace. Here, investors choose which businesses to lend to and, through an auction process, bid the amount of money they wish to lend and the interest rate they want to earn. At the close of the auction, the loan is filled from the lowest rate bids. For the maximum rate needed to fill the loan, the earliest bids get priority. Loan auctions typically take seven days. After the close of the auction, the business reviews whether to take the loan at the rate offered. If they accept, one repayment each month is collected by Funding Circle who deduct a 1% fee before paying the investors in that loan.[14] Loan requests are typically made up of lots of investors each bidding small amounts on hundreds of different businesses to spread their risk.[15] Funding Circle also has an Autobid function, where the system automatically places bids according to the criteria investors have set. Investors can choose the minimum rate they wish to offer by risk category, which types of businesses they want to lend to, and the maximum percentage of their portfolio to lend to any one business.[16] The platform includes a secondary market where parts of existing loans are traded. Sellers can offer parts at a premium or discount. Funding Circle charges a 0.25% fee on sales. The secondary market can be used by Investors to build up their portfolios quickly. Similarly, if investors need to withdraw money they can sell all or part of their investment via the secondary market. Alternatively investors can choose to withdraw their money gradually as they receive their monthly repayments.[14] Risk and regulation If a borrower fails to fully repay the loan then the lender risks losing part of his or her return. To mitigate against this, Funding Circle recommends that users lend to at least 100 businesses equally. This can be done with as little as ÂŁ2,000 â i.e. lending ÂŁ20 to 100 businesses.[17] In the UK any established and creditworthy business currently operating can apply for a loan at Funding Circle, including partnerships, limited companies and sole traders.[18] Businesses must have at least 2 years of filed or formally prepared accounts and have no outstanding County Court Judgements over ÂŁ250. A minimum turnover of ÂŁ50,000 is also required.[19] Funding Circle use many of the same credit checks as the high street banks to ensure only strong, healthy and creditworthy businesses can post a loan request. This includes an Experian check, whilst also splitting businesses into five risk bands (A+, A, B, C, and C-). If a business defaults, Funding Circle will pursue the business owner to recover the remaining part of the loan on behalf of the investors.[2] In partnership with Zopa and RateSetter, Funding Circle launched a trade body, the P2P Finance Association, with the stated goal of "ensuring high minimum standards of protection" for lenders and borrowers in the industry. The Government has ruled that peer-to-peer lending and borrowing activities will be overseen by the UKâs new market regulator, the Financial Conduct Authority, from April 2014.[20] =========== http://www.thisismoney.co.uk/money/smallbusiness/article-2934571/Funding-Circle-lending-small-firms-UK-America-hits-500m-milestone.html Funding Circle lending to small firms in UK and America hits ÂŁ500m milestone Funding Circle has helped to generate more than ÂŁ500million of lending to small firms in the UK and America. The online marketplace, which enables businesses to borrow directly from people and organisations, reached the milestone just days after announcing a tie-up with Royal Bank of Scotland. RBS said on January 22 that it would begin formally referring customers to Funding Circle and Assetz Capital for small business finance where they are better placed to help. The bank accounts for 33 per cent of the small business lending market and is the largest lender to refer small customers. More than 7,000 businesses have borrowed via Funding Circle, and investors are lending ÂŁ35million a month. One Funding Circle borrower is the Bath franchise of organic beauty products retailer Nealâs Yard Remedies. Owner Liz Season obtained ÂŁ100,000 last March to move to bigger premises, enabling the outlet to improve its visibility in the town, stock more products and provide more therapy rooms. RBSâ scheme comes ahead of Government plans to make referrals by banks compulsory this year. It said the peer-to-peer market is contributing about one per cent of total lending to small firms, but was growing by 200 per cent a year. Figures released by the Bank of England on Friday revealed that bank lending to small and medium enterprises decreased by ÂŁ1billion in December despite total drawdowns by banks under the Funding for Lending Scheme having grown to ÂŁ47billion. Santander partnered with Funding Circle last year.
