Singapore EDBI Portfolio (Digital Meida And Internet) Analysis - 2011


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An independent 3rd party analysis for Singapore EDBI\'s portfolio company in Digital Media and Internet industry.

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Singapore EDBI Portfolio (Digital Meida And Internet) Analysis - 2011

  1. 1. EDBI Portfolio Analysis (Digital Media & Internet) - Tony Gu Tao
  2. 2. Executive SummaryThis document provides a further analysis of EDBI’s Digital Media & Internet portfolio by Tony Gu, as an independent 3rd party source of information for …The document has 4 sections:1) An analysis of recent activities and trends in VC industry (Digital Media & Internet) in both USA and China.2) An analysis of current industry status and future trend of Digital Media, as well as challenges and opportunities investors/start-ups will be facing. A mapping of EDBI’s digital media portfolios to a proposed digital media framework (adapted from Accel model) is presented with potential areas of further exploration.3) An analysis of future industry trend of Consumer Internet, as well as a mapping of EDBI’s internet portfolio to the proposed SoLoMoCo framework with potential areas of further exploration.4) An exclusive focus on Mobile Internet industry, which is believed to be the next big wave of innovation, as well as a list of key emerging mobile technologies (and opportunities) that EDBI should keep eyes on. 2
  3. 3. VC Industry Analysis 2010/11(Digital Media & Internet) – U.S and ChinaEDBI Portfolio Analysis – Digital MediaEDBI Portfolio Analysis – InternetMobile Internet is the Future
  4. 4. 2010 – 2011 VC Industry Overview (Digital Media & Internet)In both US and China, Digital Media & Internet are the hottest area of VC investment(2010/2011) –> Money is after projects. More and more competition among VCs.Observed Trend of VC Investment Strategy1. Proactive development of specific sectors + deeper understand of business operation for better deal sourcing2. Shifting to either earlier (for less competition) stage or later stage (for less risk) Competition 5M - < 5M 20M > 20M Investment Range3. Strategic deal syndication – either be more professional (close to start-ups) or provide more money(close to capital markets)4. Add more value – strategy, management, technology and HR.
  5. 5. Top VC Deals (2010-2011) in U.S – Digital Media & Internet* Digital Media Investment = 2285M Internet Investment = 1325M Enabled by cloud computing, Internet is more than a mediaNext to Search, Social Networks/Gaming is proven to It’s part of consumers’ lifestyle especially the next big thing in Digital Media. The followers are Expect to deeper integration with other lifestyle services in Rich Media (interactive), Video (replace TV) and future (Education, Financial, Travel, Government) Localization (for SMB) Mobile & Localization are deeply integrated in all aspects * Data published on NVCA website
  6. 6. Top VC Deals (2010-2011) in China – Digital Media & Internet* Digital Media Investment = 629M Internet Investment = 1517MSocial network in China is developed earlier than U.S. E-Commerce is the hottest area, yet with big room of(Tencent vs Facebook) Video & Lifestyle are the growth (3% of overall retail in China VS 5% in U.S) current hot area. Mobile Internet is growing fast and gaining Momentum in all areas and will be the next big thing. Location-based Services still in infancy. * Data published on PEDaily Website
  7. 7. SummaryDigital media sees fast innovation in technology, data processing/mining and business model. It also enjoyshigher speed of global scaling due to its light-weight nature. However overstressing on the dataprocessing/mining and targeting technologies doesn’t address the branding requirements of premiumadvertisers. The industry is looking for the next big thing after search, where display and video are 2 strongcandidates.More than a media, Internet is also deeply integrated across business value chainwhich slows the speed of global scaling (since it often involves money flow and fulfillment) in exchange ofbigger, deeper and longer impact to people’s lifestyle, especially with the emerging mobile internet. Although thisis still subject to infrastructure development status in specific countries, the upcoming wave of lost-costSmartphone and global LTE deployment could speed up the process and global market maturity.In U.S. A - start-ups enjoys the bonus of global acceptance of US culture and language for fast expansion (e.g.Facebook). Expect to see continuous innovation in technology and business model.In China – due to the existence of Great Fire Wall, the closed ecosystem has its own players and focuses onbusiness model/technology duplication to grab domestic consumer market shares. Expect to see moreinnovative application in consumer internet. Globalization is on the rise through Acquisition (Lenovo), Investment(Tencent) and Product Exportation (MTK). Developing countries (e.g. South East Asia) are the major focus.Key Future Trend: Convergence (online & offline service, digital & traditional media, desktop & mobile terminals) Consolidation (cloud computing, integrated chipset) Open (open platform ecosystem, Android)
