Last October, at the Web 2.0 Launch Pad, the startup voted “Most Likely to Exit First” was CleverSet. Now three months later, CleverSet has sold itself to e-commerce software company Art Technology Group (ATG) for $10 million. It turns out to be a nice exit for CEO Todd Humphrey and founder Bruce D’Ambrosio, who built the company with about $3 million in capital and a $500,000 grant from the National Science Foundation.
But it doesn’t quite live up to a lot of the hype surrounding “discovery” right now. CleverSet offers discovery and recommendation engines to e-commerce sites, using a statistical approach to making product matches. The Seattle-based startup competes with the likes of Aggregate Knowledge, Criteo, MyStrands, and ChoiceStream. The investors in those companies are expecting much larger exits. Criteo just raised $10 million in a venture round. And Aggregate Knowledge has raised $25 million.
By those measures, $10 million is either a steal, or discovery just isn’t the next search.
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Seem like a timely exit given that the rest of the pack had already raised same if not more than what they had taken. However 10M seem a little on the low side given that criteo had raise 10M with valuation probably in the 30Ms.
$10 Million?
$10 M ..very less
It seems to be that discovery is for UGC and search is for professionally produced content including catalogs and metacatalogs.
That’s a steal. Most other players in the space are well funded $10m+ like Baynote (why does everyone forget them on this list of vendors?).
ATG needed a story here. Their personalization message was starting to get weaker in the face of these automated systems. Still really curious how they got away with that price though.
#4: That touches on a very interesting point. Google’s PageRank was created for web 1.0, not web 2.0. With UGC exploding, the need for trusted/unbiased qualified filtering (discovery) is going to increase. Since Google is now officially an advertising company and not a search engine, they automatically lose credibility in this regard.
Who knows, maybe the guys got the recession shivers and opted for an early exit.
Doesn’t sound like a great exit given the capital raised. The investors probably got their money back and the founders most likely got very little if anything.
Hopefully I’m wrong and they did get something though.
Erick - I believe the company press release says the purchase price will be $10 million less $1 million in closing adjustments…$9 million net.
I think we might start seeing more of these small acquisitions in 2008, as the smaller capital investments become more of a viable option. I think raising $1-3MM & selling for $15-$25MM within 1-2 might become a popular exit strategy, & the acquiring company gets to buy not only a product but a team for a decently cheap price.
er within 1-2 years I meant to say.
I do agree with the last comment. Some VCs are starting to think that way…
Discovery could also see a surge of open source solutions because it is a very academic populated space.
People should also start to make a distinction between those with a content solution and the others. Mystrands has also a last.fm potential which is not the case of Aggregate Knowledge. Very different strategy means very different potential.
Criteo for example has a competing offer to adsens which change a lot the nature of its market.
We’ve been working on CF algorithm for the last three years and moving to a dedicated algo for entertainment content was a strategic decision.
We’ll see but it’s definitely a growing market with needs that will become more elaborate in the coming years and each actor will have to get a specialization. At least i think so.
Anyway, despite the price I consider the deal as a positive event for the all discovery space.
Hey Scott - all of Aggregate Knowledge’s announced customers are major catalogs or major media — such as Overstock and the Washington Post. How does this fit with your suggestion that discovery is for UGC?