- http://fortune.com/2014/06/11/techs-next-disruption-small-business-loans/ Techâs next disruption? Small business loans New, non-bank lenders are using technology to take complexity and time out of small business loan making. Square, a brainchild of Twitter  TWTR 1.60%  co-founder Jack Dorsey, recently announced it would start making cash advances to small businesses. The move seems like a natural next step, considering that the mobile payment platform started helping small businesses process credit card payments. Whatâs worth highlighting, though, is that Square Capital is the latest example of technology driving a new market for small business loans. Innovators believe disruption is a good thing. And many will tell you thereâs no market more overdue for disruption than the banking industry. In fact, it was 20 years ago that Bill Gates quipped that âRetail banks are dinosaurs.â Yet, today we still apply for loans at traditional banks in the same way we did in 1994 when the former Microsoft  MSFT 0.20%  CEO made that comment. Donât get me wrong, traditional banks have helped create a small business economy that has allowed millions to pursue their version of the American Dream. But over the years what has persisted is a loan process built around inefficiencies that drive high costs due to two realities: 1) It is difficult for willing lenders and borrowers to find each other. 2) Small business credit risk is hard to assess. Since 2007, technology has spawned new markets for lending, potentially transforming this industry in the same way it has travel, retail and others. The use of these new platforms has been on the rise since the Great Recession, due to either the ongoing feeling that banks remain unwilling to lend or that these new lenders are providing capital with greater efficiency. Or both. There are the online balance sheet lenders â like OnDeck Capital and Kabbage â that typically offer short-term loans of less than nine months. The capital they provide is similar to a cash advance, with a fixed amount or percent of sales deduction each day from the borrowerâs bank account. Companies like Lending Club, Prosper, Funding Circle and Fundation are using a peer-to-peer model. Backed by individual investors, these companies make loan decisions based on proprietary credit models, typically offering loans of up to $250,000 for longer terms at between 8% to 24%. These loans are collateralized through personal guarantees or business assets. Perhaps the most interesting model is one in which companies like Lendio and Fundera are simply creating their own marketplaces where small businesses can shop and compare loan products from online lenders and conventional banks. In doing so, theyâre mitigating one of the biggest problems borrowers and lenders face â search costs. Itâs important to note that these lenders still only account for a small portion of the market â less than $10 billion in a more than $600 billion small business lending market. But they are driving fundamental change, making the typical small business loan â one of less than $250,000 â more profitable for lenders by leveraging technology to drive efficiency. We are also seeing small business owners willing to get capital through these new platforms, even though itâs often more expensive, because they value the convenience. Many of these new platforms are making approvals online and via mobile applications in as fast as 24 hours for some lower dollar loans, compared to a traditional process that takes several weeks and requires stacks of paperwork. To be sure, there are legitimate questions about this emerging market. We donât want small business lending to run amuck, and regulators and policy makers should be asking how to prevent fraud and economic risk. But that doesnât mean this isnât a breakthrough. Small businesses create two-thirds of the net new jobs in the United States. Yet a 2013 Federal Reserve Bank of New York survey noted that most small business owners say access to capital is their top growth concern. As a result, they probably arenât investing like they could, which means they arenât creating new jobs at the rate our economy needs if we want the job market to return to normal. This emerging market is adding momentum to the economic recovery in exactly the area where itâs most needed. And some will say the best thing about it is that the market is driving it, not government. ============= http://www.bloomberg.com/news/articles/2014-09-28/lenders-disrupt-u-k-finance-funding-startups-banks-avoid Lenders Disrupt U.K. Finance Funding Borrowers Banks Snub September 29, 2014 â 1:01 AM CEST Sept. 29 (Bloomberg) -- The overthrow of British banking is being plotted in between pingpong games in a 10-story office building near Londonâs Fleet Street. Thatâs where Funding Circle Ltd., an online peer-to-peer lender, is arranging an average of 1.5 million pounds of loans a day for small businesses, double its pace in September 2013, Bloomberg Markets magazine will report in its November issue. On a hot summer afternoon, the startupâs open-plan suite is filled with the chatter of two dozen account reps on the phone with borrowers. Two young software developers are taking a break to play table tennis. Samir Desai, the firmâs co-founder and chief executive officer, comes rushing through the front door with the jazzed look of a man whose far-fetched plan is actually working. âSorry Iâm late,â says Desai, all business in a blue suit, white dress shirt and pointy black shoes, âbut itâs been a crazy day.