Interesting fund-raising press release found tonight on Jacques’ blog about the latest round at RealEyes3D: congrats to the team at Atlas, and in particular to Fred Destin, the partner in charge. I video blogged him here recently, and I understand that he sometimes wanders on this blog 
As an exercise I’d like to comment on the press release, as press releases usually reveal lots of information (while at the same time they are crafted in such a way as to not reveal anything ): all BOLD are mine
“09/05/05 – Paris, France and Beijing, China – September 5, 2005 – Realeyes3D, the pioneer of handwritten messaging and provider of embedded applications and wireless services for camera phones,
Waow: they do a lot of things! Pioneer however does not mean ‘first mover advantage’, nor does it mean ‘barriers to entry’, 2 qualities that VCs like. A bit too broad to call anyone a pioneer of wireless services for camera phones. I visited a number of similar ‘pioneers’ in Japan last year. I’d be more precise in my PR.
announced today that it has secured €7.5 million (USD 9.3 million) in venture capital in an over-subscribed second round of financing
Over subscribed ? Says who ? This sounds more like a marketing spin than anything else, unless you do find proof somewhere that the folks got more termsheets than the actual investors, or that the final price was well above the fair valuation…
led by Atlas Venture and Partech International.
Nice bunch of VCs. As good as it gets on French VC soil (I would argue along with guys such as Apax, Banexi, Sofinnova, Innovacom…). This is signaling to others that they might have missed a very good opportunity to invest , or maybe it was the others that made the round “oversubscribed”. Good partners to have at the table.
The lead investors were joined by first round investors Siemens Acceleration in Communications and I Source Gestion. Realeyes3D
This is usually a very good sign, as it says that 1st round investors have reinvested at a higher valuation, maybe protecting their equity %, but increasing price per share along the way (assuming reasonably that the 2nd roudn valuation is > the 1st round valuation). It shows their confidence in the company, the team, the market and the business model (although some adjustments might be required for one of these). I don’t really know Siemens Acceleration, but can say that I Source gestion do a good job in seeding good projects.
The catch? you don’t know how much the 1st round investors have reinvested. Could have been symbolic.
develops highly differentiated, innovative mobile imaging services and applications
blah blah blah… feels like reading a press release. Someone the other day posted about Microsoft’s annual report. Everything in there was exciting, fabulous, great, etc. After a while those words start to mean nothing.
that increase the network traffic generated by camera phones, enhancing the entire camera phone experience.
Oups! Killer app. Just read a killer app.
What? there is something that can increase the ARPU of operators ? They are going to love it, and specify it into their phones, making signing deals with handset manufacturers a very easy task. If you read this blog, I talk about “pain in the market” quite a lot. What is the problem you are trying to solve? Here, it’s pretty damn clear: increase ARPU for operators, who have been looking for a way to boost data traffic (the only segment increasing in their revenues).
With Realeyes3D, camera phone users can create and send personal handwritten messages, postcards, and fax-quality scanned documents from standard 1Megapixel camera phones.
Hum! nice. This is about the current standard of phones being shipped nowadays. With a renewal rate of 18–24 months for most phones, and most of them carrying a camera nowadays, I’m reading *mass market*, therefore *global*. This thing is catching my attention now. With one billion phones to be bought every year, that’s a really nice market to go after, in particular if you get a licence in every phone, let’s say at 0,20 euros in the bills of material for royalty (no clue about the real price), that’s still a potential 200million euros/year.
“As the market of mobile imaging matures, Realeyes3D enables camera phone vendors and mobile operators to extend the value of connected, mobile image capture beyond photography, for both consumers and professional users,” said Realeyes3D CEO Benoit Bergeret. “This funding puts us in a unique position to push forward with sales on a global basis, with a strong focus on delivering useful and compelling new applications and services to the camera phone market.”
There you have it: global. Neat.
As the customer experience is not well described in here, it is still a requirement to make this feature sell phones and subscriptions, if you are to hit anywhere near the above projection.
“Camera phones are becoming ubiquitous; we found in Realeyes3D an early leader in making such devices truly useful to all mobile users. We are also very excited to be supporting a great founding team on the road to building a leader in the space” declared Fred Destin from Atlas Venture.
Another 2 of the magic words are – of course – great team (always a killer in a deal, if the team is crap), and ‘leader in the space’ (because the pie is only that big, and the #1 and #2 will have a good shot at it, in order to create the right returns for the investors).
Truly useful ? I still don’t see how from this press statement. You’ll still need to visit their web site to understand the value, but that’s not too much to ask right, after seeing a few magic green lights?
Major players in the mobile phone industry have already chosen Realeyes3D to expand the feature set of their camera phones. In February, the company announced the signing of a global licensing agreement with Samsung for the integration of a number of Realeyes3D applications as standard features in its camera phones. Several phones equipped with Realeyes3D’s Digitizer™ and w-Postcard™ are available today on the Korean and Chinese markets. In February, Realeyes3D launched Digitizer3™ (“Digitizer cubed”), the first commercially available scanning service for camera phones, which is now being tested by several prominent carriers. All applications and services from Realeyes3D are based on sophisticated and highly optimized image processing technologies that have been patented and developed over the past three years.
Nice: not only is this company having a nice technology, they have understood how to market it, and SOMEONE is willing to pay for it. And by no means is Samsung a small player, and by no means are the Korean and Chinese markets small. In fact, they are the front runners for innovation and market size in the mobile space (add Japan here anytime). Good team, good problem solving technology, huge mass market + global potential, good investors, very nice customer as proof of sales concept… what else do you need to invest ?
Realeyes3D has received several industry awards including the “DEMOgod” award at DEMOmobile in San Diego in 2003, and Capital IT’s “BEST INNOVATION” award in Paris in 2005.
And there you go, juries do understand some of this stuff.
Go4Venture, a London-based corporate finance advisory firm specialized in international technology equity private placement, advised the company in its fundraising process (www.go4venture.com).
Note GO4venture down. A French startup with French investors used a UK firm to raise funds. What’s interesting here is that you can add a new name to the usual 2 or 3 names we all know for private placements; but what is even more interesting, is that it also signals that while professionals were looking for money and managing the process, the team could concentrate on building the business.
Remember: raising funds is NOT a business nor a goal for entrepreneurs. Getting customers to actually pay for your product or service is the goal. And the more of them you have, the better. Which is where you should concentrate your energy.
Marc, Fred, Frédéric, Julien, Pascal, Jeff, Marc, Christophe… (you’ll all recognize yourselves ): do you agree with any of this, any additional comment ?