  8. 8. Suggestions Examples Category/Company:• Leverage trends/markets of U.S and China – the Video: 2 biggest markets, for maximum return. • The trends are : Social, Commerce, Video, Mobile : Lifestyle and Mobile• Be outstanding by differentiation Earlier Stage: • Strategic shift of portfolio to focus on early- middle stage business Syndicates: • Strategic and targeted deal syndication to selective partners in particular sectors• Provide strategic value-add (leverage Singapore Supply Technology as a regional hub for business expansion or Global Distribution value chain upgrade) Content Production R&D
  9. 9. VC Industry Analysis 2010/11(Digital Media & Internet) – U.S and ChinaEDBI Portfolio Analysis – Digital MediaEDBI Portfolio Analysis – InternetMobile Internet is the Future
  10. 10. EDBI Portfolio (Internet & Digital Media) – 2 clustersDigital Media (video) Cluster – Focus on Video production, Consumer Internet (Mobile) cluster – focus ontechnology, aggregation and distribution Internet/mobile technologies that directly affects consumers’ daily life Area of Focus 10
  11. 11. Digital Media Industry Overview Current Status (2010) Future (2020) Challenges/OpportunityFact 1: Digital Media is fastest growing compared to Market Size: Challenge 1: Mobile, Social, Local will be key break-traditional media 2010 Global media market size: through to create new areas of digital media. 759B Opp: SoLoMo oriented 2010 Global Digital Media Mar. Size: platform/technology/application 307B Digital/Overall : 40.5% Challenge 2: Major spending shift from TV to digital media as Branding 7-fold increase in 10 years time and Opp: Unified control over long-tail of content and it’s mostly from China, USA, Russia, fragmented audiances Brazil, India Opp: Digitalization of traditional content/media (e.g. Interactive TV)Fact 2: Digital Media spending remains small portion Opp: Premium content (video/rich media/game/AR) 2010 Global media market size: 600B 2010 Global Digital Media Mar. Size: 47.6B Challenge 3: Convergence of digital media across a Digital/Overall : 7.9% diversified range of digital terminals Opp: Maintain across-screen consistency overFact 3: Long-tail of content and fragmented audience multiple media types for the same piece of contentcreate new monetization opportunities, Search isdominating (50% of digital spending). Display, Rich Digital Media Portfolio Opportunity Matching (more analysis in next slide)Media & Video are emerging. Company Amount Time Investor Stage CloudPic Global 6M May, 2011 EDBI, Gobi A Round ScanScout (Tremor Video) 8.5M Oct, 2009 EDBI, Times Warner B Round Unattributed Vobile N.A June, 2010 EDBI funding Xinya 9M Nov,2009 EDBI, Gobi A Meritage Private Equity, Unattributed Crisp Media 6M Apr, 2011 Intel, EDBI fundingFact 4: Digital aspect(Data-centric/technology) more Unattributedthan Media aspect (creative, content) Smaato 7M Jan, 2011 Aeris Capital, EDBI fundingFact 5: Digital media gains market share from direct- EDBI, SingTel, Citiresponse (DM, Magazine) rather than branding (TV) VivoTech 24M June, 2011 Venture Crelated marketing activities Unattributed mBlox N.A Apr, 2011 EDBI, Gobi funding
  12. 12. EDBI Digital Media Portfolio Distribution Refers to areas of potential opportunities Traditional Product/Operation Focus Media (TV Book Magazine Outdoor)SearchMedia Rich Media Video Media Social Mobile Media Game Media (Display) Media Monetization Platforms Cross-platform advertising solutions Content Production Platform Cross-platform media content production Analytics & Data Platforms Cross-platform analytics & data mining Infrastructure & Distribution Platforms Application-specific media delivery
  13. 13. SummaryEDBI Digital Media portfolio is inline with identified key future trends of digital mediaindustry. The investee companies are trying to address the questions, like premiumvideo advertising, video IP protection, premium content production, cross platformpublishing and advertising, cross platform mobile advertising optimization – these keyquestions need to be addressed before digital media gains significant market sharefrom premium branding advertisers.EDBI Digital Media portfolio also focuses much on platform/technology that isuniversal to market application/localization, which is a good approach that will involveEDBI in future industry boom without too much exposure to country-specific marketrisks (e.g. China regulation). However this will be subject to limited upside duringliquidation phase.Leveraged on existing experiences & expertise, EDBI Digital Media portfolio can beexpanded both horizontally and vertically. • Horizontally it could look at other areas of digital media like social, game and digitalization of traditional media. • Vertically it could look other aspects of value chain like applications, analytics, infrastructure and innovative content distribution.
