Investment Newsletter Sees Directories, Deals at ‘Critical’ Stage

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The second issue of Street Fight’s monthly newsletter focused on strategy and investment in hyperlocal has been released. Key takeaways from The Hyperlocal Investment Report, May 2012 issue, include:

* AT&T Deal Highlights Directory Disruption: Directory Business Transition to Digital in Critical Phase
“For restructured directories like Yell, the potential for a return to pre-digital print revenue is almost out of the question. … Though we believe that the business-listing sector is a poor consumer business, New York-based Yext has found a fertile niche as a merchant service. … Street Fight believes that directory businesses’ lone remaining competitive asset is their local sales force and the subsequent relationships with small and medium-sized businesses.” Read more.

LivingSocial Dumps Location-based Deals: Ecommerce Pivot a Dangerous Play for Deal Companies 

“The weak adoption of location-based deals is likely specific to [LivingSocial and Groupon], stemming from flaws in the implementation model … rather than fundamental problems with the deals themselves. … Yipit made the case for a potential expansion of the daily deal market into the broader ecommerce space. … We view e-commerce flash sales as a potentially dangerous venture for daily deals companies. … The operational frameworks that support the back-end structures of local and ecommerce promotions — deal sourcing, marketing, and in particular return policy — are conceptually inconsistent and and a pivot from local to e-commerce promotions would require daily deals companies to essentially start from scratch.” Read more.

New Ventures Look to Curation: Opportunities Emerge as Window for Data Creation Play Closes

“April saw an increase in activity around data curation and management – a sector that Street Fight believes is set to explode over the next 6-8 months. As the amount of accessible local information on the web approaches ubiquity, companies have an unprecedented opportunity to build scalable hyperlocal products on top of an existing information layer. … Consuming and managing unstructured data is set to become a major differentiation point in the local information space over the next 12-18 months.” Read more.

The Financial Update: 32 M&A Transactions in April; $117MM in VC Investment

“We continue to see a shift in strategic focus from geographic to strategic-driven acquisitions. … Venture capitalists continued to invest in early and mid-staged hyperlocal businesses in April, with 26 companies raising a combined $117 million in total funding. … We are seeing a healthy tone in both the M&A and private financing markets in the hyperlocal commerce sector.” Read more.

Acquisition Spotlight: Intuit Snaps Up Demandforce

“Demandforce has demonstrated that it is quite viable to sell to and serve local merchants and service providers in spite of the challenge of a dispersed customer base and low average per customer revenue. … Intuit’s move brings a whole new level of legitimacy to the local solutions market and will likely be an important catalyst to additional strategic moves by others.” Read more.

The newsletter is written and edited by Street Fight associate editor Steven Jacobs, with contributions from Palo Alto-based M&A advisory firm Architect PartnersBuy the latest issue, or start a trial subscription today.