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DN Capital Newsletter




DN Capital Newsletter



02 Apr 2008
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DN Capital Newsletter

DN Capital Newsletter

Dear friends of DN Capital,

This is the first issue of our revamped newsletter, which will aim to keep you updated on DN Capital and hot trends in digital media and software. The theme of this issue is: What’s New in Tech and Digital Media?

Some of the highlight stories covered in this issue are: the recent developments in the music industry, the increasing importance of data management and knowledge on demand, and the technological shifts in financial services. Our portfolio companies Shazam, Endeca, Datanomic, and Kaidara, as well as some of our new investments, Tbricks and Familybuilder, are great examples of where we think some these industries are heading.

Our new website has also recently been launched, so please check it out: www.demianortega.com/dncapital

We hope that you will enjoy reading this issue of our newsletter and look forward to your feedback!

New Fund

DN Capital is now investing from its second fund, DN Capital – Global Venture Capital II (GVC II), which, similar to DN Capital’s first fund, invests exclusively in the areas of digital media, software, and wireless applications. GVC II invests in early stage and growth equity companies in Europe and the Americas.

 

New Investments

DN Capital is proud to announce two new investments from its second fund GVC II, which have been completed this year.

 Tbricks AB is our first ever Swedish investment. Created by world experts in financial services software, many of whom were key players at Orc Software, Tbricks offers a highly sophisticated algorithmic trading solution to traders at hedge funds and investment banks featuring ultra low latency, unparalleled visualization, stability and more flexibility.

Technological advancements continuously enable traders to operate faster, build more complex strategies and manage larger baskets. At the same time the demand among fund managers for increased visibility of trades is growing as financial institutions seek to minimize preventable risks that can be avoided if all stages of the trading process are visible.

tBricks

Speed, flexibility and visualization can therefore provide a competitive advantage for participants in this industry, and financial institutions such as hedge funds are quickly coming to understand that software such as Tbricks can as a result add significant value to their returns.

Its state of the art technology in conjunction with a world class team makes Tbricks a strong new entrant into the market of automated trading software. With headquarters in Stockholm and a development centre in St. Petersburg, Tbricks mission is to provide traders with the fastest and most robust algorithmic trading platform. In an industry that has to date been plagued by black-box trading, Tbricks excellent visualization tools make it possible for the trader to see each trade and control the process at every step of the way.

DN Capital and Angel Investors led the Series A round.

For more information go to www.tbricks.com

 Familybuilder is the first social network application explicitly for genealogy and, with over 10 million profiles, is one of the largest.

iFamily

While many genealogy destination sites, such as Ancestry.com, have targeted more mature demographics, the management team at Familybuilder had the insight that the fast-growing segment of 25-40 year olds are much more accessible through social networks such as Facebook, Bebo, MySpace and Orkut.

Within 9 months of launch, Familybuilder has accumulated over 2.5 million registered users who have recorded over 10 million relative profiles and are viewing 10 million pages monthly, making Familybuilder one of the fastest growing genealogy sites ever.

Familybuilder is now commercializing its network through a combination of advertising and commerce, and expects to roll out compelling new offerings including competitively priced genetic tests for determining family origin, and other products targeted towards its growing user base.

Familybuilder is headquartered in New York City with registered users from across Europe and the States.

DN Capital led the Series A with additional participation from individual investors including some high profile entrepreneurs.

For more information go to www.familybuilder.com

Industries and companies to watch

Radical changes in the music industry

The Music industry continues to go through radical changes. One of the main trends to follow is the relationship between social networks and digital music. Social network-enabled music purchasing will make digital downloads the primary way to sell music within the next 2 years (Forrester), and with this track downloading will be the most popular means of music acquisition.

Although the iPod will still dominate purchases this year, Apple is actively looking for ways to contest the recent Amazon/Play.com move to put an end to DRM music content. It is expected that almost all mobile phones sold in 2011 will be digital rights management-enabled (Gartner).

Another trend to watch is the blend of radio and mobile phones. Gartner expects 54% of all mobile phones sold in 2011 to support FM radio. Over three-quarters will support digital music, and 8.1% will support TV broadcasts. This trend is particularly interesting when cross-referenced with Forrester’s prediction that ad-supported music will stay on the radio.

One company at the forefront of these changes is DN Capital portfolio company Shazam.

Shazam
It is said that ‘Shazam’s Tag Charts generated by the company’s mobile music recognition service are constantly referenced by the music industry as a true indicator of market interest in pre-release material and a monitor of the hit potential of a track or artist’ (E-consultancy).

Shazam’s solution consists of a patented proprietary pattern recognition technology that can identify recorded audio even in noisy conditions and thereby enable its users to interact with music at any point in time. In addition to this, users now also benefit from a music search service, as well as an opportunity to purchase content for both web and WAP portals. The Shazam service is driven by Europe’s largest music information database with over 4 million music tracks, metadata and cover art.

Its solution is now available across a wide range of operators including Verizon, AT&T and Vodafone in more than 45 countries throughout the US, Europe, Latin America, Middle East and Asia.

Shazam is currently launching its new Facebook application, which allows users to share their tags instantly with their social network. This feature will add a whole new dimension to the service and its viral spread. Register with Shazam on www.shazam.com, and share your tags on Facebook!
Facebook

Monthly Recognition Volume

The Company experienced tremendous growth- over 500% over five months- in 2007 and is on its way to ubiquitous proliferation of its client application for mobile music recognition.

DN Capital continues to actively support Shazam and has played a key role in building out the team.

