Mayfield Invests In Affinity Labs, Qunar To Cap Busy '06

By John Letzing - VentureWire 12/4/2006

Mayfield Fund has disclosed two new Internet deals on two different continents as it nears the end of an active 2006.

Within the last month and a half the Menlo Park, Calif.-based firm has contributed to Series A rounds for both Affinity Labs Inc., a San Francisco-based information portal operator, and Qunar.com Information Technology Co. Ltd., a Beijing-based travel Web site.

The two deals are among 13 new investments completed by Mayfield in 2006, with one more anticipated to close before the end of the year.

Mayfield Managing Director Yogen Dalal said Affinity Labs is headed by Chief Executive Chris Michel, who also founded Mayfield portfolio company Military Advantage, an information portal for members of the military that sold to Monster Worldwide for $39.5 million in 2004, after having raised some $31 million in funding.

Trinity Ventures also participated in the Series A round for Affinity Labs, which Dalal would only say is worth less than $10 million. That money will be used mainly to acquire content that will appeal to the groups Affinity Labs will initially target, Dalal said, including nurses and police officers.

Affinity Labs' service, which will depend primarily on advertising revenue, will publicly launch next summer, Dalal said. He said that much like Military Advantage's site, Military.com, Affinity Labs' sites will offer a content mix including things like news, practical targeted information and message boards.

"There are new user categories that want to be super-served beyond what mainstream media companies can provide," Dalal said, adding that the capital required to launch a Web company like Affinity Labs is much lower now "than in the 2000 era." Military Advantage was founded in 1999.

Qunar, which is competing with popular site Ctrip.com in the market for online travel information services in China, raised a Series A round "in the $2 million to $3 million range" from Mayfield and its Chinese affiliate fund GSR Ventures within the last 30 to 40 days, Dalal said. Mayfield helped GSR Ventures to raise its roughly $72 million fund which closed in June, and now "selectively piggy-backs" on certain GSR investments with its own fund, Dalal said.

Qunar, founded in 2005, is banking on the increasing wealth of Chinese who have begun to plan more expensive holidays. The company was co-founded by Fritz Demopoulos, a former executive with Netease.com Inc., a Chinese online gaming company that is publicly traded on Nasdaq.

Looking forward to investments in 2007, Dalal said that Mayfield is particularly intrigued by new possibilities related to burgeoning muni WiFi and other wide-area wireless technologies.

Muni WiFi networks have been deployed in numerous small and mid-sized cities already, and large cities like Philadelphia have also recently begun their own deployments. Meanwhile WiMax networks may also cover wide swaths of cities in coming years.

"We're only at the beginning of what will happen," Dalal said, adding that expanding clouds of broadband are like "water falling down a hill." Those clouds, by offering near-permanent connectivity, will enable new applications related to messaging and email, Dalal said, as well as to portable media players and related devices.

Wireless and mobile investments made by Mayfield to date include mobile marketing company Sennari Inc. and wireless equipment developer Arcwave Inc.