We spent the past months preparing our relaunch and securing our next, series B round of funding. I am very happy today because we just received confirmation by the German Antitrust Office that our Funding round is approved.

Our relaunch brings us to the next level, where we simplify channel navigation, combine it with social features, and open our business model one step further to content owners, by letting them have a larger share in our advertising revenue. We still have a lot of optimization work ahead, but the metrics of the past weeks suggest that we are on the right track.

The round of funding we just secured will lay the groundwork for our further expansion, and I am happy and proud that we now have French, Spanish, Italian, Polish, Russian and of course Turkish localizations.

Here’s our official Press Release:

http://corporate.sevenload.com/sevenload-secures-new-round-of-financing/

After having gone underground with a series of negotiations, I’m back withe the facts and some insights:

- Sevenload (http://www.sevenload.com) got a Financing from Burda Digital Ventures, the venture subsidiary of Burda group, a leading German Media Group

- Oneview (http://www.oneview.com) got a financing from a leading Media group as well, but that is still somewhat in stealth mode.

This introduces an exciting new phase in both ventures. Sevenload has reached new highs in usage. While competitors benefit from integration in TV channels, tend to trick somewhat on their figures, and basically are positioned as “videos generate traffic, traffic generates advertising impressions, ad impressions generate revenue”, sevenload is going for the Long Tail of content, creating a series of specialised audiences and trying to create advertising value there.

We have negotiated for months on the financing deal with a series of Venture Capitalists and strategic investors. We opted for Burda because it gave us a combination of media competence on their part and independence to pursue our own entrepreneurial course.

We closed the deal more than three weeks ago but wanted to gain some time before communicating it. We had carefully crafted a press release - only to discover that an early talk and its misinterpretation has led, a day before the release, to the faulty and undesired headline that we had been acquired. While this certainly serves the purpose of strengthening the positioning of Burda as a digital innovation leader, it is important for us to stress that we remain entirely independent and this is a pure venture financing. Lesson learned: remain on top of any and all first contacts to the press and lock in the main media with exclusives.

The other surprise was that the news generated so much response. The video market remains a very hot spot.

I had the pleasure to be a speaker at an OpenBC Event in Brussels, on a panel with Eric Archembeau, serial entrepreneur turned VC. The tune I was to play was the answer of the Founder to the VCs - after ING and Eric described requirements for getting a funding. Well, here goes what I said (click on Image to run the presentation).

I have been musing about what a recently befriended VC told me about his firm investing in a few “Superfounders” every year, while discarding thousands of Business Plans. First I felt flattered, assuming of course to be meant. When i asked him how he recognized a Superfounder, he said: “well, you know one when you see one”. Aha.

There is of course a very valid point in that a VC Partner known to have invested in some of the great successes in their realm of action does have the experience to recognize success in the budding. But maybe that’s just the point, “when it is [already] budding”.

Picture this:

Niklas Zenström spent some three years being laughed at for Skypester before moving to an unlikely Baltic State to rename it Skype and get rich.

When we got to know the Sevenload team, by all classic criteria of the business and VC scene I know, there was no way their imminent (and yet to be brought to full fruition) success was discernible. But i felt:

- Passion
- Nonconformism
- A dedication to User Value
- Borderless thinking
- and the proven will to bite the bullet in the face of adversity
- very low bullshit factor
- and a keen sense for the value of every single €
- and the ambition to shoot for the moon (even if you miss it, you’ll land among the stars)

…all proven in the biography, especially of Ibrahim Evsan, the Key founder - and as i know see as an observer of http://www.codingnight.de

It’s either viral or another proof that A class people attract A class people, because the whole team shows that dedication. In the myths of our time, it’s the Googleyness of Sevenload.

Which brings me back to “What is a Superfounder?”. I’m not sure there isn’t a fat danger of having a kind of simplistic Belief in the Strong Man. Where I come from,

http://www.denkwerk.com

which we founded as the idea of “A Company of Brilliant People”, dedicated to the above, to innovation, to having the guts to start new things, it is TEAMS that created the greatest success. And Team means that secret combination of personalities, talents, and experiences, that combine to bring the spice and the reality to any Grand Idea. So if being a Superfounder means dreaming that dream and creating that kind of environment, then maybe yes, I do feel like a Superfounder, Ibo certainly is, and Bill Gates, who said success is never achieved alone, damn sure is. [wow, me and Bill in one sentence]

But maybe the lesson of the picture in this blog is different: it is the teams that matter. And the less loud, less salesmany, less obvious secret toilers, the Wozniaks, the Myhrvolds, the Substance Makers are the ones that really count at least as much. In one word:

the Supernerds.

