From the Partnership
Greetings and best holiday wishes for our last issue of 2010/first issue of 2011.
We are very pleased to announce the just-breaking news of the sale of our portfolio company Rivermine to ecosystem partner Emptoris. And, in the spirit of the season, we share some tech predictions for 2011, both from Valhalla itself and from our portfolio company CTOs. Enjoy, and profit.
As always, we welcome your comments and questions. Please email to editor@valhallapartners.com.
Some Valhalla Investment Themes for 2011
2010 brought back two old friends we hadn't seen for a while in our industry: IPOs and "frothy" investment sectors. We sincerely hope that both are harbingers of better times ahead for venture capital.
The annual NVCA/Dow Jones VentureSource "Venture View Predictions Survey" was certainly bullish about tech and telecom investments across the board from fundraising to investment levels to valuations to exits.
We share a couple of charts from the survey, which represented over 500 VCs and venture-backed CEOs.
Although some caution remains about Life Sciences and Clean Tech, VCs are clearly bullish about the IPO environment (there is a similar chart about IPO "quality"). The rising volume of tech IPOs in 2010 has triggered the expectation of many more in the new year.
The next slide shows that, even with a hotter IPO prospect, the expectation is still that M&A will drive exit activity. IPOs are seen as driving up the price of M&A acquisitions rather than leading the returns race.
Sector Trends
In terms of sector trends, we continue to believe in some of the same "big winds" we have followed through 2009:
- Transition to Cloud Computing. We are in the midst of a profound change from client-server computing through Web-based computing to "cloud" computing.
- Continuing Insatiable Demand for Storage. Demand for storage will continue to grow at double-digit rates, forcing customers at all levels -- from the enterprise through the SMB to the consumer -- to buy more storage capacity with a fixed or shrinking budget. Only innovation, in the form of startup companies de-risking new technology approaches, can bridge the gap.
- Video is the "new text". Since the invention of the printing press we have relied on text to communicate, entertain, and instruct. Those roles are now being taken over by video and, as computer, storage, and network systems reach levels of performance where it is cost-effective, video systems and applications of all kinds are likely to see rapid growth.
Valhalla continues to invest in these and other trends, and we are looking forward to some great opportunities in 2011.
Tech Predictions from Valhalla sector-leading companies
From Chris Russell, VP Engineering, Nirvanix
- Companies will transition to cloud storage over the next 3-5 years in order to manage petabytes to exabytes of unstructured data that simply cannot be practically or reliably managed using legacy storage technologies (NAS and tape).
- The continuing increase in use of rich media (images, audio, and video) will also drive demand for intelligent cloud storage technologies, in which metadata, search, discovery, transcoding, and media asset management become tightly integrated within the basic cloud storage platform.
- A third driver of cloud-storage adoption will be the increasingly global and distributed footprint of companies, requiring next generation technologies such as cloud storage that are equally distributed and globally accessible.
From Dave Wright, CEO, SolidFire
- Cisco will make a major storage acquisition, completing their transition from networking company to a full infrastructure provider.
- Cloud-based backup and DR capabilities will start appearing in network storage boxes from SMB up to enterprise.
- Google will move to take on Amazon in the cloud hosting space, with a IaaS offering that competes with EC2 and the rest of its IaaS suite.
From Paran Johar, CMO, JumpTap
- Mobile will get its own allocation in advertisers' marketing budgets. According to Nielsen, smart phone penetration is hovering around 29 percent, but is expected to hit 50 percent by 2012. This broad reach is compelling marketers to shift mobile to its own line item in brand marketing budgets. In addition, cross-platform media research in 2011 on effectiveness will categorically show the incremental impact of mobile ads on brand metrics when combined with TV and online.
- Mobile will be integrated into digital planning and measurement tools. Integration into platforms like Doubleclick and agency trading desks will begin taking place in 2011. This long awaited step will make it easier for agency media planners to include mobile on the front-end and measure mobile on the back-end. The clear quantification of performance and ROI in mobile vs. PC-based Internet will drive further budget shifts.
- Connections between M-Commerce and mobile advertising will take off. As marketers and retailers invest resources to build comprehensive M-Commerce initiatives, they will focus on promoting these initiatives in the mobile medium itself. Currently 80% of US multichannel retailers have no M-commerce capabilities and only 12% of the top 500 internet retailers have sites optimized for mobile phones. As consumer behavior shifts, so will the marketing efforts behind mobile optimized sites, allowing consumers to begin an M-Commerce process on mobile and completing the transaction on PC, or vice versa. Promoting these mobile optimized experiences for brands will be a big focus in 2011.
- Mobile Video will take center stage. Carriers, networks and app developers all know that mobile video is the next killer app. Sight, sound and motion have long been major drivers in user engagement. Allowing consumers to follow their viewing experience across multiple devices including tablets, PCs, and connected TVs will be a reality in 2011. This behavioral shift will dramatically change through Android and Apple-powered TVs which will plug right into the mobile app ecosystem, allowing mobile video to gain scale very rapidly.
- Tracking audiences and the consumer experience will become key. As advertisers continue to advance their focus on audience buying and consumers shift their Internet consumption to multiple devices, the need to track the user experience across devices will likewise increase. Publishers will need to understand the "consumer experience" across platforms and adjust content accordingly. In 2011, marketers will focus on utilizing consumer audience data to provide customized experiences suited for mobile and tablet devices.
- Traditional ad networks and other players will be clamoring to become a part of the mobile ecosystem. As Internet consumption moves from PC to mobile, the dollars will follow. While many PC and digital companies have been cautious with their mobile investments, in 2011, mobile devices will become a compelling option for those that may have never considered mobile in the past. In addition, the industry will see more growth as non-media players, including technology vendors, carriers, traditional media companies, infrastructure enablers and handset manufacturers, join the mobile advertising industry via mergers and acquisitions. For many players that were left behind in PC Internet revolution, mobile represents the next 'gold rush' to make their mark.
Portfolio News
Exits
 Rivermine, Inc., Fairfax, VA
Emptoris, Inc., a leading provider of strategic supply management and enterprise contract management solutions, today announced its acquisition of Rivermine, Inc., one of the market's leading Telecom Expense Management (TEM) solution providers. With the acquisition, Emptoris expands its award-winning solution suite, adds a portfolio of new Global 1000 companies to its customer base, and increases its footprint with key strategic partners.
Rivermine was Valhalla's first investment, in Fall 2003. We are proud of this result and the great efforts of Mark Logan and the entire Rivermine team over many years.
Follow-on Investments
Nirvanix, Inc.
 Nirvanix, Inc., San Diego, CA
Valhalla, along with Intel Capital, Mission Ventures, and Windward Ventures participated in a $10.0 million Series B round.
Nirvanix's mission is to ease the burden of storage management for organizations while enabling secure and reliable access to data worldwide. Nirvanix provides the Nirvanix Storage Delivery Network (SDN), a fully-managed, secure cloud storage service developed for today's enterprises. The SDN intelligently stores, delivers and processes storage requests in the best network location, providing the optimal user experience. Nirvanix customers range from Internet startups to Fortune 10 organizations.
Q & A
We want, as much as possible, to open up our newsletter to questions, opinions, and suggestions from our readers. The great magic of our newest medium for communication is its interactivity.
Please click here to submit feedback. We will undertake to respond to every submission, and to print those of general interest in this section. The partnership is happy to address topics such as hot technologies, exit strategies, or due diligence. We look forward to hearing from you. |
The Valhalla Team
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We want, as much as we can, to open up our newsletter to questions, opinions, and suggestions from our readers. The great magic of our newest medium for communication is its interactivity.
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