Seatwave raises $25M and shows Viagogo how it's done

Seatwave has just raised an additional $25M in Series C with Simon Clark from Fidelity Ventures as lead.  After proving the model on our initial seed investment and accelerating with the Series B led by Mangrove, Seatwave is now funded to take over the secondary ticketing market.  From leader in the UK today to leader in Europe in 12 months.  A 3-year deal with StudiVZ and money from Holtzbrinck will help us take Germany next. 

Dan Primack at PE Hub got the story and it's coming out in Telegraph and Handelsblatt today.



<-- Davor and Simon at Fidelity

What has Joe Cohen done right to raise $8m in 2007 and $25M in 2008 ?
Where heavily funded Viagogo has been focused on expensive marketing partnerships and low margin deals with sports clubs, Seatwave has taken a grassroots approach with much more palatable results (especially if you are an investor).

Seatwave has honed its marketing methods over time to systematically grow profitably whilst protecting the velocity at which it was shifting inventory.  Today it has the largest inventory of tickets of any European player and is the only company that can claim to have achieved true market economics; indeed, a large and growing proportion of resold tickets are "C2C" i.e. tickets sold by fans to other fans.  If you are an investor you are bound to like the capital efficiency i.e. first prove the model on limited cash, then build the company out and industrialise processes, then properly scale.  If you are a fan you are bound to like the price dynamics and breadth of offer that comes from a true marketplace.

How do you win Germany ?
Seatwave is also announcing today investment from Holtzbrinck and a 3-year exclusive deal with StudiVZ, the "German Facebook".  For the rest is gold old fashioned marketing and execution.



Consolidation
The secondary ticketing market is moving fast.  StubHub of course got bought by eBay and is reportedly doing $700M in revenues now (talk about selling too fast).  Formerly agressive TicketMaster recently acquired TicketsNow (for $295M) and GetMeIn (a UK startup founded by US netizen James Gray);  both TM acquisitions smell of desperation as these were the slightly grey players in each of the markets.  Ticketmaster has limited balance sheet capability and must be feeling the heat from eBay using its muscle to buy primary ticketing supply in the US.  Update: got a mail from Andrew Blachman at GetMeIn asking me to remind everyone that GetMeIn was a pretty decent UK startup success; indeed it was, with limited means and some phenomenal SEO courtesy of Paul Montaigne.  Voila !

What's up with Viagogo ?
You may wonder why I am baring my teeth when I speak of Viagogo, which is not my usual benign style.  My colleague here met Eric Baker whilst he was raising his seed funding so it's not like he is an unknown entity to us.  Eric was a co-founder of StubHub and reportedly left on bad terms; he now seems determined to show its former startup how it's done.  Never mind the fact that he decided to compete with his own creation; the man is on a mission to take his ticketing operation to the top.  There is no doubting the determination, funding (including LVMH or Index Ventures as covered here), or single minded execution of the man.  But here are some reasons to doubt Viagogo overall:

• Baker directly imported a US strategy by going after the clubs (and paying top prices to get them too).  Problem is, apart from ManU, very few fans travel to games from afar (unlike the US) and law restricts the price to face value.  Volumes are likely to remain low, the deals are white labelled and the margins are tight.  Is this good business ?
• We have witnessed some agressive competitor behaviour from Viagogo over the last year, from ticket hoarding by an employee (supposedly unbeknownst to management, sounds like SocGen) to trying to derail our financing with some proactive behaviour.
• With all the cash they spend, the struggle to match our consumer traffic.  Every external measure (Hitwise, Nielsen, ComScore, Alexa) puts Seatwave well ahead.  That probably means that despite the PR hoopla much of the topline comes from club deals and is hardly contributing to the bottom line.  There seems to be limited consumer-to-consumer sales going on.
• The site sucks.  And it's in green.  Come on.

Frankly, who would you rather buy your tickets from ?  The way we see it, we must have Viagogo really worried.  Why else would you go to extreme lengths to woo our incoming investors away. 

