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THE 2 007
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HE PACE OF CHANGE IN THE TECHNOLOGY based outside Silicon Valley, showing that technology innova-
industry is accelerating. As we created the 2007 list tion continues to become more global and distributed. In 2006,
of AlwaysOn top 100 private companies, we found 71% of the AO100 hailed from California; this year that num-
that high-tech startups are again going through sig- ber dropped to 56%, and more companies from the Northeast-
nificant lifecycle events—fundings, mergers and ern U.S. made the list. For example, Vivox, based in Massachu-
acquisitions, and even IPOs—at a rapid rate. We’re seeing setts, is adding voice to social networking and virtual worlds,
activity in a wide range of sectors, including mobile, while New York–based Tabula Digita is developing
greentech, security, social media, components and educational games for students and institutions. The
infrastructure, and on-demand services for consum- Northwest provided strong contenders too, such as
ers and businesses alike. Seattle’s SeaMobile, which provides wireless voice
With the large number of promising contenders, and data communications for cruise lines, ferries,
deciding which companies make the AO100 list is yachts, container ships, and offshore oil platforms.
always complex. To pick the final winners, AlwaysOn As for industry trends, security remains a vibrant
editors, KPMG, Bridge Bank, Merrill Corp., Level area. AO100 companies representing this sector in
3 Communications, and Manatt, Phelps & Phillips 2007 include 3VR Security, 41st Parameter, and Bit9.
surveyed industry insiders and sorted through the The mobile sector also continues to grow—especially
600-plus global company nominations. We then evaluated around making the mobile phone or device a more complete
each company against several criteria: innovation, market (and simpler) tool for finding things and providing services
opportunity, commercialization, media buzz, and stakeholder on the go.
value creation. Another growing trend is the “virtualization” of consumer
To reflect the changes we saw in the industry and in the services. Companies like Carbonite and Box.net offer easy-
range of nominations, we significantly revamped the AO100 to-use online backup and storage, showing how this virtual-
list—refining which companies fit which categories and add- ized type of outsourcing is reaching even small businesses and
ing one: greentech. This category, which addresses all kinds consumers.
of renewable energy concepts, has received large amounts of Social media—community and social networking compa-
funding and media attention. nies—continue to innovate. Examples include Intercasting,
Another way in which the list’s makeup has changed is that which is providing platforms to build communities and mar-
only 8% of the companies on this year’s list were also among the kets around user-generated, location-aware mobile content,
AO100 in 2006. A number of our 2006 winners—13%—had sig- and Gaia Online. Intercasting is media-focused, while Gaia is
nificant exits. Notables include DivX, Glu Mobile, and Aruba half social network and half virtual world—showing off new
Networks, which went public; YouTube, which was spectacu- business models in the space.
larly acquired by Google; and Ironport, acquired by Cisco. Trends we suspect will continue include the level of VC
This year, many of the companies on the AO100 list are at investment in greentech companies and the creation of new
earlier stages of development than in previous years. Although online, on-demand consumer services. In addition, we expect
80% are shipping products, 5% are still developing their products to see additional innovation in and convergence between the
(but show enough potential to be included on the list), while 6% consumer and media and mobile categories—for example, in
are just beginning to launch beta products. The average funding the area of blending social networking and search. We look
per company and total funding for the list also show the shift forward to seeing the groundbreaking strategies and products
toward younger companies. Last year’s AO100 raised a total of this year’s AO100 winners will come up with as well as what
more than $5.5 billion in VC funding and the median funding new contenders the next year will produce.
amount per company was close to $44 million. By contrast, the
far earlier-stage 2007 list has raised $2.2 billion total, and median Packy Kelly is a partner with the Silicon Valley office of KPMG
funding per company is around $22 million. LLP (www.kpmg.com) and is the Leader of the Western Area Ven-
We saw nominations from many new, exciting companies ture Capital Practice. Packy can be reached at pkelly@kpmg.com.
34 | ALWAY S O N | S U M M E R 2 0 07 The views and opinions are those of the author and do not necessarily represent the views of KPMG LLP.
