Yaletown Venture Partners invests in Constructive Media 23 July, 2009 By Liam Lahey

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With the investment from Yaletown and three additions to Constructive's board of directors, the company said it will continue to build its' business through B2B social networking and channel enablement. In short, the money will be used to further develop Partnerpedia's functionalities and to attract new users, explained Mark Sochan, CEO of Constructive.

"The Yaletown Venture Partners' investment was a very strong endorsement in light of today's economy that a VC (venture capitalist) is making an investment in our business and they see the huge potential we have with Partnerpedia," he said. "We're profitable . . . we've grown Partnerpedia organically since we launched it (about one year ago) and we've had very good traction, 40 per cent growth in the number of members in Partnerpedia quarter-over-quarter and that was by word of mouth . . . we're going to step up our marketing and development investments to ensure Partnerpedia has all the functionality and robustness to it that the community members want."

Constructive's current board, which includes Haig Farris, co-founder of Ventures West, has added Steven Hnatiuk, co-founder and partner of Yaletown Venture Partners, and Janet Wood, senior vice president of Customer Assurance for SAP at Business Objects. Joining as executive chair is Laurie Wallace, a past executive of PMC-Sierra.

"We're seeing the powerful effects of consumer social networking migrate into the B2B space," said Steven Hnatiuk, general partner at Yaletown, in a statement. "However, there are few viable solutions out there that are designed to address the unique requirements of businesses. Constructive is well positioned to take full advantage of this trend."

The Partnerpedia Open Community allows businesses to manage partner profiles and content, connect with potential partners and foster existing business relationships.

"Social media; most people are familiar with in their personal lives but using Partnerpedia can specifically apply social media for the purposes of increasing channel business," Sochan said. "Free advertising and marketing exposure . . . the Open Community is free and will never have a charge to it. It allows companies to post their capabilities and what they're looking for in terms of partnerships."

Building off the Open Community, Constructive recently launched the Partnerpedia Private Networks to provide companies with a privately branded online community for their network of channel and solution partners.

"Now more than ever, businesses need to look for new ways to maximize the effectiveness of their channel and partner network," he continued. "Traditional approaches to channel enablement are not enough. Companies must also employ new methods that can allow their entire partner community to operate more efficiently in order to increase business."

Michelle Warren, principal analyst, MW Research & Consulting, said everyone is trying to figure out the profitability model for social networks. That answer is the Holy Grail in some circles.

"The answer lies in the audience base from what I've seen. There is more money in the business network than in the consumer space so far. For instance, look at LinkedIn, which is profitable, compared with Twitter and Facebook, which still need some tweaking on revenue streams," she said. "Partnerpedia is fortunate in a couple of instances. First, it has some VC money. Canadians typically have to look to the U.S. or at least outside Canada to get funding. This is a tip for companies looking for investors, and for potential investors."

In discussing the benefits of establishing a Partnerpedia portal, Sochan cited the "long tail of the IT channel" and the challenges vendors face trying to reach beyond the top 20 per cent of their partners.

"Historically, vendors have only been able to work effectively with the top 20 per cent of their partners," he said. "The ability to do both the basic block and tackling, as we call it, of enabling channel partners with basic information . . . it sounds like simple stuff but you'd be surprised how often it is difficult for partners to find that information from a vendor's website."

Warren said Partnerpedia's business model -- providing a network for industry-specific organizations -- has some legs.

"When entering the social media realm, it is really important to have a strategy . . . this is a step that many companies negate but it is increasingly becoming significant," she added. "As this emerges, then the money can fly. Once companies realize there why they are in a community such as Partnerpedia, then the advertising benefits will become apparent (as an example source of income) and advertisers can directly target their users."

As social media sites mature, the business case and overall value will become more apparent.

"There is value in a targeted initiative such as Partnerpedia in helping companies connect, and helping advertisers target a receptive audience," she said. "Time will tell, of course, but I suspect that is the value it can deliver to its investors." -30-