European News Briefs, August 2011

LONDON

Spark Flies off Monster Exit

London-based Spark Ventures has realized a 15x money return on the sale of half its stake in Mind Candy, a creator of children’s gaming phenomenon Moshimonsters.

Based on the amount paid by an undisclosed investor, Spark now values its remaining share in Mind Candy at £6 million ($9.6 million), up from £1 million ($1.6 million) in September 2010.

That rise in value has been attributed to the lightning growth of Moshimonsters.com, an online forum for children to create and share pet monsters and which, with 50 million registered users, has been described as “Facebook for kids.”

It has also spawned a plethora of print and toy merchandising.

The return justifies Spark’s loyalty to London-based Mind Candy, which it initially backed with seed funding in 2004.

Despite the failure of the company’s main product, called Perplex City, Spark and other investors agreed fresh funding worth $7 million in 2006, allowing Mind Candy to launch Moshimonsters the following year.

LONDON

Tuning into Shazam’s TV Push

Shazam, developer of a music identification service for mobile phones, has raised $32 million in new funding from American and European venture firms.

The London-based company attracted capital from Silicon Valley investors Kleiner Perkins Caufield & Byers and Institutional Venture Partners, as well as from existing backer DN Capital.

The funding will support development of the core Shazam product and Shazam for TV, which links smartphone users to additional content when the application is used in conjunction with TV broadcasts and ads.

In the past year, NBCUniversal and MTV have incorporated Shazam for TV into their programming.

Since 2001, Shazam has garnered about 150 million users and attracted five rounds of funding. The last, in 2009 for an undisclosed amount, was also supported by Kleiner Perkins and DN Capital.

MADRID

Cabiedes Books Another Ticket with Club Santa Monica

Renowned Spanish Internet angel investor Luís Martin Cabiedes has increased his share in luxury travel provider Club Santa Monica (CSM).

His firm, Cabiedes and Partners, initially took a 15% stake in CSM in November 2010 when it participated in a €500,000 funding round ($710,000).

The latest, €650,000 ($930,000) funding involved Cabiedes, Real Madrid footballer Alvaro Arbeloa, Internet entrepreneur Yago Arbeloa and other investors.

The funding will be used to build on CSM’s 300,000 members, who use the service to buy discount travel deals on offer for a limited period of time.

Cabiedes hopes the service will reach the heights of his previous angel investments, such as Privalia.com—which this year received €88 million ($126 million) from major U.S. private equity firms—and classified advertisement search engine Trovit.com.

LONDON

Standardizing Seed Investment

In a bid to simplify early stage deals for startups, a large group of European venture capital firms have agreed to a standard investment term sheet.

With guideline clauses covering financing structure, liquidation preference, share conversion and exclusivity, among others, the sheet aims to help entrepreneurs ill-acquainted with the funding process.

“We hope these documents help bring coherence to the fragmentation of the European market,” stated Seedsummit, which operates as a platform for seed investors and which produced the term sheet as well as another for enterprise investment schemes.

Contributing to the documents were such firms as Earlybird Venture Capital, Eden Ventures, Hanson Technology Ventures, Kima Ventures and Wellington Partners.

The idea was inspired by a similar project in the United States called Series Seed.

LONDON

Oracle Purchase Supports DN’s Exit Push

Digital technology backer DN Capital has continued to reward investors with the sale of Datanomic to Oracle.

The sale to the data management software provider is DN Capital’s seventh portfolio exit in the past 14 months, allowing the firm to return the majority of invested capital in DN Capital GVC II.

That fund started investing in 2008 after a €50 million ($71 million) first close. The firm continues to invest, participating in a $32 million growth round for portfolio company Shazam, an online music identification service, in June 2011.

DN’s support for Datanomic dates back to 2003 when it took a majority interest.

Subsequently, in 2009, DN increased its stake by buying the minority share of private equity firm 3i.

REGAU, AUSTRIA

Sustainability Fund Backs NEURA

Climate Change Capital Private Equity (CPE) has pumped €8 million ($11.4 million) into Austrian heat pump manufacturer NEURA.

CPE is a €200 million ($286 million) fund from London-based Climate Change Capital, which invests in clean power, clean transport, energy efficiency, waste recovery and water.

The firm’s private equity portfolio includes nine companies. In May 2011, it led a £25 million ($40 million) round in solar device maker Enecsys, committing £11 million.

NEURA will use the funding to develop European market share for its pumps, which it claims to offer 15% to 20% efficiency improvements over rival products. The company has sold 10,000 of its smart-grid enabled pumps, which allow residential and commercial users to control heating levels via the Internet.

KOLIN, CZECH REPUBLIC

ARX Buys into Manag

Central and Eastern European investor ARX Equity Partners has spotted a growth opportunity at Czech company Manag, which makes electrical equipment for the refinery, chemical and pharmaceutical industries from its factory east of Prague.

Financial terms of ARX’s management buy-in were not disclosed, though Manag’s annual sales exceed €10 million ($14 million).

ARX said it would seek to expand Manag “beyond its current market niche” through organic growth and acquisitions.

CAMBRIDGE, U.K.

DFJ’s Great White Hope

Cambridge-based Neul has raised $12.8 million for its white space communications technology in a round led by London firm DFJ Esprit.

Other investors included IQ Capital and Cambridge Angels.

White spaces occupy frequencies unused by television and radio, which have been made available by the switch from analog to digital.

Neul’s first product, NeulNET, is a radio system designed to operate in TV white space and the company aims to use its technology to improve wireless connectivity and unify machine-to-machine (M2M) communications with the launch of a new standard called Weightless.

Its goal is to allow any wireless-capable device—estimated to number about 50 billion—to communicate with one another, creating “an Internet of everything”.

The funding will assist product development and underpin wireless data trials currently underway at the Cambridge Consortium, which includes the BBC, BSkyB, Microsoft, Neul, Nokia and Samsung.

DFJ Esprit has backed Neul’s management once before in a previous venture called CSR, a fabless semiconductor company.