  14. 14. VC Industry Analysis 2010/11(Digital Media & Internet) – U.S and ChinaEDBI Portfolio Analysis – Digital MediaEDBI Portfolio Analysis – InternetMobile Internet is the Future
  15. 15. EDBI Portfolio (Internet & Digital Media) – 2 clustersDigital Media (video) Cluster – Focus on Video production, Consumer Internet (Mobile) cluster – focus ontechnology, aggregation and distribution Internet/mobile technologies that directly affects consumers’ daily life Area of Focus 15
  16. 16. Morgan Stanley ‘s View on Future Internet Yesterday Today Tomorrow Even Faster Innovation 100 tables launched on CES Jan, 2011. Most are Android system Interactive Digital Media & Device Internet of Things. More connected devices in medical, health care. Founded in 2004. 600M Users. 50B Social Valuation Networking Founded in Nov 2008. 1000% growth in 2009. 15B Valuation Founded in 2009. 6M users in 6 month. Mobile Internet Founded in 2009. 1M Users in 3 weeks. Game-Changing Trends to Watch in 2011Worldwide Facebook/Groupon IPO Nokia & Microsoft Alliance Booming of B2C EC Year of Mobile Internet Year of Tablets – Android vs Apple MTK upgrade to Android Year of Augmented Reality Open Platform Strategy
  17. 17. What Happened (By July 2011) Facebook has 750M users and 60% of Facebook users are from Mobile – compared to 500M 6 months ago Facebook is No. 1 online display ads provider, overtakes Yahoo and Google Facebook launches LBS services worldwide - Places/Deals Facebook provide Video chatting services with Skype Android now has 36% of market share, compared to 9% 12 months ago Google Wallet launch as a game changer for mobile commerce/NFC/marketing Google+ launch as a game changer for social networks Groupon grows 1000 times in 2 years. IPO by end Tencent Platform Now Open for 3rd party 2011. Innovation App Integrates Twitter deeply in iPhone/iPad Tencent acquired a few EC Portal asstrategic alliance Sina Weibo acquired 140M users in 2 Nokia will adopt Microsoft’s Windows 7 in future years. It is the most popular social media phones. in China Symbian 56.8%, Android 21.6%, iOS Paypal expects 3B mobile transaction in 2011 – 100 8.7%, WinMo 6.7% - Android is leading times increase of 2008 revenue (24M) smartphone B2C EC is the hottest and fastest-growing Launched/updated 14 iPhone/iPad apps till mid 2011 industry in 2011 in China Launched 8 F-Commerce stores on facebook in 2011 1000+ Group Buying Sites in China17
  18. 18. A Proposed Framework to Explain the Digital Future (Consumer Internet)- SoLoMoCo The convergence of Social, Local, Mobile and Commerce is the future of InternetThe statement is inspired by KPCB’s (world’s leading venture capitalist) vision of future internet 18
  19. 19. A SoLoMoCo Analysis 750M user. No.1 Display Ads Provider Google+ Launch60% FB users are from Apple AllianceMobile. with Twitter FB LBS Services 19
  20. 20. Singapore – Where to Play? (with EDBI portfolio companies in Consumer Internet) Social Element in Digital Cross Boundary E-Commerce Media (Logistic, IT infrastructure, Settlement, Trust) Social Gaming Online Travel Technology Social Analytics Areas of Opportunity (Inline with EDBI’s investment criteria Test Bed for NFC Technology in Asia to make Singapore a regional hub in sustainable R&D, Manufacturing and business operations to reach out to regional and global markets. Internet of Things Technology (Across the Value Chain ) - Chipset, OS, Cloud Services, Content Location Element in Digital Media Production/Aggregation, Cross Device Publishing, Advertising, Distribution 20
  21. 21. VC Industry Analysis 2010/11(Digital Media & Internet) – U.S and ChinaEDBI Portfolio Analysis – Digital MediaEDBI Portfolio Analysis – InternetMobile Internet is the Future