Rumour has it VCs are downbeat again. Well, on the one hand I can’t blame them, and on the other it brings me back the structural problem of assessing innovation as an investor. I have been observing a very fashion-driven, impressionable and cyclical focus of VCs on The Things That Exit Well (TTTEW), coupled with a regularly disdainful disregard of Never Heard of That (NHoT) and Don’t Believe It Works (DBIW).

Interestingly, most acclaimed hot shots, like skype, or Social Bookmarking, or even Apple in the beginning, went through year-long phases of NHoT and DBIW before sparking real Oh God I Hope We’ll Get a Deal in That Space Epidemic (OGIHWGaDiTSE).

Now as a proponent of a few Startups That Earn Actual Money (STEAM) - I like to think of our company as having a STEAM-Engine, being STEAM-Driven, or believing in STEAM-Power, if that is not too much self-E-STEAM - I keep wondering why it is much harder for VCs to see the merits of Social Commerce models vs. simple Social Network models.

There is no logical explanation for this. And if you think of it, copying something that just exited well is about the stupidest thing you can do:

1. It has already been done
2. It has become big enough to just exit
3. It has become so big everybody actually knows about it
4. There are at least 100 other boy group founding teams and greedy-panicky Vijays (see Dilbert for who that is) funding them who are trying to do the latest GooTube thing

…doesn’t strike you as smart? It’s being done. All the time. Again. And it’s sooo 1990s, ain’t it?

So, dear entrepreneurs, stick to your guns on real innovation, don’t foray into the OGIHWGaDiTSE, avoid the Vijays, and remember MIT’s secret formula for success, as transmitted by Prof. Ken Morse:

CFIMITYM

(Cash Flow is More Important Than your Mother)

Cheers

Rocketrabbit

PS: I’m known for being a real Punster…

Even the smartest VCs still need an irrational exuberence moment to take their decision. The Financing of the Next Big Thing (NBT) is secured - but in the round (won’t be more specific in case one of them reads this) some of the VCs, though very smart and rational, still need the feeling of “we’ve got to rush to the bandwagon” before they really commit. And that means we have to waste some energy just to prove that we can scale fast really fast.

We believe that you have to finetune your Value Proposition. and make yourself sticky before you explode - or you wil get ephemereal and lose the audience you reach. That doesn’t mean being slow or defensive - it means spending as much energy on retaining customers / users as on winning new ones. Not an easy one. But probably the secret to success.

Now customer retention is probably achieved by the basics:

- compelling, understandable value proposition
- swift, perfect service delivery (including technology)
- simple mantra (see Guy Kawasaki on that) that’ll be told at every party

In short: gain not only a lot of contacts, but a relevant portion of mind share as well.

I’ll report more on this, because we have devised a nice little strategy to comply without wasting marketing reach. There is Gold there.

I promised to blog my reflections on the 18-hour stint - well, here goes:

1) Provided you can choose from equal VC quality, choose a VC with an Office in your country -

2) or calculate three extra weeks on legal hassle because they just won’t understand your legal system (unless, of course, you share legal systems)

3) Be ready to bypass the lawyer of your VC at any moment (incl. @ 03h00 AM - myke sure you have a contact who will comply) - remember there may be a Principal-Agent-Problem between Vc and his Lawyer - the VC wants the deal @ good terms and low cost, but he wants the deal. A Bad Lawyer often raises his profile by being excruciating and blaming a bummed deal on you.

4) Align your Business Angels, if you have any, into your interest. If need be, point out that you can always gang up with the VC. But it is best if you don’t have to go there - that depends on the mentality of your BAs. I’ve seen both.

5) Don’t succomb to the enticements of the new. The nice great VCs who now are a tremendous success may just be your worst nightmare two years down the road, so remember to balance control power in your company. In the best of all worlds, as an entrepreneur, you get to pick who you work with on which issue because you gang up with the Business Angels if the VCs get unreasonable and you gang up with the VCs if the BAs get unprofessional or greedy. Make it clear that, while alle share the risk, you are the entrepreneur who is going to make it happen - or not.

6) Don’t overestimate yourself and consider - in your inner fort - the scenario if the company outgrows you or you get boreed. Few Entrepreneurs are as good in the 0 - 100 employees periods as the are in the 100 - 1000 or beyond periods. That was not an issue in my recent experience, but it is always worth remembering.

