From the Partnership

In the third quarter we made three seed investments in very early-stage companies -- each one essentially a founder with an idea -- in market areas where we expect rapid growth and where the company's innovation, if successful, will materially affect the evolution of the market. We aim to make these criteria -- a big market and an early company with the potential for a big impact -- central in all our seed investments. Valhalla Partner Kiran Hebbar discusses one of these investments, ShopSocially, and Director of Research Dan Gordon discusses SolidFire.

In addition, we are pleased to note the sale of Register.com to Web.com, another player in the SMB-oriented domain-name business.

As always, we welcome your comments and questions. Please email to editor@valhallapartners.com.

Partners' Viewpoint: Kiran Hebbar on ShopSocially

ShopSocially (www.shopsocial.ly) came out of our sector work in e-commerce and social media.  I have followed the sector closely since working at an e-commerce start-up prior to Valhalla.  Through another venture-backed entrepreneur in this space, I met the CEO of ShopSocially - Jai Rawat - in June.  I was impressed by the founders, the product and their vision for how they wanted to grow this business in the multi-billion dollar e-commerce market.

E-commerce is a large and growing market.  According to eMarketer, the US market is projected to exceed $150bn in 2010.  ShopSocially plays in this market with an innovative social e-commerce platform for consumers to ask their friends for shopping recommendations and pro-actively make product recommendations after a purchase.  Consumers will be able to have such shopping related conversations wherever they are – on Facebook, an online retailer’s Facebook fan page, Twitter, or ShopSocially’s destination site.  ShopSocially provides a valuable traffic acquisition channel for retailers because social media traffic is less expensive and of higher quality than traffic from traditional channels such as paid search and affiliate marketing.

We are excited about the investment because the company was started by successful repeat entrepreneurs and they operate at the confluence of e-commerce and social marketing, both being multi-billion dollar markets that will continue to create massive opportunities for start-ups.

Dan Gordon, Valhalla Director of Research, on SolidFire

The storage sector continues to present great deals and great exits (such as the recent acquisition of 3Par for $2.4B, after a bidding war, by HP), and we are benefiting from our strong reputation in the sector by seeing more good deals early.

Our seed investment this quarter in SolidFire, a Georgia-based startup, reflects our thesis that IT infrastructure is moving from a “premises-based” model of owned and operated IT infrastructure to a “cloud-based” model of infrastructure-on-demand operated largely by third parties.  This transition appears to be taking place more rapidly than we or other forecasters had thought a year or two ago, driven in part by cost-reduction imperatives from the Great Recession.

SolidFire CEO David Wright, an ex-executive from RackSpace, has a bold architecture for provisioning block-based storage for cloud service providers and is trying to prove out both the technical and the business aspects of the idea with the investment from Valhalla and our syndicate partner Novak Biddle.

Even before the accelerated transition to on-demand infrastructure, we have been investing in companies which embodied the thesis that “big storage” systems based on large monolithic hardware and software systems would be replaced by “wide storage” systems based on simpler elements aggregated in distributed “grid” or “cloud” architectures.  Our portfolio company LeftHand Networks, which sold to HP in 2008 for $350M, was an earlier Valhalla “wide storage” bet. 

Like all our seed investments, the idea is to own a large amount of upside in a big idea with a small initial bet.

General Partner Charles Curran represents Valhalla on the SolidFire Board.

Portfolio News

New Investments

SolidFire

SolidFire, Suwanne, GA

SolidFire closed its first round of venture-capital funding, which provided the company with $1.0 million, led by Valhalla Partners and Novak Biddle Venture Partners. 

SolidFire, based in Suwanne, GA, is a next-generation storage platform for cloud computing providers and other enterprises that need scalable, reliable storage for thousands of servers.  The company’s solution allows customers to take advantage of the performance of solid state storage at a price comparable to traditional spinning disk, while significantly reducing operation and storage management costs.

StatSheet

StatSheet, Cary, NC

Statsheet secured $1.3 million in its first round of venture-capital funding in a financing led by Valhalla Partners. Angel investors also participated in the transaction.

Statsheet, based in Cary, NC, is an on-line sports data visualization platform that is designed to organize, generate and deliver relevant real-time and historical statistics through a central portal and across a network of team specific sites. The company provides statistics for NCAA basketball, college football, NASCAR, NBA and has plans to provide similar detail for all other professional and college sports.

ShopSocially

ShopSocially, Sunnyvale, CA

Valhalla Partners led a $1.0 million Series A round in ShopSocially, which represents the company's first venture-led financing.

ShopSocially is based in Sunnyvale, CA. As e-commerce and social networking continue to intersect, consumers are increasingly turning to Facebook and Twitter for product recommendations. ShopSocially is a product recommendation portal that aims to allow users to socialize shopping decisions with their "circle of trust."

Exits

Register.com

Register.com, New York, NY

On July 30, 2010, Register.com was sold to Web.com for $135 million.

In a press release dated August 2, 2010, David Brown, President and CEO of Web.com, stated, “The acquisition of Register.com is a transformative event for Web.com and creates one of the largest online marketing and web services companies serving small businesses.  With over 1 million subscribers, an expanded value proposition and broad cross-sell and up-sell opportunities, we are very optimistic about our combined companies' long-term potential.”

Q & A

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