  22. 22. Mobile Internet is the Future – Industry Value Chain PerspectiveWhy invest - Mobile Internet is booming now & will change people lifestyle in future. PC Internet Mobile Internet Wireless Network 3rd Wave – Booming Now 1st Wave - Boomed 20 2nd Wave - Boomed 10 Led by Apple/Android years back years back Accelerated by Social Big Screen Small Screen Closed Eco Open Accurate Anonymous Locatable Not Free Grassroots Apps Free Private Real Time Centralized No Real Time Decentralized Portable Managed Apps Fixed LocationWhere to invest – Challenges/Opportunities Across Value Chain Chipset OS Platform Handset Operator Internet Platforms •Wifi + 3G to LTE •Tight control over mobile •Highly Integrated •Cross-chipset •Embrace android + 1or2 •Ecosystem building traffic entrance Android compatible compatible/power mgmt other OS • Hyper-local Mobile SNS •Deep integration of mobile chipset • Version split • Social + Identify •Open infrastructure API to features with social features •Sensor R&D management Integration 3rd party (location, billing) •New way of doing M- •Cloud Computing • Cloud Computing •Sensor-based application •Bundle data traffic with commerce enabled modules enabled (NFC/Health) service •Appstore & App distribution •Human Machine •Human Machine •Cloud-based application •Internet of Things channels interface innovation interface innovation (3rd party or self-operated) Application with IDC •New way of mobile •Expansion to digital •Expansion to digital •Service-based or adv- support ad/online to offline terminals (car/tv/medical) terminals based Revenue •Mobile •Cloud computing service (car/tv/medical) •Branding + CRM payment/commerce •Data mining
  23. 23. Mobile Internet is the Future – Notable Emerging Technologies Emerging Technology How does it affect daily life?Smart Terminals (beyond phones)- Android will be powering digital devices like TV, Car, Watch, Smart PlanetRefrigerator, etc.. With a sim card plugged-in, virtually alldigital terminals can be interactive and smart with sufficientprocessing power and interactive interfaceHuman-machine interface New ways of interact with physical-Boundary between digital and non-digital world will blur where world – Iron Man effectsgesture-based , 3D-enabled control will be popular.NFC- NFC enabled mobile phone is the last mile to the ultimateconvergence of marketing, sales and CRM. It bridges the gap s Your phone becomes your walletbetween branding (especially TV) and 1-1 direct responsemarketingSocial Mobile Convergence SNS Apps Apps-Social identity can be technically integrated into mobile Middle Ware SNS Middle Warephone OS and makes the phone a virtual representation of Your phone becomes you OS OSthe physical person – socially, financially and politically Chipset ChipsetSensor/Internet of Things (M2M)- Digital terminals equipped with various sensors will collect useful Smart Planetdata to help people improve their daily life, or help business improveoperation efficiency by achieving the greatest level of trenchancyCloud computing + HTML 5- AppStore will disapper and replaced by mobile web Your phone can do everythingapps(HTML5) powered by cloud computing services. A phone for you – an entry point to allwill be as powerful as, but more useful than a PC/notebook information and servicesUnified Communication- All communications (Voice/Messaging/Streaming) are aligned and Unified communication experiencesintegrated ,even better than physical face-to-face communication to replace physical meetingAugmented Reality/Image Recognition Change people’s perception to- Add additional layer of information to physical world physical world
  24. 24. SummaryWhere are investment opportunities?20 years back : Infrastructure, Operator, SP10 years back : Portal, Search, Social Networks3 years back: Mobile Internet (and it’s just starting)“Rapid Ramp of Mobile Internet Usage Will be aBoon to Consumers and Some Companies will WinBig (Potentially Very Big) while Many Will WonderWhat Just Happened.” - Morgan StanleyMobile internet is the current booming industry - it has the potential to change people’s daily life in the future.There are 5 major players (chipset, OS, handset, operator, internet platform) and each of them want to cut abigger pie by horizontal expansion or vertical integration. This pushes up the demand for:1) New innovative mobile technologies2) New ways of commercialization for existing technologiesAnd the demand will result in another round of IPO or M&A of mobile internet companies, which could probably specialize in one or more of below technologies -• NFC• Smart Terminals• Sensor Technologies• Internet of Things (M2M)• Mobile OS• Augmented Reality (Imaging Reorganization & 3D)• Cross screen Mobile Advertising/Publishing• Cloud Computing and HTML 5• Unified Communication (IP-based)
  25. 25. Tony Gu TaoEmail: