Viadeo secures $5m more funding, but it still needs a breakout strategy

Viadeo, a LinkedIn and Xing competitor, has secured $5m of funding from French investment houses AGF, Ventech and other investors (including the wealthy Mulliez family) to accelerate growth and prep for potential acquisitions. The business social network is best known in France, but it’s planning to expand its existing foothold in emerging markets like China, India and Mexico. The latest investment takes the total money it has raised since 2006 to $23m. AGF and Ventech were previous investors. Although this market is seeing a lot of “down round” investments right now (a down round is where investors purchase stock from a company at a lower valuation than previously) I am assured by Viadeo that this is not the case here.

Viadeo is also introducing a new partnership strategy with content providers to feed into the site. They’ve signed a global deal with Microsoft to appear on the Live platform enabling Viadeo members to access their Viadeo network news feed directly from the Microsoft platform. The API they had to build to make this happen will also be used to stream in content from “credible partners” – although personally I’d prefer to be able to plug in my own RSS or Twitter feeds maybe. Perhaps this is coming, since Viadeo was a launch partner with OpenSocial but it has dragged it’s feet till now. They say a full suite of apps will go live in the Autumn. The OpenSocial applications on the runway include Google apps like Google Docs, Flickr, Youtube and a number of others. The ability to Tweet from within Viadeo and an iPhone app are also, apparently, on the way. In other words, they’re clearly pretty busy.

Admittedly, the “French LinkedIn” tag may be a tad unfair – Viadeo now claims 70% of its members are outside of France. So let’s look at the numbers. Video says it has 8.5m members. The last figure reported for Xing, which is now a floated company in Germany, was 7.5 million members, with its base membership coming out of Germany. Xing has admitted losing out to LinkedIn in the USA and China. Both are dwarfed of course by LinkedIn, where half of its 42 million members are outside the US, and let’s not forget it’s $1 billion valuation (Xing’s market cap at the Frankfurt Stock Exchange is in the $220 million range).

Back in Viadeo’s world, they’ve given the site a long-awaited face-lift which has left it looking more Facebook-like, with a much improved interface not dissimilar to LinkedIn or Xing, but certainly more navigable.

But it’s quite hard to say if Viadeo can really do something different enough in the business networking space to give it an edge on it’s competitors. Personally my biggest network is on Linked in, followed by Xing. I can add contacts into Viadeo from Webmail, Outlook, an Addressbook file or (gulp) manually, but I can’t pull them in from, say, Facebook or Twitter. One could of course download LinkedIn contacts as a VCF file. The question is, would anyone join you on Viadeo?

One of the few areas that remains for them to grab hold of is vanity URLs. Facebook has seen a huge boom in these. LinkedIn has had them for years. Xing sort of has them though hardly counts. Furthermore in trying to replicate LinkedIn’s business model – premium members can do more than free members – they simply set themselves up for a fall against a bigger player. Surely it would be better to disrupt the larger competitor’s model somehow? Still it’s a much improved effort from Viadeo, and I’ll certainly be using it to build my network in France.