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TELECOM VENTURES SPECIAL SUPPLEMENT:
What's the VC attraction? Ouida Taaffe talks
with our CEO Morten Arnesen about different
reasons for a start-up to give up equity to
a VC. For some, it's purely to raise cash;
for others, management guidance and good
connections are factors.
Company: Soundonweb (soon to become
Arphiola)
Morten Arnesen, CEO
Market segment: content aggregation
Location: Norway
VC requirement: the ‘right connections’;
merger management experience
www.soundonweb.com
Soundonweb is a content
aggregator, founded in 1999. It is privately
funded with the CEO, Morten Arnesen, holding
30 per cent. “We have the money we need for
now,” says Arnesen. “Going forward the issue
is more about strategy than cash.” Arnesen
won’t disclose exactly what sort of VC deal
Soundonweb would like to arrange, as a
number of factors come into the equation.
However, he says they
have spoken to VCs and that what is of real
interest to Soundonweb in working with an
outside partner is setting up the right
merger.
Arnesen points out that
many of his service provider customers are
no longer independent and that, in dealing
with them, scale is increasingly necessary.
“We are very interested in content providers
as potential merger partners,” he says.
“Those in the games and videos fields, for
example. Strong brands and good customers
are important factors in choosing the right
candidate.”
Soundonweb had a profit
of €100,000 last year on a turnover of €1 m;
it expects to treble the profit number and
double turnover this year. It is not in a
hurry to get to the altar. “We plan to grow
organically this year and next, to be an
attractive option to others,” says Arnesen.
Soundonweb has
approached some VCs and been approached
itself. It currently employs 20 staff and
expects to have around 50 in two years’
time, with growth driven partly by the
advent of 3G. Arnesen quotes the video
dating service provided by ‘3’ in Sweden as
an example of 3G content services that can
do very well.
As things stand,
Soundonweb has 150 customers in 20
countries. Why, however, should an operator
go to a small company like Soundonweb? Why
not go to a big publishing house? “That is a
question we have to deal with that all the
time,” says Arnesen. “We’ve been around a
while and we have contracts with companies
like EMI, so it really is easier for
operators to come to us for a variety of
content, rather than set up agreements with
each individual label. We also have
experience in dealing with the technical
issues. Music people often don’t know that
much about the telecom business. We have
experience of both.” (Arnesen’s own
background is as a musician.) |
