Hi Frank, This clip posted below is the Hyperchannel I referred to.. It goes back to 1999. Even in the hysteria of the time, this MRV investment seemed out of sync with the rest of their business. They were doing deals with a Goldman Sachs VC fund.(also a coinvestor in their Brazilian affiliate D3.) d3.com.br
Maybe that is how they got roped into this...
I don't know about the URL for the VZ article you asked about as it was not my post..
Hedge
HYPERCHANNEL
M2 PRESSWIRE
October 19, 1999
HYPERCHANNEL
Nick Kandola - Hyporium European launch
Good morning, ladies and gentlemen. Thank you for taking the time to come along to our launch event here today. What we are launching is Europe's first business to business e-commerce trading hub for the IT market called Hyporium. For the first time ever, suppliers and buyers in this market will be able to trade electronically over the Internet without worrying about complex technology or investment.
I believe that Hyporium will revolutionise the $300 billion dollar IT market in Europe allowing thousands of IT resellers in the UK and Europe to build real time Web storefronts and trade with millions of end users. We have all heard a great deal about the e-business revolution, thanks initially to our IBM colleagues, but the real business-to-business revolution is taking place outside the boundaries of individual firms such as Cisco or Dell. A new breed of intermediaries similar to Hyperchannel is emerging to facilitate business to business e- commerce. They create value by aggregating buyers and sellers, creating marketplace liquidity and reducing transaction costs. There are already examples of trading hubs in the U.S in the chemical, plastics and steel industries.
So where is all of this going? Forrester predict a total business to business market projection of $1.4 trillion within 4 years, this is going to be nearly 10 times the size of business to consumer markets within the same period. The Precursor Group forecast that $130bn of revenues will be generated by business-to- business trading hubs within 2 years. We believe that some of these forecasts are conservative and there are two things to say about this. The first crucial one is that those amazing revenues will have to come from existing ones. Sure, trade will expand, it usually does, and growing globalisation will increase that trend. But ultimately, if e-commerce is going to expand massively then that must be at the expense of the existing traditional ways of trading. Secondly, it is also predicted that about 25% of that $1.4 trillion will flow through intermediaries.
Up to now the Digital Revolution has only really transformed how businesses communicate and to some extent how they share information. It has, up to now, failed to genuinely improve how they trade. We believe that trading hubs change that and open up a whole new way of doing business.
Hyporium behaves like a network hub, concentrating, routing and switching transactional traffic in business-to-business e-commerce. Hyporium brings together multiple suppliers together onto one standardised system and allows buyers to search for products from their suppliers electronically and then place orders onto this hub. This effect can be compared to mass EDI for all businesses in the IT sector, not just the large ones.
Hyperchannel is not alone in this venture. We have here today a number of people from all areas of the industry who also believe this is an exciting opportunity for them. I would like to welcome the manufacturers who are supporting our initiative. In addition, the real suppliers in this market are distributors. Finally we have the buyers in this market, the resellers. For the first time all of these people, manufacturers and distributors are working together so that we can provide an industry standard platform for electronic trading.
So who are we? And what are we launching?
Hyperchannel started 18 months ago. We did some research in the e-commerce marketplace and raised $2.5 million to get started. We started our e-commerce development about a year ago and involved some key partners. Today, Hyperchannel has a turnover of around $5 million, with a staff of 26, including some of the best talent in the IT marketplace. We are rapidly expanding and plan to be in most of the European countries within 6 months.
The IT marketplace consists of manufacturers that physically design and make the products, distributors or wholesales who carry the inventory and provide credit to the resellers, the resellers who bring together multiple IT products to build an IT solution for their end users.
At the moment all of these companies trade with each other in a variety of ways - phone, fax, email - and research shows that its costs each party around $80 per transaction doing business in this way. Around 30 million of these transactions between resellers and distributors take place annually. So, the real point is that -for commodity purchases where margins are thin for all parties, this is a time consuming, expensive and slow process.
The idea behind Hyporium has been to develop a platform that will transform this into a simpler, more efficient, more sophisticated process for trading for every participant. A revolution in trading. Something that has not been possible up to now.
I don't want to go into the technicalities at this point. We will run a quick demonstration in a moment to show you how it works, and we will take questions at the end for those of you who want to know more. What I would like to do is to look at some of the benefits we have identified, and that will also serve to explain what Hyporium makes possible in a bit more detail.
We can see benefits here for everyone involved - end-users, resellers, distributors, and manufacturers. The trading hub automates all the fundamental stages in the procurement process, so all parties can focus on added value service and relationship building.
To start with it provides real time pricing and availability electronically to the end user via the reseller's Hyporium storefront. This is a simple system for the resellers allowing them to build real time Web storefronts. Orders received via this Web site are passed directly onto the distributors system thereby reducing the distributors and reseller sales costs. Manufacturers end up with streamlined supply chain and a new electronic route to market.
The bottom line is that Hyporium helps every user to achieve what all businesses are trying to achieve in a highly competitive environment h reducing costs and improving efficiency, whilst providing an enhanced customer service.