â Five years ago, Desai and two of his mates from the University of Oxford, James Meekings and Andrew Mullinger, decided to start their crowdfunding site over pints in a London pub. Instead of catering to cash-strapped consumers the same way U.S. pioneers LendingClub Corp. and Prosper Marketplace Inc. did, the trio, all now 31 years old, targeted enterprises with at least 50,000 pounds ($81,550) in annual sales that were having trouble getting credit from British banks. Online Matchmaker Today, Funding Circle is Britainâs No. 1 online matchmaker for small-business loans. From its inception through Sept. 25, it transacted 373 million pounds in lending between 32,000 investors and 5,000 firms, which pay interest rates ranging from 6 to 15 percent. âSome people may still want to sit with a branch manager, but this is a game-changing way for businesses to borrow money,â says Desai as he walks past whiteboards covered in flowcharts. That may sound cocky, especially considering that Funding Circleâs loan volume is modest compared with that of established British lenders. The small-business loan book at Santander UK Plc, Britainâs No. 5 bank, stands at 30 billion pounds -- about 80 times larger than that of Desaiâs startup. But Funding Circle is leading a generation of financial technology startups that may have only begun to challenge traditional bankingâs grip on the movement of money. Creating Alternatives Scores of fintech enterprises in London and Silicon Valley are devising new ways to loan cash, transfer money abroad, settle international commercial transactions and score credit risk -- all chores that have been the domain of banks for centuries. Now, tech giants such as Apple Inc., which in September introduced a new way for consumers to make wireless payments via their iPhones, are jumping in to create alternatives to the existing order. âPrior to 2008, it was accepted wisdom that if you didnât have a banking license, a massive balance sheet and a 300-year-old name you couldnât possibly play in this space,â says Neil Rimer, co-founder of Index Ventures, which has invested in more than two dozen fintech firms in Europe and the U.S., including Funding Circle. âBut after trust in banks crumbled during the financial crisis, that emboldened entrepreneurs to start companies and go after them.â Historic Shift The fintech generation promises to harness the Web to create a faster, easier, more-efficient way for consumers to bank. One key tool: the online marketplace model pioneered by auction powerhouse EBay Inc. By matching lenders and borrowers on a website, Funding Circle can originate a loan for a small business in three weeks or less instead of the months it can take at a conventional bank. While almost 40 percent of the small companies that sought loans from traditional British lenders were turned down in the second quarter of 2014, according to the Federation of Small Businesses, 100 percent of Funding Circleâs applicants obtained credit from investors. Betting that global banking -- with $50 trillion in assets -- is ready for a historic shift, investors are piling into fintech startups. French telecommunications billionaire Xavier Niel and PayPal Inc. co-founder Peter Thiel are backing TransferWise Ltd., a London-based online marketplace that moves money internationally for 10 times less than conventional banks. Old-School Bankers Google Inc.âs venture arm has invested in Upstart Network Inc., a Palo Alto, Californiaâbased peer-to-peer firm that uses unorthodox measures such as college grade-point averages to assess the credit risk for recent graduates. Even old-school bankers are joining the revolution: John Mack, the ex-CEO of Morgan Stanley, sits on LendingClubâs board, and Richard Kovacevich, the former CEO of Wells Fargo & Co., is an investor in Daric Corp., a crowdfunding venture based in Redwood City, California. Investment in fintech startups may hit $4 billion worldwide this year, double the level in 2012, according to a forecast by Accenture Plc. And entrepreneurs are eying the first major fintech IPO: San Franciscoâbased LendingClub, valued at $3.8 billion in April, may go public by the end of the year. With terms of less than five years and average net yields of 9 percent in a zero-interest-rate market, peer-to-peer loans have become desirable fixed-income bets, says Cormac Leech, an analyst at Liberum Capital Ltd., a Londonâbased investment bank. âWall of Moneyâ New Yorkâbased BlackRock Inc. and British hedge-fund