Just as Blyk, an ad-funded, youth-oriented mobile virtual network operator, announced their partnership with Aito, they come and announce that they have closed a significant funding round of 40 million euros ($50.4 million) from their existing investors, which include Goldman Sachs, IFIC and Sofinnova Partners. Considerign the current economic climate this achievement is that much more significant.

But by following the news one can’t but wonder whether Blyk is a startup anymore at all. MocoNews.net, a news site covering the business of mobile content, reports that just as Blyk took in the investment it also announced lay offs.

Here’s a quote from Pekka Ala-Pietilä, Blyk CEO, on MocoNews.net:

[...]we are experiencing tougher times and unpredictable times ahead of us, and we like everyone else are feeling the impact, so we have to be well prepared and to do things differently internally. We are working more smartly, and we have to cut the number of people. But I can’t disclose that number.

So on one hand you have the 40 million euro that just came in and on the other you have a group of people whose services are not needed anymore at Blyk.

As said times are tough for those who try to raise financing. VC funds don’t just give out money, but the firms need to work hard to get it in and commit to certain conditions. Add to that the fact that one of the investors that is part of the 40m euro round is the infamous Goldman Sachs who is known to be cut throat in everything they do, and you start to see why Blyk partly adjusted their strategy (new partnerships with operators), and especially why the people who were there for the  startup stage need to go. The firm is not a startup anymore, but a full blown company that needs professional management, not some quirky founder DNA. At least this is how the investors see it and after all they are calling the shots when one decides to take that route.

We all grow up, even startups. Regardless, ArticStartup congratulates Blyk by pulling this off when most companies are busy telling each other how they should stop thinking about growing and start thinking about surviving.

Here’s what a Finnish serial entrepreneur and dealmake Taneli Tikka makes of the news.

Library House, a research house on startups and other fast growing ventures, has listed 100 of the hottest mediatech companies in Europe. The 100 companies were selected by analysing companies using Library House proprietary data and an expert advisory panel. Library House also states that these 100 companies are the ones that will most likely change the mediatech world (mediatech meaning media and technology).

To our joy, we can find 3 Nordic companies in the top 10 list; Blyk (Finland), Sulake (Finland) and Stardoll (Sweden). Other companies in the top 10 were Flirtomatic (UK), MOO (UK), Where Are You Now? (UK), Dailymotion (France), King.com (UK), Playfish (UK) and Plastic Logic (UK). It’s interesting to see that there is a healthy spread of gaming and entertainment companies in the top 10 as well as to note the absence of any media companies per se.

Other Nordic companies in the list were CCP (Iceland), Spotify (Sweden, Luxembourg), Betware (Iceland) and Xtract (Finland). The fact that most of the companies are from the UK or Central European countries pretty much states the overlooking of the Baltic market in total (I believe they are part of Europe, at least the last time I looked). Then again, this is exactly one of the reasons why I set about with ArcticStartup a little over a year ago - to give more insight to the Baltic and Nordic startup industries. Seems like we still have plenty of work to do.

Blyk, the free Finnish born (but operates only in UK) mobile network for 16 to 24 year-olds funded by advertising, has signed a frame agreement with Aito Technologies, a Customer Experience Management (CEM) solution provider, for the delivery and implementation of its Business-Driven CEM software product, Aito, to UK market. This follows a successful 3-month pilot installation, which began in May.

Aito takes business intelligence from network traffic data and offers Blyk an easy-to-understand, in-depth analysis of service usage, member behavior patterns and trends.

The information that the software generates is given to key staff directly involved in business management – sales and marketing managers, member service teams, product managers – in a form which is easy to use and act on.

In essence, Aito is an easy-to-implement tool that’s a user-friendly method of making sure mobile subscribers are having a great network experience, at all times, whether making a voice call, sending a text or MMS, or, in the case of Blyk, receiving relevant mobile adverts with their services. The carrier-grade Aito will provide Blyk with a 360° view of the activities and overall experience of its entire subscriber base. .

CEO of Aito Technologies, Anssi Tauriainen, said, “Like Blyk, we know that mobile advertising is set to be one of the most important business models and revenue-generating network activities offered by operators in the future [...]“

Mobile advertising has been already coming from years and is still as annoying as ever. Yet, this is hardly Aito’s fault and I admit not having tried Blyk services. That said, even if Blyk works like charm, I already pay fixed monthly sum for practically unlimited calls, SMS and data and can’t really imagine the future any other way. For cash-strapped 16 to 24 year-olds teens who adore brands there seems to be something there though. Blyk users receive 6 sms/mms from the chosen brands per day in exchange for 217 txts and 43 minutes of voice calls each month.

For the segment the service seems to be working: Blyk has currently 200,000 member in the UK, which is the only market they are currently serving. Now Blyk is ready to slice and dice the market data into an easy-to-use format with Aito Technologies’ help and are well equipped to follow their plans to go pan-European in 2009 potentially reaching 40 million young consumers.

The advertisers seems to be happy as well: Big brands like L’Oreal have seen tremendous results with average click through rates of 29% (ranges between 12 and 43%). Quite a lead from the average mobile advertising average CTR that hovers around 3-6%.

Finnish media Digitoday knows that in addition to Blyk, Aito Technologies has currently six commercial pilots running in Europe, including Finland. Digitoday also reports that Aito has around 700 potential customers, traditional and virtual mobile operators. Along with these, Aito is going after ring tone, community and added value service providers in the mobile space, which there are around 2000 to 3000.

Aito Technologies is owned by the employees as well as two reputable Nordic investement funds, Creandum and Conor. The company has currently 25 employees.

Despite the difficult times, Blyk and Xtract are promoting advertising (at least in a sense) as a revenue model. Blyk’s business model is built around advertising as a source of revenue. Blyk confirmed they are going full steam ahead with internationalisation in a recent blog post about entering the Dutch markets in the first quarter of 2009.

In the blog post Blyk refers to an IAB research which states that consumers are sceptical about receiving ads on their mobile but become strongly willing to accept ads on their mobiles when they are incentified. Furthermore the willingness is increased by relevant ads. Something that shouldn’t really be all too shocking when you use common sense.

This thinking is confirmed by Xtract in their most recent white paper titled Brands Need People and People Need Brands. Xtract argues that when ads are positioned correctly at the right touch points - they work, and people actually want to see them.

The problem with business models based on advertising usually is that the companies don’t understand the difficulties the advertisers face. In SIME Helsinki, organised in September, I had multiple talks with advertisers that all these new innovative startups don’t really understand the needs of the advertiser and thus only bringing about banner advertising - is not very appealing. What do you think, are the advertisers up tight or is their discontent acceptable?

Photo by trialsanderrors (CC:BY).

Normally there isn’t nothing big in companies appointing CEOs or recruiting people. However, this time I believe there is something ineherently different happening in terms of Blyk that will tell the whole industry how different it is compared to a few years ago. Blyk is a Finnish based startup that offers a free mobile contract to 16-to-24 -year-olds in exchange for advertisements.

Eric Samson is the former Managing Director of Carat Belgium. Now as far as I know, Carat doesn’t engage itself in mobile operator business at all. When Blyk is bringing a heavy weight advertising and marketing specialist onboard it tells about the business the company is in as well as how dedicated they are to promoting the way the company is seen.

This brings about an interesting point to many startups - how many are still focusing on technology through company recruicts, when (possibly) the focus should be on answering the market needs such as in the case of Blyk? No doubt the technological understanding is important, but isn’t the customer insight even more important?