PrivateEquityChina

Shanghai VC Invests in Mobile Phone Content Provider

Mobile phone content developer Digital Chocolate, Inc., of San Mateo, says it's secured $13 million in a second round of funding from four venture capital firms.

The Series B funding was led by Sutter Hill Ventures and also included Chengwei Ventures, a Shanghai-based venture capital firm and one of China's first independent venture funds. Digital Chocolate Series A investors Kleiner Perkins Caulfield & Byers and Sequoia Capital also participated in the second round. The company previously secured $8.4 million in its Series A funding.

"This next round of funding validates our vision of what that mobile content can be, and will allow us to explore any and all opportunities to create the kind of experience we envisage and customers will demand," says Trip Hawkins, founder and CEO of Digital Chocolate.

source

Beware the Forecast Pundit, or Lies and Statistics?

Om Malik comments on forecast revenues from mobile data....

Strategy Analytics estimates that global revenues from mobile data will grow from around $61 Billion this year to just over $189 Billion in 2009, with person-to-person messaging representing 48 percent of the total.

I wonder how much if any of the forecast built in the China story? See my previous post on the fallout from falling SMS revenues in China.

I read in the print version of Wired Magazine recently a short piece on the previously forecasted trends for online users, online shopping and the like. Key point: the forecasts were mostly trending as predicted but with a lag or a year or so.

China Portals Falter as SMS/IVRS Business Suspended

SCMP today continued covering the fallout from China Mobile suspending services to Mtone Wireless, Sohu, Shanghai Sifang, Guangzhou Rui Shi Communications.

A VC picks up on the theme of overfunding in the mobile gaming market.

I think this is going to end badly for a lot of these investments. For one, its too much money in the individual companies. For another, there are too many "me too" investments. Overfunding and me too investing are the two most rampant diseases in the venture business today.

It looks like mobile gaming is the latest industry to catch that disease. And its too bad. Because its a nice niche market that could have produced decent returns for a few VCs. But not for the whole industry.

Ive held similar views on the whole SMS/IVR business in China. Last week Sina advised it had suffered temporary suspension. "Market watchers" described the moves as part of the Government's pressure to clean up questionable content (read sex) and billing practices (not sure what this refers to?).

Mtone Wireless as a result has cancelled its Nasdaq offering of US$55M.
Tom Online's share price has fallen to record lows (crashing 20% in a week) as investors fear the backlash will hit the largest IVR business on the mainland. Tom maintains its content contains 'nothing offensive'.

Overall though the China portals have run up considerable gains after discovering SMS/IVRS services as a revenue stream alternative to online advertising. Without controlling the distribution channel to end customers Ive had a hard time seeing a sustainable business model. Nevertheless significant fortunes have been made but where they go next is going to be tough. Gaming? see the start of this post!