Spinvox

Spinvox close to $150 million exit to Nuance? Not so fast

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[UK] Spinvox, Spinvox, Spinvox. It promised so much but in the end delivered only so much. Like a latter-day Boo.com it hyped its magical voice-to-text service to the stars, apparently built on highly advanced technology, but in the end it has not lived up to the expectations it went all out to trumpet.

Nuance, possibly the leader in speech-to-text processing, and with 40+ carrier relationship, is reportedly picking up Spinvox in a $150 million sale which might be completed before Christmas. But there was no source on the Sunday Times story and Spinvox tells us they aren’t commenting at all. The Sunday Times is often used as a vehicle to float ‘sale rumours’ which are actually designed to flush out more bidders.

This story could have been different, but the exit route to another likely suitor was cut off when SimulScribe, the ‘scrappy’ voicemail transcription company, effectively exited in an exclusive deal with Ditech Networksthat worth as much as $17 million back in September. It could be argued that SimulScribe played it right, setting expectations at a realisable level and executing on that promise.

The Sunday Times story did mention a deadline for the £30 million bridging loan which “has been rolled over to January to allow the takeover to be completed”. In other words, the Nuance deal smells genuine.

Spinvox raised between £120m and £150m in capital from GLG Partners, Goldman Sachs, Toscafund Asset Management and Blue Mountain Capital Management. The latest rounds came in the form not of new investment but of various tough-terms bridging loans totalling £73m.

With forecast revenues (not profit) next year of only £7m, Spinvox has had no collateral assets or cashflow to service these high interest loans. So equity holders have thus taken second place to those that had loaned the cash.

As others note, if this deal goes through Spinvox will have effectively turned £150m of investors capital into £92m. Now that’s one kind of translation service.

Executives and staff come last in this food chain, behind those that have put in the loans. Thus it seems unlikely that CEO Christina Domecq (pictured), who has presided over all this, will remain with the company if the sale goes through.

As usual, you can raise lots of capital with great powerpoint and PR, but it’s not the same as building, testing, iterating and improving. Spinvox was basically the exact opposite of a lean startup.

There were rumours of a sale in August.

And then in September a major investor wrote down its investment by 90% Invesco Perpetual said it has written down the value of its £759,000 investment to, er, £76,000.

What remains?

Plenty of egg on a few faces. First of all on us, as we gave them a Europas award (doh!), although to be fair we still think voice to text apps rock. But mainly on CEO Christina Domecq who paid staff in stock rather than cash over the summer. Although this didn’t work for all of them. Domecq told press in September that SpinVox would become cashflow and EBITDA-positive after their Latin America launch, within 90 days. We’re now well over that target.

Egg is also on the faces of shareholders, many of whom probably got a look at the anonymous dossier which went around various people and which detailed interesting spending of company funds.

Also, alas, on Dragon’s Den celeb, Ariadne Capital chief and Spinvox advisor Julie Meyer, who defended Spinvox and Domecq to the hilt, even saying Spinvox was “already profitable” and “conversion revenue is going through the roof” back in August.

On its CFO who only joined the other day, after the company went for 15 months without one (although one did join only to leave a week later).

On the technologists behind the actual service who couldn’t come up with an algorithm which could translate phrases beyond the most basic. In a quiet room.

But others may yet dodge the flying egg. It looks like co-founder Daniel Doulton will stay on if Nuance does indeed go through with the purchase.

However, as we’ve said in the past, Spinvox’s demise won’t matter to the real tech startup community.

Good luck then to tiny startup voxsciences perhaps.

  • Miguel

    I find it hard to believe Nuance would be that stupid…..

  • Al

    Maybe Google should buy them because their Google Voice speech translation is 1000 times worse.

  • mukk

    I read somewhere that Domecq was making 600,000 pounds a yr. Not bad robbery whilst the money was there.

    How some of these companies get funded is beyond me.

  • mukk

    how much of this is your own content ?, seen most of the text either from the bbc article or from the times newspaper

  • MightyMicro

    This thing was always more Spin than Vox. How peoplelike Goldmans were ever conned into this amazes me. Anybody who knows anything about these technologies knew this was snake-oil from the outset. They perpretrated a massive fraud, hiding the fact they were using armies of Philipinos to hand transcribe voice to text.

    Why anyone would pay a brass cent for it is beyond me.

  • http://alexdodge.net Alex Dodge

    I am bothered by the upside-down left quotation mark in that image.

  • http://www.cyber-cottage.co.uk Ian

    Having seen the spec of the “api” for spinvox and hoped to intergrate it into customer systems, I was VERY suspicious when they told me that it could take minutes for a simple phrase to be returned, Having worked on voice rec platforms for over 10 years this answer smelt bad to me and I was suspicious that Humans were involved, But they never answered my concerns. Shame as its a cool concept but just not do-able….