So remember: live entertainment needs = Seatwave.  Drive a Prius, buy  food from your local market and your tickets at Seatwave  :-)

Technorati Tags: seatwave, secondaryticketing, fidelityventures, viagogo, ticketmaster

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Comments

[alain]

I don't think anyone can accuse Fred of being unfair. He is probably only reacting to a bunch of nasty tactics to try to hurt a company he is invested in and cares about.

Every entrepreneur would like their VCs to be involved and displaying true team spirit. So he is involved? Well great that is the way every VC should be.

Lastly it's so sad to see two European startups which seem to have found a market try to hurt one another. Viagogo's attitude looks like Vente-privee.com with its competitors. We should be happy many start ups are succeeding. And so Fred would only react this way if Viagogo didn't play by the rules. Otherwise he is very supportive of startups and many in which he didn't invest in.

[Nigel]

The irony of Viagogo's strategy is that it comes from Baker's time at StubHub, before he left in 2004. The vast majority of StubHub's absolute growth occurred after that, and had little to do with team deals. Their new MLB deal was actually signed after the eBay acquisition.

[GMC]

Excuse me Sir, but SEATWAVE partners London Irish and the colour GREEN is key to their brand. Is there a problem with your partners colour there? No, didn't think so.

Please be competitive in your remarks by all means with regard to Viagogo but leave the petty comments at home. Shows a distinct lack of tack.

Kind Regards,

GMC
London Irish Supporter

PS Any idea what London Irish would say about your distaste of the colour green, well I'll email Ian Taylor, the London Irish Chief Exec and see what he has to say. Cheers!

[Alex]

Point taken on the channel - if you look at it purely from the point of view of "reach", they might be good choice.
The only alternative would be paper ads in Student magazines - or a model where you re-imburse people who put the banner on their websites if through that banner a ticket was sold.
Actually not a too bad solution - you can engineer the banner content centrally and based on data dropped on registration. Plus, if a ticket is sold you can probably go up to a Euro for the "sales agent" which makes the model attractive for local websites..
Hmm. Sure that exists already.

[fred Destin]

@ Alex: you know your assesment of StudiVZ is not one dissimilar from mine in the early days. As an angel friend told me, he declined to invest b/c they did not even bother changing the layout (as compared to Facebook). I don't know about the privacy violations which clearly don't sound too good, but the end-result is that after flawless execution in penetrating the universities they are the most relevant player for the target audience of seatwave. The new CEO is a great guy etc so they sound like a good channel. Like all partnerships this will be demonstrated (or not) over time.

@Thomas: I don't write posts like "deal envy" about Netvibes (done by Index and Accel) b/c I am "afraid of not being a leader". We have always treated Viagogo as a serious, better funded competitor with a serious execution guy as CEO. This does not remove my slight surprise at both their strategy and negotiation tactics. But thanks for this insight, I will modify the tone of the post slightly so as not to appear too one sided.

[Thomas]

Seems like you are rather obsessed with viagogo. You sound like an envious follower talking about a leader that is out of reach.

[Alex]

C'mon - StudiVZ is sort of the worst example for a "startup". An idea and layout which looked strangely close to another site focusing the exact same target market in the US (reminds me of Alando, the german ebay clone). Questionable investments, a brilliant business plan ("online marketing"), an investor which is not following any clear idea on where and in what they invest. Not sure that that environment is "positive".
Around all that some of the most prominent privacy violations in germany in 2007, not to forget the bizarre public posure of the "founders".

The money from Holtzbrinck, fine. But believe me, showing up with a partnership with StudiVZ is not really carrying "trust" with it - in my eyes. But my eyes might be wrong :-)

And to answer your question - after the mess created by Kartenhaus I prefer to buy my tickets online from the theater directly. Or from FNAC. Oh there's ticketshop.ch as well. Amiando. Some others. All of them very traditional and in a healthy distance to StudiVZ.