7) Don’t bind yourself to milestones. Business Plans are a process, not a bible. Focus on the metrics and never tie your investment capital to that. There is only one 100% sure fact about your business plan: it is not going to happen. The story will always be different, for better or for worse. So while building the structure of the company for the VC phase, make sure you have a tight-knit communication, frequent consultation infrastructure (Board) - share decision responsability. Stop selling your venture the minute the money is in the bank and all covenants are through (that’s why milestones are unwise for a VC too, because then reporting focuses on showing how milestones are met, not on the actual problems and necessary adjustments of and to the business model). Make sure you have VCs you are comfortable sharing your worse problems with.

In this sense, there is no real “stupid money” - you should always keep that communication line open so noone will feel thumped and try to get back at you (of that, the stupidest money sources are always capable). And sometimes even the worst moron will see something that you, in the Hamster wheel, won’t.

That’s a first - discussions welcome.

I Just emerged (at 04h00 in the morning) from an 18 - hour (!!!!) - bit of negotiation with two international VCs in one of the startups dw capital is invested in. We had the full program:

- the Lawyer pissing contest (pardon my french)
- the last-minute deal restructuring
- the last-minute battle over terms
- the nerve game on who gets to leave the table first (well not quite, but we did have a little theatre play)
- we used three rooms and a hallway to do all telcoing back to the principals

But now come the differences:

- a savvy founder who kept his nerve and outplayed the lawyers well (it always helps to just call the principal of the VC)
- and a really easy-going notary, funny on top of it

So it all ended

a) succesfully
b) even on friendly terms
c) and with two bottles of champagne….

I’ll get back to the audience on my findings out of the process. Still a lot to be learned, or remembered again at the very least.

Cheers!

The past 2 Days I spent at Expand 06,

http://www.expand06.com

the conference hosted by my friend Ola Alvahrsson, former Founder of Boxman and Founder of Result

http://www.result.com

Here I meet Founders from the Netherlands, Sweden, even France and Spain, including bigger shots like Tradedoubler (300 Poeple, listed on Stockholm SE since november 2005, 117 Mil. € in Revenues.

The conference is ablaze with founding willingness, endeavour, and the smartness of founders intent on not spending it all. As with Lukasz Gadowksi of spreadhirt.net in Hamburg, the most exciting founder was one who founded with 0 € in VC money. Samy Liechtl is Founder of Blacksox.com

http://www.blacksox.com or http://www.blacksocks.com

He does really smart marketing, selling “sockscriptions” of socks, to relieve “sock sorrows” by selling only matching socks, so if you lose one it doesn’t matter. He also puts small sock-shaped jelly in to his mail-order deliveries - with cheese tase!

We discussed that the exciting part about web 2.0 and social networks, is not so much the direct features you get but the potential it has for enhancing existing Business Models into the decision taking sphere (an aspect of both long tail and social commerce). Exciting discussion. More Later.

PS: Sweden is cool, the Swedes very nice.

Last thursday saw a big event in Hamburg: 450 - 500 would-be netphiles converged on SinnerSchrader’s (one of the biggest new media agencies in Germany) to acclaim and discuss the virtues of web 2.0, mashups, social networks, long tail commerce, etc.

http://www.next10years.de/

20 or so nervous VCs were imitating Dilberts Vijay (the World most Desperate VC), but I liked the rather cynical We’ll-Fan-The-Hype-And-Take-The-Money-But-Do-It-Right-This-Time entrepeneurs. My Favorite was Lukas Gadowski, founder of spreadshirt.net, who founded his 120-poeple company with 0$ VC money. that’s right, 0$. Cool guy. He urged “all the consultants and bankers in the room” to “do it again and found a startup, because you’ll get VC money now…” Hilarious, I keep thinking about the old adage of B2C and B2B meaning “back to consulting” and “back to banking” after going bust…. I now it’s really bubble 1.0-ish, but hey, I’m a veteran.

On a more serious note, while valuations are going up, it is true that there are four major differences between then and now:

1) development costs on more mature and open source technologies are a 10% fraction of the cost of 5 years ago
2) (viral, search, performance, affiliate) marketing costs are a factor of 100 cheaper now
3) there are 5-6 times more users with a wide range of needs and much higher affinity to web and mobile (adding up to 13 Mil. in Germany alone)
4) founders, even inexperienced, aren’t half as naive (though some ar getting giddy with the valuation thing).

Cheers!