Posted: February 7th, 2010 | Author: Chim | Filed under: Education, Food for thoughts, Fun, Startups | Tags: Business, Business plan, Education, Entrepreneurs, Fun, Interesting, Internet, Money, Social Network, Startups | No Comments »
Kwedit is a strange name for a payment company. This is a startup that offers a new form of payment to social and interactive games that allows people to buy virtual goods. The strange thing is that it allows people to “promise” to pay for a virtual good and the user can pay the promise later with a bar code in a 7eleven store.
Even though this seems to be a great innovation, the idea of printing a bar code and pay it in a retail store is nothing new to date. The strong differentiator of Kwedit is the idea of promising to pay later. I wonder what would happen if everybody promises to pay but none of the actually pays anything. I believe that the CFO of the company would be scare of the increase in the account payable of the balance sheet.
This type of payment for virtual goods reminded me of Habbo Hotel. Habbo is a Finnish company that started its virtual goods operations before the internet boom. It is probably the first company to have a business model based on selling virtual goodies to users. Interesting enough, Habbo targeted in a very narrow market segment. Its targets on teenagers that love to chat in pixel-lated environment.
Habbo and its many forms of payments.
Habbo offers 7eleven payments too. OK, they sell pre-paid cards and Kwedit doesn’t.
In my humble opinion, Sulake could have grown much more if it had focused on the virtual good market as a whole market instead of just that niche teenager segment. It could have created a strategic plan of reaching all types of games and services based on virtual goods. Well, other companies grew upon this model and they are newer than Habbo. C’est tant pis.
Posted: December 23rd, 2009 | Author: Chim | Filed under: Food for thoughts, Framework, Shopping, Web 2.0 | Tags: AdWords, Business, Food for thoughts, Google, Interesting, Internet, Money, Productivity, Useful | No Comments »
The Science of Managing Search Ads
There is an amazing article about Google AdWords from the New York Times.
It illustrates the management of an online campaign in AdWords for a company called Tiny Prints. This company advertisers on Google and gets a substantial part of its revenue and customers from AdWords. The company has stopped advertising for a day, trying to decrease its acquisition cost, but it ended up losing customers and allowing competitors to grow. Its management team decided to advertise again and it started to manage its campaign more closely, balancing the ads spending, competitors’ bids and profits.
The article gives an accurate view of how advertisers live with AdWords. To have success in that platform, you need to have quick decision, money and knowledge to use this powerful tool.
Read more here: The Science of Managing Search Ads
Posted: August 17th, 2009 | Author: Chim | Filed under: Finance, Food for thoughts, Private Equity, Venture Capital | Tags: Canada, Entrepreneurs, Finance, Interesting, Market, Money, News, Private Equity, Startups, Valuation, Venture Capital | No Comments »
Canada - USA - Niagara Falls
People in the venture capital industry know that the VC industry is not going well in Canada. That is why it is even more important to know the situation in a quatitative point of view.
The SME Financing Data Initiative is a government website that publishes quarterly reports about the venture capital industry in Canada. The summary is that the level of investment and funding is the lowest since 2003.
VC investment and fundraising, Q1 2008 and Q1 2009
There is an increase in the number of investment in the seed stage startups. However, all other stages of deals fell.
VC investment by stage of development, Q1 2008 and Q1
Also, you can see better how the distribution deals in Canada per provinces is.
Number of companies receiving VC by province, Q1 2008 and Q1 2009
I haven’t added all the number, but the impression that I have is that the venture capital activities in Canada is decreasing significantly. You can read the whole report here: http://www.sme-fdi.gc.ca/eic/site/sme_fdi-prf_pme.nsf/eng/h_02156.html
I took the report from the Money Tree Report from PriceWaterHouseCoopers and there is a lot of interesting results.
According to the report, the number of deals remained flat but the value increased slightly compared to Q1. But if we compared to Q2 2008, the value of investment drop 48.6%. In this perspective, Canada is not doing that bad at all.
Number of deals in US
Another interesting fact is that the number of seed stage investment increased as in Canada.
