Shozu – the mobile contender that turned into a write-off

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I’m sure there may be longer histories written about Shozu. The service was founded way, way back in 2001 and was initially most exciting for allowing you to post mobile phone pictures to sites like Flickr. I remember people coming up to me and simply raving about this service in the early part of the decade. In many ways it was the “UK’s Twitter” for the early 2000s. And perhaps it could have had that potential going forward. But although it expanded into allowing you to exchange video, pictures, social networks, and information resources, somehow it lost its – and I can’t think of a better word – mojo? Perhaps like other early play mobile startups it was just too early. By the time exciting platforms like the iPhone came out, Shozu felt like old news and seemed unable to excite people about it’s still quite comprehensive offering.

Plus the business model always seemed just that little bit too far away. Although it managed to cut deals to get pre-installed on mobile network handsets that didn’t seem to be enough. And the white label aspect was cracked better by others, which is why today’s acquisition by Critical Path – which is gunning for the enterprise – seems very much like the right fit.

Unfortunately this won’t be the “home run” its investors or founders would have wanted. SEB Venture Capital UK calls it a ‘successful outcome’ but my soundings of the VC community indicates that no price was released because it was just incredibly embarrassing.

One VC I spoke to said he think Shozu was sold to Critical path for “less for £1m. When the word ‘assets’ is in the press release it usually means it was a distressed sale,” he says.

Another points out that “it’s an asset sale as far as I know – great service, no monetization. how do you make money off an content gateway on the phone?”

So let’s just remind ourselves of what was put in.

The Series A round attracted Atlas Venture, TLcom Capital Partners and TTP Ventures. That brought in $12m. A Series B round in May 2005 added Crescendo Ventures to that roster and came in at another $12 m. A Series C round in January 2008 added SEB Venture Capital and another $12m.

Crunchbase totals that up to a cool $36 million.

In other words there’s every indication that Shozu was a write-off for its investors. But, if there is a silver lining to this, the service will continue and will be developed.

Lastly there are implications for Newbay Software, another Irish company playing in this mobile social aggregation and services space. It will have a big competitor in Critical Path now.

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