As smartphones proliferate, “mobile” and “Internet” will continue to converge. ScaleVP is an active investor in both. Please see the mobile page for our thoughts on opportunities that are born mobile.
We believe that social will be a persistent and pervasive aspect of all Internet businesses going forward. Already, social communities are shaping ecommerce, music, games and other spaces. Furthermore, knowledge of social connections can lead to entirely new categories, such as group messaging and expert networks. That’s why ScaleVP seeks new investments that use a social twist to rapidly gain market share. As our investments in social commerce leader BeachMint, SaaS social marketing pioneer Vitrue, and social network security leader Actiance demonstrate, we “get” social.
Engagement is the key to winning in content. If users aren’t hooked, neither are we. Along with strong engagement, we expect content companies to span platforms and use multiple revenue streams. We also tend to favor multi-title content strategies for their longevity and extensibility. Our investments in Everyday Health and in two mobile content companies, Glu Mobile and PlayPhone, illustrate this approach. Looking forward, content distribution is changing radically as social media refers gain momentum over search traffic and we use more mobile devices than PCs. Companies that get ahead of these trends will win.
ScaleVP made its first “local Internet” investment in 2005, when Google had fewer than 200,000 advertisers worldwide and the U.S. Yellow Pages + local TV/Newspaper business was stuck at $25 billion. Today, Google alone has 20 million small business customers worldwide. ScaleVP has numerous investments riding this trend, including Reply.com, which recently combined with MerchantCircle, and HubSpot.
The intersection of local + mobile + social continues to excite us. Consumers on the go with mobile apps, geo targeting and actionable content and advertising can give real value to both the users and advertisers, whether they are small to medium-size businesses or larger chains.
As early as 2008, ScaleVP believed that Internet markets for paid labor would experience explosive growth in numerous service categories due to their ability to aggregate demand and supply and to provide trust and quality. Mechanical Turk had proven this for low-value tasks, but numerous other sectors were ripe for innovation. We hosted an executive-in-residence who had earlier led marketing at LiveOps to help us understand the market dynamics and identify strong potential investments.
uTest is ScaleVP’s first pure crowdsourcing company, though several of our portfolio companies have crowdsourced aspects.
While Internet commerce has become mainstream, new approaches and verticals continue to propel its high growth. Innovations such as membership models, social commerce and aggregating merchandise without holding inventory can all deliver better growth and margins than a traditional store model. BeachMint utilizes celebrity curation, social marketing and a membership model to deliver consumer value and profitable growth. In addition, mobile commerce provides another layer of acceleration. ScaleVP is actively seeking additional new e-commerce investments combining these themes.
BrightRoll is a great example of the type of AdTech company ScaleVP targets: they’re in the giant market updraft of TV ads moving to online video ads, they have tremendous reach and targeting, and they’ve managed significant growth with modest capital. AdTech businesses often take lower-value inventory and, through technology and data, transform it into high-value units.
ScaleVP has other AdTech companies that “make” some of the highest value ad units: leads. Both Vantage Media and Reply.com serve specific vertical advertisers with consumers far down the purchase consideration funnel.