Rovio is well on its way to stardom with Angry Birds. Business Insider reported last week that Rovio has sold more than 2 million toys already since October. In mere five months, the company has essentially generated at least 20 million euros worth of revenue through its toys (if we hypothetically agree on a 10€ average price per toy sold - they actually sell for $11.99 and $14.99). Plush toys are just one source of revenue for the company, other major sources include iOS apps, advertising on the Android platform as well as the Mighty Eagle add on.
I want to be fully honest about this, but I'm really thrilled to be sharing information like this so openly about the venture capital business with the help of Nexit Ventures about the mathematics behind the venture capital business. While it's pretty straight forwards on a basic level, it's great to get these figures actually with comments from an actual investor. In this post, we'll look at the fundamental financials and why venture capitalists are looking for certain growth figures in the way they invest.
A little over a year ago we reported on a Finnish media startup called Indiedays. The company put together a fashion, beauty and lifestyle network of bloggers, all under the same address to leverage their traffic and build a new media destination. I talked to the CEO and co-founder Esa Suurio about their development in 2010 and how they were able to exceed their goals.
Yandex, one of the biggest internet companies operating in Russia and the likes of Kazakhstan and Ukraine reported its 2010 revenue increase 43% compared to 2009. The giant reported revenues of 12.5 billion rubles in 2010, which equal to $410 million US. Yandex makes most of its revenue from contextual advertising, just as its counterpart Google does in the US.
Rebtel is a very interesting Swedish telephony company. This year, the Rebtel is expecting to make $75 million through VoIP telephony. The company has seen immense growth and it's been a fantastic company to follow. Last Friday, the company released their Blackberry app to further fuel the growth. The reason, or at least one of the, why Rebtel has become so successful is their concept of VoIP calls - they don't require the user to have a working internet connection, but instead transmit the calls through local numbers. This way, it sort of falls in between the likes of Skype and companies offering calling cards. It's pretty much a perfect approach for the mobile generation.
In the interview Andreas Bernström sheds some light on how the company has grown and where they're headed. With $75 million in expected revenues for this year, they want to remain independent and further grow the company.
Ironstar Helsinki is a Finnish game developer that has been previously developing a social game called Moipal, but changed course to developing Facebook games earlier last year. Tiina Zilliacus is the CEO of the company and joined it early 2010 to help the company build new traction. I did a short e-mail based interview with her to learn how 2010 has looked for the company and how they've managed to build their business forward. I had the idea of the interview after having a little chat with Tiina Zilliacus at a recent Christmas gathering in Helsinki. Their recent development has been impressive and is definitely worth covering for our community as well.
When filing for an IPO Mail.ru Group disclosed some interesting financial indicators for the different platforms they own. At the moment Mail.ru Group itself is mostly owned by Digital Sky Technologies, a Russian investment fund. Mail.ru Group's fixed assests include 10% of Mail.ru portal, 100% of a social network Odnoklassniki, 91% of recruitment portal Headhunter.ru, 100% of ICQ LLC, 24,99% of Russia's biggest social network Vkontakte.ru, 25,09% of QIWI Investments, 2,38% of Facebook, 1,47% of online-game developer Zynga Inc. and 5,13% of Groupon. On top of that Mail.ru owns minority shares in a plethora of Russian and Ukrainian Internet companies.
CNET ran an article on Spotify and its troubles of setting up business in the US. Many believe it's the stubbornness of the record companies that have slowed them down to a halt almost. However, the CNET article states that Apple maybe protecting its iTunes Store from Spotify and talking with record labels to think twice about the ad-supported model. According to the CNet article, Apple executives are worried about the effects of a free music service might have on the rest of the market.
Reporting from the Mindtrek conference, I managed to have a chat with Jussi Laakkonen the CEO of Applifier about their service and what's been keeping them busy in the recent months. Only a little over a month ago we reported about the company reaching 55 million monthly active users (MAUs) within Facebook with their cross promotion network. Applifier is the successful (I think we can give it to them already easily) full company pivot from Everyplay, which used to be a 3D social game in Facebook.
