Apple’s Jonathan Ive and Craig Federighi: The Complete Interview.

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Series A Investors Take the Gloves Off

In recent years, there’s been a lot of talk about the symbiotic relationship between seed-stage and Series A investors.

But things are becoming a little less symbiotic of late, suggests Josh Felser, co-founder of Freestyle Capital, a San Francisco-based seed-stage firm that recently closed on a second, $40 million fund. Felser says that he has encountered a number of Series A deals recently that “pitted the entrepreneur against the seed investors.”

Here’s the scene that Felser has seen playing out more and more: A VC agrees to invest $5 million into a company with a $20 million pre-money valuation, giving the startup a post-money valuation of $25 million. The company’s seed investors, presumably holding convertible notes, ask to invest an additional $2 million in the Series A round to maintain their pro rata rights. But the VC refuses to go above the $25 million post money, telling the entrepreneur that if he or she wants to make room for those seed investors, the company will have to accept a lower pre-money valuation.

It isn’t a new tactic. It’s always been the case that some VCs don’t play nice with seed-stage investors. In certain situations, too, there are simply too many seed-stage investors to accommodate; if everyone maintains their pro rata rights going into the Series A, it doesn’t give the VC firm enough of an ownership stake to make the investment worth its while.

Still, in recent years, some Series A investors have either left room for seed investors or at least been upfront about their designs to maintain specific ownership levels, thus giving entrepreneurs the opportunity to look elsewhere.

That’s changing, says Felser, who has been involved with two recent investment rounds where VCs have put entrepreneurs and their seed backers in precarious positions by not disclosing their true intentions until very late in the game.

Felser tells me of one startup raising a Series A round that asked Freestyle to invest less than the $750,000 it had planned after the Series A investor laid down some inflexible terms. Felser and Freestyle co-founder Dave Samuel — successful founders themselves — reminded the entrepreneur of how much work they had poured into the startup. (As Felser jokingly tells it, for effect, they refreshed the entrepreneur’s memory over lunch in a darkly lit nightclub that opens out into an alley.)

Ultimately, the founder made room for Freestyle, accepting a lower pre-money valuation in the process. But Felser says the trend is “something [for early investors] to be worried about” and calls relations between seed and Series A investors “symbiotic still, but tense.”

Says Felser, “We depend on each other.” He acknowledges that “fixing the post-money [valuation of a startup] can make a ton of sense,” too. But he doesn’t like that some VCs are starting to play hardball, or that it’s happening “sneakily deep in the process” all of a sudden.

“It’s something we’re mindful of,” he says.

New Fundings

Appirio, a seven-year-old, San Francisco-based IT consulting company that offers technology and professional services to companies wanting to adopt public cloud applications, has raised $4 million, according to a new SEC filing. The funding brings Appirio’s total funding to roughly $80 million. Investors include Sequoia Capital, GGV Capital, and General Atlantic.

Deem, a San Francisco-based, e-commerce platform company formerly known as Reardon Commerce, is in the process of raising a new, $100 million round, an SEC filing shows. According to the Form D, the company has already secured $70 million, including from new investors General Catalyst and HGGC, the middle market private equity firm, as well as previous investors Oak Investment Partners and Foundation Capital. Just two years ago, the company had raised $133 million in a financing that reportedly valued the company at $1.35 billion. The newest funding would bring the total raised by the 14-year-old company, whose apps help business and consumers manage online transactions like travel reservations and consumer loyalty programs, to roughly $450 million. Others of its investors include Khosla Ventures, and strategic investors American Express, Citi, and JPMorgan Chase.

Gyft, a two-year old San Francisco-based company that makes a mobile gift card app, has raised $5 million in Series A funding from A-Grade Investments, Social+Capital Partnership and Karlin Ventures. Gyft raised $1.25 million in seed funding a year ago from Google Ventures, Founder Collective and 500 Startups.

HotelQuickly, a Hong Kong-based maker of a hotel booking app, has raised $1.16 million in Series A funding, including from former Singtel and Singapore Airlines chairman Boon Hwee Koh and Temasek Holdings.

JustFab, the three-year-old, El Segundo, Calif.-based e-commerce company, has raised $40 million in Series C financing, led by Shining Capital of Hong Kong, with participation from existing investors Matrix Partners, Rho Ventures, Technology Crossover Ventures and Intelligent Beauty. The company has raised $150 to date.

Ranovus, a year-old company based in Ottawa, Ontario, that produces advanced digital and photonics integrated circuit technologies (among other things), has raised $11 million from Azure Capital Partners, OMERS Ventures, T-Venture, MaRS Investment Accelerator Fund, and BDC Venture Capital.

