The emergence of NumberFour in Berlin ? which has today announced a $38m Series A round ? throws up a few interesting points worth briefly dwelling on. It may be the case that we are looking at a tipping point in the European tech startup scene, which will play out over the next few years. Indeed, this business platform may be Europe?s answer to the global consumer platform created by Google and Facebook.
The first point to note is the location. For the last few years Berlin has become a hotbed of startups. Everything from the execution-led factories of Rocket Internet, to the cool innovation of Soundcloud and Wooga, we?ve seen a cross-section of technology emerge in Berlin. The city was almost built for technology startups on purpose. With high unemployment, cheap offices and housing, and almost no incumbent industries other than cafes, galleries and the government civil service, tech startups are free to roam the badlands of Berlin, throwing the proverbial startup mud against the wall to see what sticks.
Right now, the cost of failure in Berlin is pretty low. Admittedly, it still doesn?t have the end-to-end capabilities of London ? meaning that there is a lot more money in London from early to late, and a potential pipeline towards acquisition or a public market listing. But at the early stage right now, and if you can find the talent amid Berlin?s tiny population (3.5 million versus London?s 8m) Berlin has a strong hand. And importantly, NumberFour, while it is HQ?d in Berlin, it also has an office in the U.S. It shows that smart European entrepreneurs always have one foot in the important American market, and don?t cut off the possibility of raising large second rounds in the U.S. if they need to.
The second is the people. Let?s just have a look. CEO and founder Marco Boerries is one of the most experienced executives in the world, let alone Europe. He was former head of Yahoo EMEA and knew Yahoo founder Jerry Yang very well. It is little surprise Yang is an investor. Then there is Mike Volpi of Index Ventures; Andy Bechtolsheim co-founded Sun Microsystems and wrote the first $100,000 check to Google; Simon Levene, a former partner of Accel Partners, and executive at Excite@Home and Yahoo; Klaus Hommels has invested in Skype, Facebook, Xing and Spotify ? not a bad track record; Lars Hinrichs, Founder of XING, has been one of Europe?s most active Angels and has a well-earned reputation as someone who really understand technology under the hood. And lets add a non-investor, Ian Formanek, NumberFour?s Director of Engineering. Formanek was formerly VP of Engineering at GoodData, the cloud platform allows 6,000 global businesses to monetize big data. It is also worth noting that Allen&Co has been involved in almost every interesting mezzanine round or IPO in the tech or new media space for some time.
A curious side note is who missed out on this deal. The obvious answers are Index?s arch-rivals, Balderton and Accel. Whoever over at those firms couldn?t convince Boerries to take their money must feel like the guy who didn?t sign the Beatles right now.
Then there is the money. $38 million is a lot of bug fixes, and is reminiscent of the $41m the ill-fated Colour raised at its launch.
But Color appeared in 2011 during the white heat of the social app gold rush. NumberFour is very, very different ? it has an amazing team and it?s aiming at that sweet spot around small business and enterprise.
Admittedly one thing missing is the product. No-one has publicly seen it yet and the secrecy around the project is enormous. There are rumors of hundreds of engineers involved already. Current job openings on the newly unveiled web site include Sr. Java / Scala Software Engineer, Senior Software engineers and Mobile Software Engineers. No doubt there will be many more.
But we can be pretty confident that this team, with this funding, ought to produce something pretty amazing. And they?ve been taking their time to think about it, clearly. Fingers crossed they will pull it off.
And if there?s one thing about having $38m in Berlin ? it will take some time to burn through that cash, so they have quite a big runway ahead of them to get this right.
It?s now up to a delegation from the City of London to fly over and convince these guys to eventually IPO, in Europe, not on the NASDAQ.
But all that is a long way off. For now, we wait with bated breath for ? after de-cloaking in the middle of Europe ? this particular starship to start firing its photon torpedoes.
Founded in 2009 by Marco Boerries to re-imagine how small businesses are run, NumberFour is building a business platform paired with a great collection of versatile, easy to use apps that run on smartphones, tablets and personal computers. This solution creates a level playing field by giving small businesses instant access to the tools, capabilities and insights normally only available to larger companies.
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