SA Insider has listed its own 100 most valuable digital startups. The list is pretty US oriented with only a few companies from other parts of the world. From Nordic and Baltic region, you can find 2 companies - Skype and Sulake. The list immediately sparked lots of good debate about who's missing the list and why. One of those opinions can be found from Ben Black. He argues that, in my opinion correctly, that there are lots of social gaming companies valued over $100M that didn't make the list ($100M seems to be the cut off line more or less for the last companies on the list).
According to Talouselämä, a Finnish business magazine, the Finnish mobile operator Elisa has bought an approximately 10% share of Voddler in their latest stock emission. The Swedish Dagens Industri writes that Voddler will be collecting approximately 40 million crowns in the emission, possibly valuing the company at 300 million crowns (about 30 million euros).
The Finnish online gaming company behind Habbo Hotel, Sulake, has reported it's 2009 earnings along with H1 2010 figures. In 2009, Sulake accumulated a loss of 4.4 million euros. However, it also reported that for 2010 revenue reached 29.1 million euros which is 20% higher than in 2009 in the same period. Furthermore, EBITDA in the same period increased 63% to 3.5 million euros with a solidly positive cash flow, according to the company blog post.
There's an interesting TechCrunch post a while back on the amount of money different people made on the Google acquisition of Slide. Slide was the maker of different Facebook applications, perhaps best known for its Funwall before Facebook took over those features and made the service redundant. The reason the post is interesting is the fact that it shows how different investors get their returns in a case where the valuation is only 36% of what it was 2 years ago.
Fruugo, the much-debated ambitious Finnish e-commerce startup (see our previous coverage) that has raised tens of millions of euros of funding, filed its 2009 annual report last Friday. The report reveals the company made a loss of 11,040,071 euros (USD ~13.9M) in the financial year 2009. Despite the huge loss, the result was actually a slight improvement from 2008 when the company made a loss of 14.5 million euros. The report also tells that Fruugo produced a turnover of 8236 euros (yes, not a typo; i.e. USD ~10,350) from the sales commissions in 2009. The company launched its web storefront, available to consumers in Finland, Sweden, and the Netherlands (and including merchants from also the UK), in May 2009 several months late from the planned schedule.
Sulake Corporation, the creators of the popular teenage social network Habbo Hotel, have reported very strong financial figures for their first quarter of 2010. Between January and March, Sulake's revenue grew by more than 25 percent compared to Q1 in 2009. Sales for the first three months of 2010 were $20 million (€14.7 million).
The company titled its annual report for 2009 as a "Fantastic voyage" and having been at the press conference I can say the title is a big understatement on the story itself. The Switch is a 5 year old clean tech company building converters and generators for the wind energy industry. They have been in business for about 5 years and their first years (2005 and 2006) revenue wise were good - they made a few millions in turnover. In 2009 they turned over 96,5 million euros.
TechCrunch ran a story on Spotify a couple of days ago, where Daniel Ek had commented on some very interesting issues. Daniel Ek, Spotify CEO, spoke at SXSW and told in his keynote that, Spotify as a service consumes more bandwidth than the whole of Sweden (on certain days that is). Those wondering why Spotify is built in a P2P manner now fully understand the need for such a solution. Ek also commented that it's a million dollar question why Apple remains to deliver all its digital downloads from a "single source" generating huge amounts of traffic that also need to be paid for.
The Finnish multi platform game developer RedLynx has announced that it has sold over half a million copies of its popular Trials HD game on the XBOX360 (via Kauppalehti). The game is worth about 1200 Microsoft points which accounts to about 15 USD totalling in 7,5 million USD in sales.
The company itself is also in very good shape financially. RedLynx is already showing some of the success in its finances as 2009 revenues are in the range of three million with a million in profit. Last time RedLynx was profitable was in 2004 with a 356 thousand euro profit. High fluctuations are natural in the gaming business as it takes a long time to build a game and very few are capable of pumping out new games on continuous basis to keep the company constantly profitable.
The Finnish Heavy Metal band Mokoma, has publicly thanked Spotify for their payout model. Their Facebook fan page states that for "every 100 album playbacks we get 30 euro cents from Spotify. Thanks Spotify." The deals that Spotify has struck with different artists have been kept secret, so it is not known if this is the only payout model. However, if there were 1000 people listening to an album and to my understanding would listen it through, Mokoma would get 3 €.
