Digital Media was the second most active segment in 2Q10, with 65 transactions, including 35 acquisitions and 30 investments, up from 45 transactions in 1Q10. Aggregate transaction value increased 87 percent to approximately $2 billion. Rakuten’s acquisition of Buy.com for $250 million was the largest transaction in the segment.
ACTIVE SUBSEGMENTS eCommerce was the most active subsegment with 18 transactions for approximately $907 million. During the quarter, two leading flash sale companies raised additional growth capital from existing investors, with Gilt Groupe receiving $35 million from General Atlantic and HauteLook.com getting an additional $31 million from Insight Venture Partners. Other eCommerce transactions included Digital Sky Technologies’ $135 million investment in Groupon at a post-money valuation of $1.4 billion, Naspers’ $17 million investment in Brandsclub and Lightspeed Venture Partners’ $13 million investment in ShoeDazzle.
Social Games was the second most active subsegment with 16 transactions totaling approximately $522 million. Zynga acquired Challenge Online Games and XPD Media, while Playdom acquired Merscom, Hive7 and Acclaim Games. Additional social gaming transactions included Ngmoco’s acquisition of Stumptown Game Machine, Perfect World Company’s acquisition of Runic Games and Google’s acquisition of LabPixies.
Twenty-three transactions, including nine acquisitions and 14 investments worth approximately $397 million, were recorded in the Social Media and Niche Content subsegments in 2Q10. Notable transactions included Yahoo!’s acquisition of Associated Content for an estimated $100 million, Constant Contact’s acquisition of NutshellMail and Yell Group’s acquisition of TrustedPlaces. In addition, Andreessen Horowitz Fund invested $20 million in FourSquare Labs at a pre-money valuation of $95 million, Lightspeed Venture Partners invested $14 million in Hungry Machine, Intel Capital invested $12 million in Vostu and SoftBank Capital invested $10 million in RockYou.
BUYERS Strategic buyers announced a total of 33 transactions for approximately $1.4 billion, up from 26 transactions worth $841 million in the previous quarter. Venture and growth capital investors announced 30 transactions for approximately $502 million, roughly double last quarter’s transaction value. ZelnickMedia’s take-private of Alloy, Inc. for more than $126 million at 0.5x revenue and 9.5x EBITDA and Criterion Capital Partners’ acquisition of social media network Bebo for $10 million from America Online were the only two buyout deals announced this quarter.
TRANSACTIONS Other transactions in the Digital Media segment included Warner Brothers Entertainment’s $160 million acquisition of Turbine, a multi-player online gaming company, Cyberplex’s $75 million purchase of Tsavo Media, NHN Corporation’s $68.1 million acquisition of Livedoor, a Japanese Internet portal, and Delivery Agent’s acquisition of Billion Dollar Babes, a members-only shopping website. Growth investments included Great Hill Partners’ $61 million investment in Vitacost.com, Pinnacle Ventures’ $20 million funding of Diapers.com, Accel Partners’ $20 million investment in location-based mobile gaming company Booyah! and Investor Growth Capital’s $14 million investment in Healthline Networks.