Shyp, a San Francisco-based company that promises to pick up packages, professionally package them, then send them on their way quickly and cheaply, has raised $250,000 from investors that include the venture firm Homebrew; author-investor Tim Ferriss; Paypal President David Marcus; and Google exec Brian McClendon.

Synergis Education, a two-year-old, Phoenix-based company that’s working with six universities to fund, establish and grow higher education programs for adults, has raised a $33 million Series A round. The funding was led by University Ventures and included Bertelsmann SE and the University of Texas Investment Management Company.

Urban Compass, a two-year-old, New York-based home rentals platform and social network, has raised a $20 million Series A round that values the company at $150 million, according to TechCrunch. New investors include Conde Nast parent company Advance Publications and Salesforce.com founder Marc Benioff. Existing investors to participate in the funding include Founders Fund, Thrive Capital, and .406 Ventures. Urban Compass has raised $28 million to date.

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People

Sarah Guo has joined Greylock Partners from the Goldman Sachs investment banking group, where she led coverage of private enterprise technology companies. Guo worked on the IPO of the HR giant Workday, a company that continues to be co-led by Greylock partner Asheem Chanda. According to Greylock, Guo also championed Goldman’s investment in Dropbox and has advised several public companies, including Netflix and Zynga. Her title is “investor.”

Ellie Wheeler has been promoted to principal at Greycroft Partners, which has offices in both New York and L.A.. Wheeler will continue to be based out of New York, where she works alongside the firm’s managing partner and founder, Alan Patricof, co-founder and partner Ian Sigalow, and partner John Elton.

Marissa Mayer is getting the unauthorized book treatment care of Business Insider’s deputy editor Nicholas Carson, who has just landed a deal with Hachette Book Group. We’re expecting good stuff. (Now the question is: when does the movie version get made, starring Reese Witherspoon?)

Benjamin Nye, co-managing partner of Bain Capital Partners, has just been named CEO of the Boston-based software maker VMTurbo, backed by Bain, Highland Capital Partners and Globespan Capital Partners. Nye will continue in his role at Bain. Meanwhile, VMTurbo founder Shmuel Kliger, a former VP of architecture and applied research at EMC, becomes president of the company.

Anup Arora, Paul Edwards, Forbes Burtt, Mark Modica, and Daniel Holman have joined Hercules Technology Growth Capital in Palo Alto, Calif., as managing directors. Hercules is a specialty finance firm that provides senior loans to venture-backed companies.

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Exits

Ebay’s PayPal has acquired Chicago-based payments gateway Braintree, in an all-cash deal worth $800 million. The six-year-old company had raised roughly $70, including from Accel Partners, New Enterprise Associates, RRE Ventures and Greycroft Partners.

Automattic, the San Francisco-based parent company of WordPress, has acquired Cloudup, a seed-funded file-sharing service that launched this year and  Terms of the acquisition were not disclosed. The purchase represents Automattic’s 12th acquisition. Cloudup’s backers include Bessemer Venture Partners, Charles River Ventures, RRE Ventures, and Atlas Venture.

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IPOs

Enzymotec, an Israel-based company that produces lipid-based food supplements is expected to raise $75 million tomorrow in a public offering, with its shares priced at between $16 and $18. The company is owned by GlenRock Israel, Millennium Material Technologies Fund, Kibbutz Maanit’s Galam Ltd., Ofer Hi-Tech Ltd., and Mexico’s Arancia Industrial SA de CV.

RingCentral, a San Mateo, Calif.-based company that makes multi-location, multi-user, enterprise-grade communications software, is also expected to go public tomorrow, with its shares offered at between $11 and $13 to garner around $90 million. The company has raised roughly $55 million from Sequoia Capital, Khosla Ventures, DAG Ventures, Scale Venture Partners, Silicon Valley Bank and Cisco.

Violin Memory, a Mountain View, Calif.-based flash storage company, is expected to begin trading tomorrow at between $8 and $10 per share, which would raise about $160 million. The company’s investors include Highland Capital Partners, SAP Ventures, Toshiba and Juniper Networks.

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Essential Reads

Who gets richest when Twitter goes public? Ev Williams. Not enough-to-buy-an-America’s-Cup-team rich, but pretty rich. Bloomberg has the story.

Reuters columnist Felix Salmon does not approve of SecondMarket‘s new bitcoin fund, warning investors to steer clear.

Bill Gates finally admits that Control-Alt-Delete was a mistake.

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Detour

The former president of Trader Joe’s is opening up a restaurant for expired food.

A reporter documents her campaign to make 300 sandwiches for her boyfriend, after which he has promised to propose to her. Someone, please bring us a tissue as we follow this sweet, empowering love story.

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Retail Therapy

Four words: This thing shoots marshmallows.

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