Monday, February 11, 2008

General Catalyst stays with its consumer focus

By Efrain Viscarolasaga

Activity comes in fits and starts in the venture capital world, and Cambridge's General Catalyst Partners is in the midst of a consumer technology-driven fit.

The seven-year-old firm has spent the early days of 2008 closing three new deals, deflecting rumors of a major exit and cleaning up after a fourth quarter that brought its share of good and bad news. The common thread among all the activities is the firm's growing interest in deals close to the consumer, particularly when tied to video applications.

In January, General Catalyst participated in three separate fundings with the words "consumer" or "video" predominantly featured. Last week, Boston-based JNJ Mobile Inc. brought in $4 million in its second round from General Catalyst and others for its mobile social networking application, Mocospace. Earlier in the month, Visible Measures Inc., another Boston-based company that makes traffic and viewing measurement applications for online video, also raised a second round that included General Catalyst, this time for $13 million.

Across the country, General Catalyst hooked up with former Fox TV and Fox News president Stephen Chao to fund Chao's newest venture WonderHowTo.com, an instructional video site. Terms for that deal have not been disclosed.

The three deals included three separate partners at the firm. While special venture partner and former Upromise Inc. and Excite@Home Corp. CEO George Bell is working with WonderHowTo, partners Brad Hoover and Neil Sequeira are working with Mocospace and Visible Measures, respectively.

Bell said the timing of the deals was coincidence, but the firm's activity in consumer and video applications is not.

"It's a great time to be a consumer," he said. "We think all the empowerment is going toward the consumer, and it's a great time to invest (in those firms)."

Aside from those three deals, General Catalyst has also been a player in a number of other local consumer plays. The firm participated in the $196 million funding of Norwalk, Conn.-based travel search engine Kayak.com, for that company's acquisition of California's SideStep Inc., announced in December 2007. In addition, portfolio company Maven Networks Inc., a video hosting and distribution provider in Cambridge, has been rumored to be courted by Internet giant Yahoo Inc. While a deal has not been announced, sources have indicated Yahoo could spend as much as $150 million for the company.

Everything hasn't been gold for General Catalyst. Cambridge-based e-commerce software maker and portfolio company n2N Commerce Inc. closed its doors recently, burning through $30 million in private funding from investors including General Catalyst. Another high-profile investment, Eons.com, which was launched by Monster.com founder Jeff Taylor in 2006, was recently forced to cut staff and refocus its plan to bring generation-specific content to Baby Boomers.

Despite the fact that the deals come at a time when the economy is tightening, JNJ Mobile CEO Justin Siegel said General Catalyst's interest in the company has not wavered, and the company's consumer-based offering has continued to resonate with investors.

"We haven't seen a change in the comfort level of investors and, if anything, we saw an increase in interest from other investors that ended up not being involved in the funding," he said.