Mobile social networking startup decentral.tv, the operator of Kyte.tv, has wrapped up a $15 million second round that will allow it to expand the development and distribution of its social communications platform.
The company operates an enabling communications platform that allows partners, through a Kyte-powered service, to offer users an easy way to share pictures and video from their mobile phone or the Web that are instantly broadcast to multiple destinations, including Web sites, blogs, social networks and other mobile phones.
The new round featured a host of players from the telecom industry eager to take a stake in a company that is converging social networking with distribution of content through mobile devices. Telefónica SA of Madrid led the financing, joined by Switzerland's Swisscom and the investment arms of Finland's Nokia Corp. and Japan's NTT DoCoMo Inc.--Nokia Growth Partners of Menlo Park, Calif., and DoCoMo Capital Inc. of San Jose, Calif. Also participating was Munich-based Holtzbrinck Ventures, the venture arm of publishing group Verlagsgruppe Georg von Holtzbrinck GmbH and Draper Fisher Jurvetson of Menlo Park.
Founded last year, Kyte received $2.25 million in July 2006 to get its technology off the ground. Early investors included Atomico, the investment vehicle of Skype and Joost founder Niklas Zennström; Draper Fisher and individual investor Ron Conway. That was followed in May, by more capital from Swisscom and Holtzbrinck Ventures, as well as European angel investors Klaus Hommels, Oliver Jung, and Peter Schüpbach.
The Series B investment will go primarily toward the development and distribution of Kyte's platform. Daniel Graf, Kyte's co-founder and CEO said that the second round's proceeds are expected to last several years and give the company the resources it needs to enhance its offerings while the market for mobile content develops.
"This financing buys us some time," Graf said. "To succeed in mobile will take quite some time; mobile services are not that mainstream yet."
Graf expects his company to start bringing in its first revenue in the first quarter of 2008 from several different models including: sponsorships of channels, targeted advertising, premium accounts and paid content, which he said may be Kyte's largest opportunity.
"With the partners we have, [who] have tons of content, just imagine the content they could monetize there," Graf said. "The keys for Kyte are our very low barrier to entry for producing content and ease of distribution, where users can embed on any Web site, any mobile phone, etc."
Swisscom Mobile already offers Kyte.tv to its mobile customer base, and Graf expects that all of its strategic investors will be offering Kyte's services on their networks. Nokia doesn't currently sell phones with Kyte's software pre-loaded, but that is also something that Graf expects to see in the future.
While the telecom's financial backing is valuable to Kyte, it is exposure in the Asian and European markets, where the mobile Internet is far more mainstream, that could be most important.
"I think in the U.S. it's going to take a couple of years until mobile content and services take off. We're still in the early stage," Graf said, "but if you go to Japan, people use the mobile phone way more for mobile services than they use PCs, every one has flat-rate data plans and a high-end mobile phone."
The company is also in talks with telecommunications companies beyond those that have a strategic stake in it about providing Kyte-powered services on their networks. By the end of 2008, Graf expects to have millions of consumers using kyte-powered services on their phones.
Kyte will not be providing its services on a white-label basis as it wants to create a network that allows content to be shared from any source or provider.
Dorsey and Whitney LLP represented the company in the deal, while the investors received counsel from Dewey & LeBoeuf LLP.
