There is some chatter today about Visto, a provider of mobile emailing technology, rolling into my RSS feed inbox. The reason for the chatter is that Visto announced a staggering $70 million raise, which is remarkable for several reasons.
1) According to CEO Brian Bogosian, this deal was oversubscribed and more than double the intended raise of $30 million:
“This financing level clearly demonstrates a tremendous vote of confidence in our strategy, technology, execution, intellectual property, and team,” said Visto CEO Brian Bogosian. “Our original goal was to raise $30 million, but given investor interest, the potential size of the market, and the ultimate prize of winning in this space, we were compelled to increase the size of the round.”
2) This is Visto's EIGHTH round of private financing, bringing the total paid-in-capital to $229 million
3) They're, at best, part of a four-horse race for the land grab that is wireless email messenging while combating very real threats from the big boys (cough cough...Microsoft, anyone?)
Seeing this discussion of Visto brought memories of the bubble crashing back to me. In the early days at my current firm (circa 2000), we were getting pitched a tremendous amount of private equity (late stage, pre-IPO) offerings and I (the FNG) was in charge of culling through the deal books. Visto, to their credit, made the cut and we had a face-to-face meeting with them. In fact, if memory serves, I was one of the early users of the Visto service (I wonder if my login is still active?).
This was before they acquired Psion (which gave them the ingredients for push-based mobile mail) and was really being touted as a PC-based portal that integrated all your disparate email accounts into one web-based Inbox. Back then, much of their presentation revolved around "unified messenging" and how much better their solution was than Onebox (which was acquired by Openwave).
Bill Burnham (a long-time favorite in my blogroll) posted his criticism of the tremendous money flowing into a crowded and competitive segment of wireless email; and I have to give him credit as it echoes many of my own concerns.
One could argue that they've come a long way in the last five years, but they've spent a ton of cash to stay afloat in the process. Visto has no lack of venture backers (DFJ, Oak, VantagePoint, Meritech, Rustic Canyon). But Bill's column and criticisms echo many of the reasons we passed back in 2000 [note: To be fair, Bill isn't questioning Visto specifically, but the TAM of the space].
At the time, I couldn't resolve several issues. 1) Did Visto have demonstrable competitive barriers to entry in the form of technology leadership, a beachhead of powerful customers and partners? 2) Was their vision of the future of messenging one that made more sense than others? 3) How long could they defend themselves against the bigger infrastructure players who inevitably saw the value of mobile-based software and messaging by extension? I'm not sure we're any closer to those answers in 2005
I wish the folks at Visto well, persistence is an integral part of succeeding in business. But I'll be very curious to see how this plays out and whether our decision to not invest back in 2000 was a wise choice or not.
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