“The Team at DN Capital have added significant value in many aspects of the business, whether that be assisting in building the Senior Management Team by sourcing candidates through their extensive network or validating strategy and supporting corporate development initiatives through their industry knowledge and expertise.”

Andrew Fisher, CEO, Shazam Entertainment

For more info go to www.shazam.com

Accelerating importance of knowledge on demand

Business users are demanding more control over their access to critical information. Where in the past users were satisfied with pre-packaged reports prepared by their IT departments using Business Objects or Cognos, now users want control over the way they look at information. This holds equally true where the data is not 100% accurate (the managers do not want to wait for their IT department to clean the information before it can be used) and for end consumers.

Some of DN Capital’s portfolio companies are at the heart of this change.

 

 Endeca, recognized as a global leader of information access software, has once again exceeded its growth and revenue targets in 2007. The Company is considered to be one of the fastest growing software companies in the world and has over the past five years seen revenue grow from $2.5 million in 2002 to $108 million in 2007.

Endeca
Only two weeks after Microsoft’s $1.2 billion acquisition of FAST, Endeca signed strategic investment deals with Intel and SAP to develop its business further and accelerate its charge into the world’s biggest IT enterprises.

The attention from these giants followed news from IBM in late 2007 that it was using Endeca’s unique platform as the foundation of a new analytics and discovery offering. Aimed at lending and financial institutions, the joint solution will help lenders more easily identify and manage their portfolio risk – an attractive proposition given the recent credit crisis. The media continues to feature Endeca as a technology that reaches beyond the all familiar keyword search engine, ‘a prospective new Google’, CNET News suggests.

Endeca helps people explore, analyse and understand information to inform millions of daily decisions. Leading multinational businesses such as ABN Amro, American Express, Boeing, Nike, Standard Chartered Bank, and Wal-Mart rely on Endeca-powered applications to increase revenue, reduce costs and streamline operations.

DN Capital has been involved with Endeca since its very early stages and has played a key role in the Company’s European expansion.

For more information go to www.endeca.com

Increasing demand for secure data management across industries

 Datanomic is a leading player in the Data Management space and recently beat off competition from many larger and more established competitors to pick up the Silver Award in the Data Quality Product of the Year category of SearchDataManagement.com’s annual awards for 2007. The judges recognised the innovative software’s ease of use and the speed with which it ensures that business users are getting maximum value from their data.

Datanomic
Datanomic’s software can be used to improve the management of any type of data in any industry, but it has had particular traction in Financial Services, where it ensures that Financial Institutions are complying with important Anti-Money Laundering legislation (including EU3MLD) and Basel II.

Indeed, the software house has just won a $1.5 million account with a Global 1000 company for its customer banking business, and has announced over 40 new hedge fund customers, each of whom is working with Datanomic to ensure their customers are not personae non gratae. Datanomic and its partner World Check were recently covered by international news for uncovering hundreds of suspect Directors within the UK Companies House database, including terrorists, war criminals, drug dealers and convicted felons. Datanomic is also currently applying its technology outside of financial services into retail, telecommunications, and industry.

The Company has grown over 200% in the last 18 months and has been recognised as a leading player by industry analysts and customers alike.

DN Capital was the original Series A investor in Datanomic and also helped restructure and recruit the current executive team 18 months ago, and also works closely with the CEO on strategic direction and partnerships.

For more information go to www.datanomic.com

 More and more consumers can now get web self support to solve problems with their home electronics and appliances by using software provided by DN Capital portfolio company Kaidara.

Kaidara
Kaidara has already deployed their solutions at Comet in the UK and Darty in France and recently announced a major new win with Sears, the largest home service provider in North America.

For more information go to www.kaidara.com

 

Team

We are pleased to welcome two new members to the DN team, Philip Prescott and Marta Skundric, who have both started with DN toward the end of 2007, and to announce that we have promoted Andy Choi to an Associate.

 Philip Prescott has taken on the role of Financial Director and VP of Operations. Phil joins us with over 10 years of experience in finance in private equity at CVC Capital Partners, prior to which he worked in the corporate tax advisory department of Deloitte, and had a spell in operational audit at Orange/ Hutchison Whampoa.

Phil is a chartered accountant and holds a Law degree from the University of London.

Philip Prescott

 Marta Skundric joins us as an Analyst, having recently completed her Master in European Business from ESCP-EAP, one of the leading European business schools, where she lead a student research project on enterprising Britain, which was commissioned by the Conservative Party and published in late 2007. Prior to this she obtained her BSc. in International Relations from the London School of Economics.

Marta Skundric

Since joining DN Capital, Marta has supported investments in Tbricks, Dezineforce and OLX.

 Andy Choi has recently been promoted to Associate. Since joining DN Capital in 2005, Andy has been very active in investments in the digital media space and has supported deals such as IGA, OLX, and Digital Railroad. Andy also has two and a half years of operational experience as part of the technical team at Ensim Corp, a venture-backed Silicon Valley software start-up.

Prior to joining DN, Andy was a Fellow of the Chevening Technology Enterprise Scheme, a programme designed by the Entrepreneurship Centre of London Business School with the aim of creating leaders for technology driven enterprises.

Andy holds a BSC. (Honours) in Computer Science from Cornell University and a MSc. (Distinction) in Computer Science with specialisation in communication technologies from University College London.

Andy Choi

DN Capital

28. St. James Square

London SW1Y 4JH

Email: info@demianortega.com/dncapital

Copyright 2008 DN Capital Limited
DN Capital is authorised and regulated by the Financial Services Authority.

 

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