That's the real revolution that the hub concept represents. It's not a new way of doing business in one sense. What we have managed to do is create a system that can replicate the physical market electronically. Very much like when the digital stock exchange was introduced resulting in greater efficiency and expansion of the market by automating cumbersome manual transactions.
What it also does is allow every participant to concentrate on the service they provide. In a highly competitive market, gross margins are inevitably eroded. That puts pressure on your sales and service operation to reduce costs. What suffers then is service. But if you can automate the sale, then you can significantly reduce costs and time. And that means you can spend more time on your customer relationships.
So, we can see a world of genuinely free trade. Adam Smith wrote in the Wealth of Nations: "People of the same trade seldom meet together, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." That may have been true in 1776. I believe that in the digital age, the age of the trading hub, people of the same trade will meet together but in a spirit of healthy competition where the technology enables them to concentrate on service and their customer relationships. Because if they don't they will be beaten hands down by the people who do.
That, briefly, is my vision of the potential of the trading hub. What I'd like to do now is look in a bit more detail at Hyporium itself, to give you some idea of how it fulfils the claims I have been making.
That gives you some idea of Hyporium in action. If you need more detail then we will be around later on to answer any questions you may have. As I said at the beginning, I believe this is the catalyst for the real revolution in e-business, proper trading on the web. About a month ago, Tony Blair made a speech outlining the government's view of e-commerce. He started that speech by saying this:
Britain has a proud history as a great trading nation. We were the first industrial power in the world. Great inventions have "Made in Britain" stamped all over them. We are a creative, innovative, and adventurous people."
Hyporium is in that trading tradition: a revolutionary way of trading from a British company.
Tony Blair also said to British industry, if you don't see the Internet as an opportunity it will be a threat. Awareness and education are the first steps in understand that opportunity. With this in mind we are also announcing a new partnership with the IT national training organisation working with them to develop NVQs and other qualifications in Internet and eBusiness. Anne Russell from IT NTO is here today to tell us a bit more about their plans.
(formerly The Financial Post)
January 27, 2000 Thursday NATIONAL EDITIONS
FINANCIAL POST; Pg. C02, Internet
Hyperchannel raises $24M to expand Web site
LONDON - Hyperchannel Ltd., a privately held British Internet company that provides online trading service, said it raised $24-million (US) to fund the development and expansion of its Web site Hyporium.com. The company received sums of between $5-million and $12-million in its second round of funding from a venture capital unit of Goldman Sachs Group Inc., GE Capital Corp.'s Equity Group and MRV Communications Inc., in return for undisclosed stakes. The site matches buyers and sellers online, cutting costs by reducing transaction times and paper work.
Financial Times (London)
January 26, 2000, Wednesday London Edition 1
COMPANIES & FINANCE: UK: Hyporium finance ready for launch
By CARLOS GRANDE
Hyporium finance ready for launch
Hyporium.com, a UK internet trading portal for IT business supplies, has secured Pounds 15m in first-round funding ahead of its UK launch next week. The investment was made by GS Capital Partner III, an investment fund owned by Goldman Sachs, GE Capital and MRV, a Nasdaq-listed IT hardware group.
The service remains majority owned by Hyperchannel, a privately owned Berkshire-based IT supplies distributor.
Hyperchannel would not disclose the size of the stake. It now plans further versions of the portal in the main European markets.
March 10, 2000
Ann Comerford, marketing director of Hyporium.co.uk, an online trading hub forIT resellers, says: 'When a new dotcom is up against well-known high-street brands, reputation is everything. You need weight and substance and PR can help give you that credence by putting you in front of the right audience. It gets you visible fast and gives you a stamp of authority in a competitive market. We're about to roll out across Europe and PR is top of my list when it comes to formulating a marketing plan.'
Financial Times (London)
March 23, 2000, Thursday London Edition 1
A sour taste of success: VENTURE CAPITALISTS: Nick Kandola's problems began when he found his backers, writes Katharine Campbell
By KATHERINE CAMPBELL
Nick Kandola, who is building Hyporium.com, a pan-European e-business trading hub for IT, has recently completed his first formal round of venture capital. He has hauled in Dollars 24m (Pounds 15.2m) - and secured the backing of Goldman Sachs, the US investment bank, and GE Equity, the private equity arm of General Electric of the US.
However, the satisfaction of a strong result has not made Mr Kandola feel any better about the fund-raising exercise itself, which he firmly categorises as one of the more painful experiences of his life. The source of the heartache was not the obvious one. While Mr Kandola certainly knows what it is like to get a lukewarm reception from venture capitalists, he was inundated with offers for this round. The rough ride came later in the process.
Previously director of marketing for Cisco Systems UK, Mr Kandola had set up Hyperchannel at the end of 1997 as an e-commerce solutions company. At that time, he claims, no one in the UK would fund him unless he was prepared to put his house on the line - which he was not.