Seed investing increasing
This is actually good news. The more we invest in early stage company, the more growth we can expect in 3 – 5 years. So, those who want to gain fast money should not get into the venture capital industry now. But, it is important to get into this industry now to invest in new companies and expect a good exit in 3-5 years; this is the average needed time for a company to mature for an IPO.
The current situation in the VC industry is not good. But, actually, this is a good opportunity to have a readjustment in the industry, lower the valuations and we may have a better return from the portfolio companies in the next 3 -5 years.
Posted: June 20th, 2009 | Author: Chim | Filed under: Finance, Food for thoughts, Private Equity, Readings | Tags: Business, Finance, Mergers & Acquisitions, Money, News, Private Equity, Sweden | No Comments »
Koenigsegg's car with Saab logo
I’ve been following many news related to the GM’s sale of Saab to Koenigsegg and I’m very curious about the outcome of this situation.
I searched Google to see if there was any news of small companies buying big companies and I couldn’t find any results to that, instead I found many news of big companies buying smaller firms. Then, I made some changes in my query and I still didn’t get any results of small companies buying a bigger one. However, I’m sure that there are a bunch of history of small companies buying big troubled ones or at least their brands.
Two examples:
As in this little research, most companies bought the troubling ones because of the brand. It is quite hard to see a small company buying a larger one because usually, small companies do not have capital to buy any company at all.
That is why it is fascinating to see the merger of Koenigsegg and Saab. Koenisgsegg sold only 20 cars around $1.2 million each last year. Meanwhile, Saab sold over 5o,000 cars units during the same period. Koenisgsegg is receiving many many support to acquire Saab. First, it has $600m loan from the European Investment Bank guaranteed by the Swedish government, and a dowry from GM in the form of platforms, powertrains and about $500m in cash and other assets.
Then, Saab’s Creditors agreed to write down 75% of their debt!
This merger looks more like this: GM and the Swedish Government “hired” Koenisgsegg to clean up or infuse a new life into the company.
I would love to see how successful this ‘marriage’ will be. Some cars enthusiasts’ sites say that it would be great to have Koenigsegg technology and hype infused into the Saab products. I wonder what Koenigsegg is thinking about this. Maybe, it would be great for them to have a platform where they can mass produce their extremely cool cars to the world.
However, there are many risks for this strategies. How could Koenigsegg adapt its designs into the production line of Saab and how the small Koenigsegg’s team can hope to manage the bigger and fatter Saab management and company’s structure?
I wish them luck!
News related to Saab and Koenigsegg sale:
Unstable Storm – Economist.com
Saab’s Creditors Agree to Sharply Write Down Debt
Koenigsegg buys Saab: The automotive gods may smile upon us once again
Google News: Saab & Koenigsegg
512-HP Koenigsegg Quant Solar-Electric 4-Seater To Enter Production
Geneva 2009: NLV Quant by Koenigsegg
Posted: June 18th, 2009 | Author: Chim | Filed under: Education, Food for thoughts, Venture Capital | Tags: Business, Education, Entrepreneurs, Entrepreneurship, Food for thoughts, Interesting, Money, Readings, Venture Capital | 1 Comment »
A new study by the Ewing Marion Kauffman Foundation, Right-Sizing the U.S. Venture Capital Industry, states that venture capital industry’s return is under performing because of the current size of the industry. It says that by reducing the it, this industry may increase its return.
The logic is that the VC firms won’t have that much money to make high valuations in startups, so the return will be higher naturally.
Kauffman says The US VC industry must shrink
This report is in tune with what I am reading from The Money of Invention, How Venture Capital Creates New Wealth: Paul A. Gompers, Josh Lerner. Josh Lerner’s book states clearly that if the supply of money from limited partner is high, while the demand of investment from startups is the same, the consequence is lower return.
This is incredible.
You can read more about the Kauffman’s paper here: http://www.kauffman.org/newsroom/venture-capital-industry-must-shrink-to-be-an-economic-force-kauffman-foundation-study-finds.aspx
