Rotten Fish? GetFugu Not Getting $5mil Funding After All

Last week I wrote a post about a recent flurry of deal and funding activity at enhanced mobile search marketing company GetFugu (GFGU). Well today something clearly went pear-shaped with those investments from SpongeTech ($4mil) and Vanity Events Holding ($1mil). This morning GetFugu issued a press release announcing that it had rescinded the investments... which is odd, since they were the recipient. Basically they were saying they no longer wanted or needed the money (maybe 'rejected' would've been the right word). Then later in the day SpongeTech (who was also planning to be a customer) issued its own release declaring that their "investment arrangement with GetFugu, Inc. has been rescinded"... making it sound like it was their decision not to pursue the investment. To make matters messier, SpongeTech had advanced GetFugu $1.75mil in anticipation that the companies would reach a definitive agreement, and apparently GetFugu has already spent the money (oops!). So, now they need to find alternative financing to pay back those funds. Well inquiring minds definitely want to know much more about what really went down here, right? You gotta figure, either something went very badly between GetFugu and these investors, or that GetFugu found a bigger and/or better investor... or potentially, a buyer. One thing is quite clear, the market thinks this stinks. GetFugu's stock plummeted 37% on heavy volume.

Is GetFugu Properly Prepared For Human Consumption?

San Francisco based enhanced mobile search marketing company GetFugu (GFGU) has made a lot of noise in the last week. First they announced investments from Vanity Events Holding ($1mil) and cleaning products company SpongeTech ($4mil), Wednesday they presented at GigaOm's Mobilize '09, Thursday they announced a major licensing deal with Health Matrix ($5mil) and then last Friday they launched iPhone & Android Apps. To top it off, this morning they announced a partnership with Majesco. Not bad for a company that's been trying to find it's sea legs (fins?) for a few years, in guises including BlowfishWorks and MediaPower Group. Believe it or not, the company has been publicly traded for over 2 years and has a market cap of $127mil, despite never having reported a dime of revenue (wow!)... which makes it more akin to a biotech startup than a mobile company. Clearly investors have great expectations.

Anyhow, GetFugu's value proposition is a suite of technologies, within an application service, that expedite consumer interaction with brands on mobile devices by way of eliminating the cumbersome process of typing a URL or the back and forth associated with shortcodes. Their 4 key technologies are:

1. ARLs (Augmented Reality Links): where a user takes a picture of a logo, movie poster etc. using the application and then the application returns links to a mobile website, piece of media or another application of the brand owner's choosing
2. VRLs (Voice Recognition Links): where a user says "Coca-Cola" into the handset while the application is on and the application returns a links to a mobile website, piece of media or another application of Coca-Cola's choosing
3. GRLs (Geographical Recognition Links?): where a users with a GPS enabled handsets gets links based upon where they're physically located
4. Hotspotting: where a user can get information about, and potentially purchase, an item within piece of video by tapping on it on a touch screen handset

Assuming the technology works as advertised, this is all really cool stuff. I've been a fan of enhanced search tools like these ever since I used my first QR code in Japan and, even more so, after I met mobile visual search pioneer NevenVision (which was eventually acquired by Google) while at Universal, back in 2005. Way back then I wanted to use NevenVision's i-Scout technology (their version of the ARL) to allow users to shoot pictures of the movie key art from The Fast & the Furious: Tokyo Drift and get sent back links to purchase the mobile game based on the film. We went a long way down a road, but eventually abandoned the project because the process, in practice, turned out to be too klugy. This is the same reason I'm skeptical about 2D barcodes (see my post from March 16th) and why I'm reserving judgment on whether GetFugu will be successful. The issue is that these tools work great IF the consumer already has the application on the handset... QR codes work in Japan because almost every data oriented device, on every carrier, has the reader application preloaded. Otherwise the brand owner has to educate the consumer that they need to download an application first...which basically eliminates any benefits.

Getting this app ubiquitously preloaded by all the major OEMs is never going to happen. Getting brands to enter into partnership agreements, with no financial committment, will happen, but my guess is that most will use the technology in limited new media marketing "experiments"...not a good way to build scale. That said, I think GetFugu's real opportunities are to...

• Roll it out in enterprise settings, where IT departments can preload it on the devices. I believe this is what Health Matrix is doing with the technology for health care providers and pharmaceutical companies
• Eventize the application for consumers by focusing tons of energy on getting one monster national brand to make GetFugu the centerpiece of a sustained media campaign... like, get American Idol to run a weekly contest with viewers who use the application to access sponsors' sites (hell, it worked for SMS).
• Get bought by, or enter into a major strategic partnership with, either Google, Apple, Nokia or Microsoft so distribution becomes their problem

We'll see how it goes. I'm looking forward to monitoring their quarterly statements, now that they have a product launched.

Velti's Prelim 1H 2009...Still Hard To Read The Health Of Mobile Marketing

London-based mobile marketing platform provider Velti (VEL), which recently bought Ad Infuse, estimates that it's Jan - June revenue has grown 50% to about $30mil on "strong demand" for it's technology, according to Reuters. The company, founded in 2000, has contracts with big mobile operators like Vodafone, Orange France & Telefonica Mexico and a bunch of blue-chip brands like Microsoft, Mastercard, Nestle, Disney, Colgate-Palmolive and Bacardi. Velti claims its platform can currently reach up to 2bil people in 35 countries (hmm...but how many people have actually ever seen a Velti message?). While ostensibly encouraging, what's totally unclear from this statement is whether there's any organic growth going on here, or whether gains are solely attributable to the Ad Infuse acquisition. I guess we will see when the real numbers are released in the next few weeks.

btw -- there's been a lot of speculation about how much Velti paid for San Francisco-based Ad Infuse...but the fact that the company is now disclosing that it's borrowed $14mil from investors to fund the purchase (and other activities) should help give us a clue...again, all should be revealed with official 1st half results.

Greystripe Gets More Green to Support AdGame Machine

According to a NYT story, ad-supported mobile game network Greystripe (owners of the Gamejump portal) has raised a new $5.5mil round of venture funding from Incubic Venture Capital, Monitor Ventures & Steamboat Ventures (Disney's VC Fund)...bringing their total raise since 2005 to $15.6mil. Greystripe has been a real pioneer in this space and many people in the mobile content space (including myself) believed a couple of years ago that free ad-supported gaming was the future of the business. Unfortunately, the agencies and brands have been moving very cautiously (read: like molasses on a cold day) in the mobile advertising space overall, in spite of evidence of its efficacy. This has made it a bit of a tough road for Greystripe and other more traditional mobile ad networks. As Greystripe continues to push into richer media devices like iPhone (where they have about 50 Apps) and continues to enhance its ad formats the hope is that marketers will come around...which, if all goes as planned, will help Greystripe realize profitability in 2009.