He had to take a trip to the US, where he stumbled across MRV, a manufacturer of optical networking infrastructure that also makes investments in allied businesses, to secure the initial Dollars 3m of seed funding.
When he returned to the City last summer for funds to develop Hyporium, the first of Hyperchannel's possible stable of trading hubs, it was a different story. He soon had on his desk offers from seven of the dozen or so London-based venture capitalists he had visited.
Anything internet-related was clearly white hot and he was an early entrant to the field of business-to-business in Europe. It also helped, he thinks, that he hired New York bank Gruntal to lead the fund-raising.
So Mr Kandola sailed through that part of the process. Next came the reasonably agreeable task of choosing between backers.
"Once you have got the terms sheets, the tables are turned," he says. He was now fending off calls from the potential investors - including plenty from one that was "desperate" to participate, having seemingly forgotten the stringent personal guarantees it had demanded in 1998.
The decision was not purely about valuation - a subject on which he is not revealing numbers. It was a function of things like personal compatibility and the strength of respective networks, he says.
In the end he selected Goldman - mostly for its capital market clout - and GE Equity, not least for the power of the GE network. MRV also agreed to put in more money. At this point the real pain began.
Mr Kandola's first piece of advice for other entrepreneurs, in the light of his experiences, is to minimise the number of venture capitalists invited into any individual funding round.
Each will want to crawl over the business, he points out, putting a surprising degree of strain on a nascent company.
The venture capitalists pulled the business plan apart, and asked myriad questions to allow them to draw up a proposal for their internal investment committee, while armies of consultants were wheeled in for other tasks.
Even though the investors had agreed to split roles, one masterminding the business due diligence and another the technical assessment, for instance, Mr Kandola says it was still chaos. In practice, everyone wanted to be involved in everything. "All these parties were demanding time from all parts of the company. We had tiny offices with just two meeting rooms. It took three or four months of my personal time. I couldn't concentrate on anything else."
The next hurdle was internal approval at the investors' end - delayed two or three weeks, he says, "mainly due to the volume of approvals they were trying to get through".
Finally, the most painful part of all was completion of the legals - three sets of lawyers arguing about minutiae for weeks.
"There was some really complicated stuff. I just wanted to crack on with the business." That process alone took almost two months - prolonged because it straddled the Christmas period. "The clients would get together and agree a point that made sense. Then the lawyers would go away and suddenly it was 'that's not what we thought my client agreed' and everyone would go back to the drawing board." It finished with the almost obligatory all-night session and a 6am signing.
With hindsight, Mr Kandola says, his principal other piece of advice to fellow entrepreneurs is to have a chief operating officer in place before paying a visit to the venture capitalists - though he acknowledges that is not easy against the background of an uncertain funding base.
The business had slipped while his eye was diverted - particularly in the development of the system. The hub went live in the UK in late February, a couple of months later than planned.
Now Hyperchannel plans to float towards the end of this year. With a much more robust organization in place, Mr Kandola aims to ensure that that is a less disruptive affair.
PRIVATE
All rights reserved
Global News Wire
Copyright 2000 VNU Business Publications Ltd.
PC Dealer
March 8, 2000
VARS HANG ON FOR HYPORIUM AGAIN.
Resellers signed up to the Hyporium trading hub Hyperchannel were kept waiting again last week, after the launch date for the service slipped from 1 March to the end of the month.
After six months of delays, Hyporium finally began issuing access passwords to 1,000 pre-registered resellers last week.
Simon Aldous, UK managing director of Hyporium, confirmed the system - which should eventually allow VARs to order products, spread credit and check pricing from one source - is still in its pilot phase. He claimed that the need for "lots of hand-holding" to allows resellers to set up an account and understand the full benefits of the system, had accounted for most of the delays. Aldous also revealed that only 100 resellers at a time would be given access to the system during March and no reseller would be able to access Hyperchannel independently until the end of the month.
He added: "We're not going to let 1,000 users crash onto the system at once. Instead we are going to walk them through it and make sure they take advantage of everything Hyperchannel offers."
Aldous also confirmed that Hyporium is still in talks with several distributors, including Ingram Micro Europe, Actevis and Landis, to gain their support for the hub. "We are now going back to the distributors and restating our message. We are letting them know that we can act as a complementary offering, but that we do not want to replace their e-commerce plans," Aldous said.
Graeme Watt, managing director of Computer 2000, which recently pulled out of Hyperchannel, said: "When we looked at the balance of worth from signing up with Hyperchannel, we decided that it was not balanced enough. Strategically, I think Computer 2000 was worth more to Hyperchannel than the value that it would have brought to us."
HYPERCHANNEL LIMITED
Registration No.: 03396545
Merlin House, Brunel Road, Theale, Berkshire.
RG7 4AB
* * * * * * * * * * * * * * COMPANY DETAILS * * * * * * * * * * * * * *
COMPANY TYPE: Private Limited with share capital; Live Company; Small unquoted company filing only a modified balance sheet
INCORPORATION: July 2, 1997
DATE OF LAST ANNUAL RETURN: June 20, 2001 |