firm Marshall Wace LLP are just two of the players committing clientsâ capital to this emerging asset class. In May, Marshall Wace unveiled the P2P Global Investments trust on the London Stock Exchange, the first publicly traded pool of capital devoted to funding these loans. Leech forecasts that peer-to-peer loan volume on the top U.S. and U.K. sites will explode to 267 billion pounds from 5 billion pounds in the next decade and eventually account for a quarter of all consumer and small-business loans. âA wall of money is coming,â Leech says. In London, the worldâs No. 1 international banking center, new ventures are materializing every month in the hipster haven of Shoreditch as angel investors and venture capitalists pour money into British fintech firms at twice the clip for those in Silicon Valley, Accenture says. Rebel Vibe Entrepreneurs and investors network in a never-ending stream of receptions and conferences at the sceneâs clubhouse, Level39, an accelerator perched atop Canary Wharfâs highest tower. London Underground stations are festooned with TransferWise advertisements that capture the rebel vibe: â$cammâŹd. Your bank is secretly overcharging you on international money transfers.â There are more than three dozen peer-to-peer lenders in the U.K., including Zopa Ltd., a nine-year-old firm that pioneered the model. âBanking is ready for massive disruption,â says Taavet Hinrikus, TransferWiseâs co-founder, who was employee No. 1 at Skype Technologies SA in a previous life. Fintech has won a powerful ally in U.K. Chancellor of the Exchequer George Osborne. Credit Squeeze In speeches and policy statements, Osborne has expressed his frustration with Britainâs Big Four -- HSBC Holdings Plc, Barclays Plc, Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc -- for squeezing credit to small and medium-sized companies. In the first half of this year, net lending to enterprises with less than 25 million pounds in annual sales shrank by 1.3 billion pounds even though the Bank of England has bestowed banks with cheap capital through its Funding for Lending Scheme. In August, Osborne unveiled legislation that would require lenders to refer borrowers they reject to peer-to-peer firms and other alternative finance providers. âPeople are using technology in new ways to communicate, to form social groups, to shop -- why not new ways to bank?â Osborne said in an Aug. 6 speech at Level39. âIt means being able to bypass traditional banks altogether and lend money directly through peer-to-peer platforms like Funding Circle and Zopa.â âA Little Euphoriaâ Itâs going to be tough to disrupt an industry as entrenched as banking. In the U.K., the Big Four control 80 percent of the lending market. âIâm positive about this financial innovation, but there is a little euphoria going around,â says Thorston Beck, a professor of banking and finance at City University Londonâs Cass Business School. âIf this really expands at a rapid speed, then more-marginal companies will get loans, too. So we have to be realistic about questions of scale and risk.â Banks themselves are moving to co-opt the fintech surge. In December 2013, Barclays joined forces with Techstars, a U.S. and European accelerator, and launched the first in a series of three-month boot camps that will help startups develop business plans. And in July, Santander UK, a subsidiary of Madrid-based Banco Santander SA, created a $100 million fund to invest in fintech ventures around the world. âWeâre good at assessing credit risk, but the whole idea of innovation isnât a natural skill set for any large bank,â says Steve Pateman, Santander UKâs head of banking. âSo we want access to different ideas, and weâll seed those that give us more options to expand our business.â Sense of Opportunity One option is Funding Circle. In July, Pateman sealed a partnership deal with Desai in which Santander UK will refer borrowers it turns down and Funding Circle will send the bank potential customers. Back in 2009, Desai was watching the fallout from the global financial crash with a sense of opportunity. Desai, who studied economics and management at Oxford, specialized in the inner workings of banks at Boston Consulting Group and Olivant Advisers Ltd., a London-based private-equity firm. He saw how small businesses were paying a price for a crash not of their making as wounded lenders withdrew credit. That August, loan approvals to small and medium-sized companies fell 13 percent. Desai says he wondered, What if someone used an online marketplace to provide these borrowers with an alternative? Desai, a cheerful man who used to organize riverboat parties as a class social secretary in college, brainstormed with two friends at The Thomas Cubitt, a gastropub in Londonâs Belgravia neighborhood. Virtual Syndicate Fellow Oxford graduate Meekings was a senior consultant at OC&C Strategy Consultants in London, and Mullinger, a mathematician who transferred to