  • http://timo.synthasite.com/ TimO

    Nuance did try to attract staff away from SpinVox with some targeted recruitment back in October, as per http://www.nuance.com/news/pressreleases/2009/20090924_RDcenterExcellence.asp

    “Nuance to Host U.K. Career Days in Marlow and Cambridge; Talented Mobile Professionals Invited to Join World-Class Team”

    Guess where SpinVox are based!

    • http://twitter.com/mikebutcher Mike Butcher

      No kidding? That’s hilarious.

  • CE

    >>”Also, alas, on Dragon’s Den celeb, Ariadne Capital chief and Spinvox advisor Julie Meyer, who defended Spinvox and Domecq to the hilt, even saying Spinvox was “already profitable” and “conversion revenue is going through the roof” back in August.”

    Does anyone actually believe a word that this woman says?

  • http://www.attentio.com Simon

    Honestly I was jealous of their abilities with PR, especially at the beginning. That has an opposite effect of course if things seem to be going badly…

  • Brad

    I fucking hate that photo of Domecq. Reminds me of the Seinfeld episode with the hot girlfriend, but then when you get her in bad lighting and the wrong angle, she looks awful.

  • http://eu.techcrunch.com/2009/12/22/lessons-from-10-disappointing-tech-stories-of-2009/ Lessons from 10 disappointing tech stories of 2009

    […] voicemails into text for mobile services. It turned out it also used plenty of humans to do this. Rumoured to be for sale for $150m, if the deal goes through Spinvox will have effectively turned £150m of […]

  • http://www.techcrunch.com/2009/12/30/nuance-acquiresspinvox/ Nuance Finally Picks Up SpinVox For $102.5 Million

    […] and manipulated, has been acquired by speech recognition company Nuance for $102.5 million. We reported on the rumors of the acquisition a few weeks ago, when a $150 million price tag was floating […]

  • http://www.blog-feast.com/technology/techcrunch Techcrunch « Blog-Feast.com Blog Collection

    […] and manipulated, has been acquired by speech recognition company Nuance for $102.5 million. We reported on the rumors of the acquisition a few weeks ago, when a $150 million price tag was floating […]

  • http://www.techfeed.in/?p=5582 Nuance Finally Picks Up SpinVox For $102.5 Million | Technology Magazine

    […] and manipulated, has been acquired by speech recognition company Nuance for $102.5 million. We reported on the rumors of the acquisition a few weeks ago, when a $150 million price tag was floating […]

  • http://www.simonsemenoff.com/2010/01/nuance-finally-picks-up-spinvox-for-102-5-million/ Nuance Finally Picks Up SpinVox For $102.5 Million – Simon | Semenoff

    […] and manipulated, has been acquired by speech recognition company Nuance for $102.5 million. We reported on the rumors of the acquisition a few weeks ago, when a $150 million price tag was floating […]

  • http://www.150FastGroup.com Robert

    All this just keeps the CEOs on their toes…
    Just a matter if they will fall forward or backwards…

  • http://www.warburtonsinc.com Warburtons, INC

    Are these services available in the US? Why report on this if it’s not really going to matter to the real tech startup community?

  • http://www.adeptcontractorsinc.com roofing

    Someone needs to come up with a good text to speech system. That’s the next big thing. Especially because texting while driving is becoming illegal everywhere.

  • http://www.cyber-cottage.co.uk Ian

    There are many good text to speech systems spinvox was a poor speech to text service.

    Check out Nuances iphone app.

  • http://www.brsmservices.com roofing brattleboro

    That is amazing that she has been that successful in such a short amount of time. I really hope that the company that I am working for will have that kind of success, but I know that it is only a pipe dream and something that I am not going to be able to see for a few years at least.

  • http://www.roofpromemphis.com roofing memphis

    I think that there really needs to be more people out there that are dedicated and love what they do, and they are just bound to be successful. It doesnt take a lot of thinking to realize that. You do what you love, have a good time with it, and you are bound to do a good job with all of it. It’s as simple as that. Not a lot of complications with that.

  • http://pulse.yahoo.com/_MQUDWCPAGSBV6Q3SHOMOX3W6CQ Gram Josi

    If they really provide a better product, then it is probably great news that Nuance might incorporate the other company. This is like a roofing company becoming experts in gutters and then adopting that portion of operations from a smaller corporation that would rather focus on flooring…I think. At least that is what is seems to be like. Thanks for the information, in either case I am glad it is the company with the superior services which is able to buy out the other. http://dialoneroofing.com

  • http://www.facebook.com/people/Leslie-Love/100002398033650 Leslie Love

    I don’t think the voice-to-text technologies could stand up to Nuance. http://www.valentineroof.com

  • Brett Rodgers

    I been trying to get this roofing job done so I dont have to deal with this kind of stuff.

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