Today, Kauppalehti wrote that the Finnish computer electronics store founder and owner Samuli Seppälä is going to take the company public in a few years time. He's doing this with the help of the Swedish private investment company Rite Internet Ventures who have invested 3 million euros to the company with a 15% stake. This brings the company's valuation to a mere 20 million euros. Why do I say a mere 20 million euros, you might ask. The reason is simple, the company's 2008 turnover was about 140 million euros with 2,4 million euro profit before taxes and amortisation.
I bumped into Mikko Nurminen a few years ago and was immediately fascinated with their business. He's one of the co-founders of Ideakone and they own products such as Kotisivukone and Moogo as they're known in English. They're in the business of easing website development through modular plug and play features. We've recently written about one of their Estonian competitors Edicy and since there seems to be a lot of well developed business here, I thought of getting back in touch with Mikko and interview him on where they stand today.
During my visit to Iceland a few weeks ago, I had the chance to visit one of the greatest "startups" in a while - CCP Games. CCP Games has its offices in the Silicon Docks area of Reykjavik. While the other startups are doing the proper bootstrapping and sharing offices next door, CCP Games has grown to cover three stories employing some 450 people at the moment. Those who aren't that familiar with CCP Games, they are the developer of Eve Online one of the most popular MMORPGs out there. In short, there are over 300 000 registered players on Eve Online and almost everyone is paying about 15 USD a month for the membership (some have 14-day trial accounts). This in turn sky rockets their revenue well past 50 000 000 USD annually.
Sulake has just announced that will initiate negotiations to lay off up to 20% of its workforce in Helsinki. Sulake is the Finnish company behind the successful teenage web service Habbo Hotel. Just yesterday we wrote that they have managed to create a one million euro profit with their 50 million euro revenue.
I actually talked about this yesterday with some net savy entrepreneurs and we all had only one question in mind. Where does the 50 million euros go to when you're operating an internet service? A Finnish entrepreneur, of French origin, Ramine Darabiha did a very non-scientific analysis into this in his blog post last March. It may not seem a big thing, but once you break the numbers down - a lot of money is going somewhere.
According to Kauppalehti, Sulake Corporation's 2008 was by a small margin a profitable one. The group of companies turned over 50,1 million euros and managed to create a 1 million euro profit on it. The company's earnings before tax were still in the red, but the IFRS calculated tax receivables turned the company statements profitable. The company has been injected with some 45 million euros of investor money of which some 20 million euros have been put aside for the losses of the previous years.
Fruugo has burned through 14,5 million euros in 2008, according to an article in Kauppalehti. Last year's books show (in Finland these are public for all limited liability corporations) that Fruugo's net loss for the year is 14,5 million euros and with no income, this is the investment Fruugo used in 2008.
Fruugo is the much debated startup from Finland that has gathered a lot of media attention in the recent year. One of the reasons they have done so is their attractive and well known board members that include Risto Siilasmaa (Founder, F-Secure), Jorma Ollila (former CEO and Chairman of Nokia) and many others. Fruugo's main product is a webshop that would aggregate all the different webshops into one.
Severa is a Finnish "startup" that focuses on creating one SaaS-solution to managing company's billing, project management and sales. They have just released a new version of the service - Severa3. I have to admit, looking at their website and statistics - they are doing very well. Severa was founded in 2004 and has grown a staggering 1304% over the last four years.
According to Inoa, their 2007 revenue was around 790k euros with a 121k operating profit. Other stats on their site are also pretty impressive - they help manage 130 000 projects, around 42 000 invoices and 10 million hours of work. Their business model is also relatively inexpensive - 30 euros per user per month and the first person to sign up gets the service for free. I have to disclose, that this is not a paid blog post by Severa, but I seldom am this fascinated by management tools!
The Finnish corporation behind the overwhelmingly successful teen community site Habbo Hotel, Sulake, has reported a €4.8 million profit for the financial year 2008. The company also created record sales, up more than 20% in December, closing in at €50 million for the year 2008. Even though Sulake has made a nice profit, there is still plenty of downside to cover in the coming years to make up for all the loss it has accumulated over the years. This is the first year Sulake has reported a profit since its founding in 2000.