the University of Manchester from Oxford, was on the regulatory risk team in the U.K. operations of Nomura Holdings Inc. The three friends noted that large companies could tap the fixed-income market to raise capital. So they hit on the idea of using a peer-to-peer approach to form a virtual syndicate for more-diminutive enterprises. âWe wanted to create a bond market for small businesses,â Desai says. To do so, theyâd have to establish a secondary market where lenders could trade the loans the same way bondholders do, Mullinger says. Otherwise, investors would be loath to fund debt they couldnât sell. âFor this to work, we had to provide liquidity,â says Mullinger, a Le Mans auto-racing aficionado. âWithout that, I wouldnât put any money in it myself.â Cushy Jobs Still, Desai and Mullinger were nervous about leaving their cushy jobs for a startup. So Meekings says he found a way to force their hand. âI quit my job and told them that if youâre not coming along, Iâm doing it myself,â says Meekings, a lanky, fair-haired man who competes in triathlons. The three men formed Funding Circle in September 2009. Over the next year, they set up a risk analysis system that grades borrowers from A+ to Câ by vacuuming up at least 400 bits of data, such as credit-card-payment history and legal judgments. They established a website where lenders scroll through a menu of potential borrowers. Funding Circle charges borrowers a 2 to 5 percent fee and lenders a 1 percent annual rate. Like bondholders, the investors receive a coupon-like payment; as of Sept. 8, their average net return was 6.4 percent. âWe wanted to allow people to be banks,â Meekings says. âOur Babyâ Those investors loan money to companies such as Kaizen Furniture Makers Ltd., a 35-employee firm that designs and builds custom furnishings. Amid the whir of band saws in a workshop outside London on a summer morning, Kaizen co-founder Antonius Wubben places a hand on a hydraulic press the size of a minivan. âThis is our baby,â he says. When Wubben decided in 2013 that Kaizen needed the state-of-the-art Austrian machine to apply veneer to pieces of wood, he turned to Funding Circle for an uncollateralized loan, bypassing his bank, NatWest, a unit of RBS. He posted a loan request on Funding Circleâs website. Less than three weeks later, 612 investors ponied up 100,000 pounds at a 9.1 percent interest rate. Now those investors are trading Kaizenâs debt on Funding Circleâs secondary market, which handles about a fifth of the siteâs total loan volume. Ruthless Efficiencies In under five years, Desai and his partners have set up a lending alternative thatâs growing so fast theyâre desperate to find more office space to accommodate all their new hires. Funding Circle has raised $123 million in venture backing from Index, Accel Partners, and Union Square Ventures, the same outfits that backed Skype and Facebook Inc. Thanks to the ruthless efficiencies of the Web, theyâve done so without the costly branch networks and capital requirements that burden commercial banks. Funding Circle and its online peers are originating loans for 40 percent less in costs than traditional lenders, according to Liberum Capitalâs Leech. With a 1.4 percent default rate, Funding Circle has demonstrated that it can manage risk, he says. Even so, Funding Circle has far to go. It isnât expected to record a profit until 2016, according to a forecast by Leech. If fintech firms in general are going to change the way we bank, theyâre going to have to collaborate with the institutions that have the market power and regulatory standing to deploy capital measured in the trillions and not millions, says Hank Uberoi, former coâchief operating officer of Goldman Sachs Group Inc.âs technology division. âHundreds of Mergersâ Heâs now the CEO of Earthport Plc, a London firm thatâs built a digital hub designed to settle cross-border payments faster, more cheaply and with greater transparency than the current system. Earthport already counts HSBC, Bank of America Corp. and the World Bank among its clients. Uberoi says fintech startups and banks need each other. âThe problem with banks is complexity, and this is exacerbated by the hundreds of mergers theyâve made in the last 30 years,â he says. âBringing about changes in such complicated organizations is incredibly difficult, if not impossible, to do, and thatâs why banks need to be open to new solutions.