Jason E. Klein, Founder and CEO of On Grid Ventures, led a StreetFight Summit panel of investors exploring where the next billion dollar opportunities in hyperlocal might be. Joining Klein were Matt Turck, Managing Partner, First Mark Capital and Ben Siscovick, with IA Ventures.
Klein framed the discussion by calling Google’s June 2013 acquisition of Waze for $966 million and Foursquare’s valuation of $700+ million two of these billion dollar opportunities. Klein questioned whether any funds tracked the local space. Answering his own question, he said “none.” The reason Klein believes no funds cover the space is because it is not a defined investment universe. His firm targets “geo-disruptive” businesses, which On Grid defines as, “businesses that use GeoLocation as a disruptive force to influence consumer or business activity.” Klein shared several examples. (1) GeoSocial – consumer to consumer businesses like Foursquare; (2) GeoMarketing – business to consumer companies like Yelp; (3) GeoInfrastructure business to business firms like ReachLocal, Yext, PlaceIQ or xAd. We’d also point you to BIA/Kelsey’s own coverage of local also has put some definition into the “local” investment universe.
Turck observed that one thing driving so much change in local is that since software is so easy and cheap to build and offer SMBs at low cost, even very small businesses are developing powerful new capabilities. Siscovick pointed to a company like Locu (now owned by GoDaddy) that offers SMBs the ability to personalize, contextualize and localize based on aggregating geo-signals that establish the context of the area; inferring your reason to be there. He argued that “local” is really becoming tied to “geo-personalizing” the experience at a user level.
Looking ahead to where the next billion dollar opportunities lie, the panel pointed to the business to business (B2B) companies are currently in the hot part of the market (versus C2C and B2C). Investors offering Series A, B or C rounds typically look for exits in the $20 million to $200 million range, Klein offered. But Silicon Valley needs the billion dollar exit he said. Within the B2B part of the local space, it will be those companies that are “mobile first” that will be the ones more likely to win.
Finally, the panel reframed the whole question of the billion dollar opportunities in local by essentially concurring that “local is dead.” Even as big data allow us to personalize based on transaction and other consumer profiling to enhance targeting, personalization and improve the user experience via social signals like check-ins, the whole notion of “local” is being co-opted by “mobile.” It will be the “mobile first” company who can be the geo-disruptive offer in the market by contextualizing, personalizing and targeting users with an enhanced experience driven by geo-signalling and user data ported through the mobile device and SaaS big data solutions that defines the winning landscape of the billion dollar opportunities in local. Nothing is more local than where I am now and why I am there. You get there by mobile. Local is dead, long live mobile.