07
CATEGORY KANEVA
WWW.KANEVA.COM
CONSUMER HQ: Atlanta, GA FOUNDED: 2004
Overall Winner
ASSOCIATED CONTENT
WWW.ASSOCIATEDCONTENT.COM LOOPT
WWW.LOOPT.COM
HQ: Denver, CO FOUNDED: 2004
CEO: Geoff Reiss EMPLOYEES: > 20 HQ: Palo Alto, CA FOUNDED: 2005
CEO: Sam Altman EMPLOYEES: 17
CATEGORY INVESTORS INCLUDE: Softbank Capital
INVESTORS INCLUDE: Sequoia Capital, New
CONSUMER AND MEDIA Enterprise Associates
AZUREUS
GAIA ONLINE WWW.GETAZUREUS.COM NETVIBES
WWW.GAIAONLINE.COM HQ: Palo Alto, CA FOUNDED: 2006 WWW.NETVIBES.COM
HQ: San Jose, CA FOUNDED: 2003 CEO: Craig Sherman EMPLOYEES: 60 CEO: Gilles BianRosa EMPLOYEES: 15 HQ: Paris, France FOUNDED: 2005
INVESTORS INCLUDE: Redpoint Ventures, CEO: Tariq Krim EMPLOYEES: 15
INVESTORS INCLUDE: Benchmark Capital, world—that differentiates itself from other
Redpoint Ventures, DAG, Stanford sites. Its success is undeniable and owes BV Capital INVESTORS INCLUDE: Accel, Index Ventures,
a lot to its focus on teen engagement and angels including Marc Andreessen
AO TAKE: GaiaOnline.com is an avatar-
based teen hangout grounded in the addictive virtual economy, which powers its BABELGUM
manga and anime world. Started in 2003 revenue engine and keeps users on the site WWW.BABELGUM.COM OODLE
by comic-book enthusiasts, it’s evolved for over 1 hour per day. Gaia also conducts HQ: Dublin, Ireland FOUNDED: 2006 WWW.OODLE.COM
into a complete virtual world. The virtual innovative advertising programs with com- CEO: Erik Lumer EMPLOYEES: 40 HQ: San Mateo, CA FOUNDED: 2004
world concept is coming into its own, as panies like Scion and Time Warner. Gaia is CEO: Craig Donato EMPLOYEES: 12
INVESTORS INCLUDE: Silvio Scaglia
more and more users from all demograph- currently one of the fastest-growing online
INVESTORS INCLUDE: Greylock Partners, Red-
ics are leaving the surface world and living communities, with more than 6 million total
point Ventures
complex lives in a variety of communities. users, 2.5 million uniques per month, and BAYNOTE
As a relative newcomer, Gaia has demon- 1 billion (and counting) total posts. Top-tier WWW.BAYNOTE.COM
strated strong growth and staying power. investors are sitting up and taking notice as PALTALK
HQ: Cupertino, CA FOUNDED: 2006 WWW.PALTALK.COM
It’s an unlikely combination of ideas— well, with Benchmark and Redpoint partici- CEO: Jack Jia EMPLOYEES: < 50
part forum, part gaming site, part virtual pating in a recent $9 million round. HQ: New York, NY FOUNDED: 1998
INVESTORS INCLUDE: Hummer Winblad, JK&B CEO: Jason Katz EMPLOYEES: > 50
Capital, Steamboat Ventures, Chess Ven-
INVESTORS INCLUDE: Softbank Capital
tures
PANDO
BEBO WWW.PANDO.COM
WWW.BEBO.COM
HQ: New York, NY FOUNDED: 2005
HQ: San Francisco, CA FOUNDED: 2005 CEO: Robert Levitan EMPLOYEES: 20
CEO: Michael Birch EMPLOYEES: 18
INVESTORS INCLUDE: Intel Capital, BRM Capi-
INVESTORS INCLUDE: Benchmark Capital tal, Wheatley Partners
JAJAH TOPIX
WWW.JAJAH.COM WWW.TOPIX.NET
HQ: Mountain View, CA FOUNDED: 2005 HQ: Palo Alto, CA FOUNDED: 2002
CEO: Trevor Healy EMPLOYEES: 60 CEO: Chris Tolles EMPLOYEES: < 50
INVESTORS INCLUDE: Sequoia Capital, Intel INVESTORS INCLUDE: Gannett Co., The
Capital, Deutsche Telekom, T-Online Ven- McClatchy Co., Tribune Co.
ture Fund
TRULIA
JAXTR WWW.TRULIA.COM
WWW.JAXTR.COM HQ: San Francisco, CA FOUNDED: 2005
HQ: Menlo Park, CA FOUNDED: 2005 CEO: Pete Flint EMPLOYEES: 40
CEO: Konstantin Guericke EMPLOYEES: 8 INVESTORS INCLUDE: Accel, Sequoia Capital,
INVESTORS INCLUDE: angels angels
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