â Finishing Touches At Funding Circle in July, Desai is putting the finishing touches on an announcement that shows how some finance veterans are embracing this new world of banking: Robert Steel, the one-time vice chairman of Goldman Sachs whoâs CEO of New Yorkâbased private equity firm Perella Weinberg Partners LP, is joining Funding Circleâs board. Desai has big plans. Funding Circle, which late last year began expanding into the U.S., plans to push into asset-backed lending and property development debt. Asked if the inevitable next step might be an outright acquisition by a bank, Desai laughs. âIf they can afford us,â he says, trotting off to yet another meeting. ============= http://www.inc.com/jeremy-quittner/goldman-sachs-readies-consumer-loans-as-it-competes-with-own-companies.html How Goldman Sachs Plans to Disrupt the Disruptors Goldman Sachs will soon offer consumer loans online, as some established competitors wonder where else the banking giant will surface. After nearly 150 years of catering to the wealty elite and helping fast-growing startups either go public or sell themselves to larger competitors, Goldman Sachs is finally getting into the consumer lending market, and will soon offer small personal loans. It may not be that surprising that white shoe investment bank Goldman Sachs is getting involved in making consumer loans. After all Goldman, along with Morgan Stanley, were re-chartered as a bank holding companies 2008. At the time, the move was largely seen as a strategy for accessing federal bailout money in the aftermath of the financial crisis. So by offering loans to consumers, Goldman is simply becoming more of a bank. What is more surprising is that Goldman, also a wholesale bank that serves as an underwriter for some of the most promising alternative finance technology IPOs, will be competing with alternative lending technology platforms that facilitate similar types of loans. Itâs also an investor in some of the most promising alternative finance companies out there. While its entry into consumer finance is a sign that that market is ripe for some new players, and lends validation to many companies that are already there, it raises questions for some potential competitors about where Goldman will appear next. The Bank's Past, Future Most recently, Goldman served as underwriter for Lending Club in its 2014 initial public offering. Lending Club, which uses a marketplace approach to financing, primarily makes consumer loans for consolidation of debt, and has recently gotten involved in lending to small businesses. Over the past few years, Goldman has invested hundreds of millions of dollars in an assortment of payments and alternative finance companies including Square, Bluefin Payments, Billtrust, Revolution Money, as well as newly public OnDeckCapital, an Inc. 5000 company. Itâs also ventured into digital money, including the bitcoin startup Circle Internet Financial, venture capital research company CB Insights reports. In an internal memo from Goldman in May, when it hired Harit Talwar, an executive from Discover Financial Services, to head up is online lending division, the bank talked about its opportunity to participate in disrupting traditional finance, including with small business loans. âThe firm has identified digitally led banking services to consumers and small businesses as an area of opportunity for GS Bank,â the memo reads. âThe traditional means by which financial services are delivered to consumers and small businesses is being fundamentally re-shaped by advances in technology, maturity of digital channels, use of data and analytics, and a focus on customer experience.â Details of how the loan product will be made available to consumers are a bit thin, although according to the New York Times, which first reported the story, the loans could be for between $15,000 and $20,000, and will be made available either through an app, online, or via a prepaid card, or a combination of all three. A Goldman spokesman said in an email the bank had not decided on timing for the launch. Why They Want In Certainly consumer loans are a big market. Non-revolving debt, which excludes credit card debt, currently stands at about $2.5 trillion for 2015, compared to $1.8 trillion in 2010. That's according to CEB TowerGroup principal executive advisor Brian Riley, who cited Federal Reserve data. By comparison, revolving debt for credit cards, where many banks have also sought their fortunes in the past, stands at about $850 billion, which is essentially flat compared to 2010. âThere is room for growth, and [consumer loans] does fit within the traditional banking space,â Riley says, adding that Goldman will have to continue developing more products and services in order to appeal to a consumer clientele. In addition to personal and small business loans, Goldman could get involved in student loans and even auto loans, Riley says. Still, the prospect of Goldman establishing itself in small business lending has some of the entrenched alternative finance players leery. âThe boat has already left the docks, and there are some really respectable players in this space,â says David Goldin, founder and chief executive of small business lender AmeriMerchant, of New York. âUnless Goldman Sachs has no problem losing money for the next three to five years, they have a long road ahead of them.â ============
- http://www.bloombergview.com/articles/2015-06-16/europe-s-tech-unicorns-are-so-tame