“Got kitesurfing on the mind, mixed with some search & classification tech, and a dab of political ranting”

Powerset slowly coming out of the closet

Posted by direwolff on November 6, 2006

Caught Powerset‘s announcement today on VentureBeat first. They raised a nice whopping round of $12.5M at $30M pre-money valuation, basically meaning that they sold 30% of the company. That’s really awesome to have gotten such a large valuation on a company that has yet to earn a dime or release their product. Heck, even Jonathan’s Friendster was already in the market when he got what was thought to be a pretty high valuation of $40M pre-money for a Series A deal.

This valuation is most likely being doled out based on the team. I’m sure the product may have something to do with it too, but given that the market has yet to weigh in on it, it’s hard to give much credit here at this stage. For example, Matt Marshall provides the example in his post that Powerset will be able to understand the subtlety of an inquiry like “Who acquired IBM?” and provide responses regarding acquisitions of IBM divisions. It will be interesting to see it also understands other subtleties like “Who purchased IBM companies?” or “Who bought IBM divisions?” and appropriately return similar responses.

No revenue companies getting valued this highly has always seemed absurd to me given the number of things that can go wrong and the irrationality behind valuing them at this stage especially given the fact that we have yet to see Powerset in action. However, in recognizing many of their angel investors, it does seem that there are a lot of very smart people placing their bets here. It should be interesting to see if Powerset can live up to the hype. Lots of luck out to them.

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