Good morning! On deck tomorrow: a brilliant (mystery!) founder who has raised $130 million for his pre-IPO startup, including a $50 million round this fall. If you haven’t signed off already for the holidays, stay tuned!
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Top News in the A.M.
Oops. Target is saying this morning that up to 40 million customer credit and debit card records may have been breached over the two-week period ending December 15.
With its share price up, Facebook is planning a secondary sale that will see Mark Zuckerberg among others sell some holdings. Wall Street’s reaction: We’re selling, too.
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Investing in Two Indias
Nikhil Khattau has spent most of his career both building and investing in India-based companies. In fact, in 2007, soon after selling a mutual fund he’d founded to a financial group, Khattau co-founded Mayfield India in Mumbai, where he continues to help the firm.
It isn’t always easy, given that India’s 1.2 billion residents remain very much separated both culturally and economically. “You have to divide India into the country [that wants to be a great global power] and ‘Bharat’ … which is rural India, where 70 percent of people live,” says Khattau.
Khattau tends to invest in non-tech companies that cater to the latter — outfits like Geodesic Techniques, a specialty construction company that creates buildings out of steel and glass. (“Most were made of concrete prior,” says Khattau.) But earlier this week, during a wide-ranging conversation, we discussed India’s metropolitan centers, too. Here’s part of that conversation, edited for length.
I recently read an article positing that given the amount of gold held by people in India, there must be a way to unlock its value, possibly by renting it out. That struck me as an interesting proposition. Would it ever be possible culturally?
Well, gold is used to show whether you’re wealthy or not. But women have also traditionally been given gold jewelry, so if ever they need money, they can pawn or sell their jewelry and have access to liquid cash. When a woman is married off, she’s given a lot of jewelry by her parents as her backstop, really. She then saves it to pass along to the next generation. So looking at gold and gold jewelry in that light, the sharing just doesn’t work.
Still, I think in urban India, it could be interesting. We’re seeing [a lot of behaviors] that are more akin to what you’re seeing out West: young people living away from home, earning their own money, wanting to go out and dress up and not necessarily wanting to invest in the hot asset that gold is. It would be complicated, but it’s a non-trivial market. The four biggest metropolitan centers have 10 to 15 million people; the next four have between 5 million and 10 million people. Altogether, city populations [add up to] 350 million.
Is this younger, urban demographic interested in shared transportation other than buses, or is that also premature?
The public transportation system isn’t great. And not everybody can afford their own private transportation, so there’s a unique phenomenon in India where companies provide transportation – sort of like shared taxis. If you look at Google or Amazon or Infosy, for example, they’ll commission thousands of private taxis each month. The taxis are fairly sophisticated, too; they feature GPS systems, and employees have their own codes, all of which enable their employers to know where a cab is and how many people are in it and whether or not it’s running late. It’s sort of like an Uber system, but it’s enterprise-geared.
Why are you focused exclusively on low-tech or no-tech business opportunities?
India is so many generations behind that we’re seeing white spaces where you [in the U.S.] have had developed structures for 30, 50, even 100 years. We’re also able to realize venture-style returns without taking venture-style risk, because the model has been proven time and again. For example, we recently exited from a portfolio company called Fourcee Logistics, which transports liquids [from fatty acids to crude palm oil to molasses] in multi-modal containers. These containers have been around in the rest of the world since the 1950s; Fourcee was first to bring them here.
It really seems that India is developing at two speeds.
Absolutely. The twenty and thirtysomethings are looking for bleeding-edge technologies; they want free, perfect, and now. Then there’s the rest of the country.
New Fundings
Blacklane, a two-year-old, Berlin-based portal for chauffeur services, has raised roughly $14 million from Daimler AG, which is looking to expand its business beyond car production. According to the WSJ, Blacklane customers can book limousines in 130 cities including New York, Hong Kong and Paris via a website, app or phone. The company doesn’t provide the chauffeur services itself but passes bookings on to local limousine operators.
Hatchbuck, a two-year-old, St. Louis, Mo.-based company that makes sales and marketing software for small businesses, has raised $1.25 million led by Cultivation Capital, and joined by Holekamp Ventures.
Moovit, a two-year-old, Israel-based company whose mobile app makes it easier for users to “ride public transit smarter,” has raised $28 million led by Sequoia Capital. The company had previously raised $3.5 million from BRM Group and Israel Ventures, both of which participated in the new round.
Respira, a three-year-old, Albuquerque, N.M.-based company that’s designing a new inhaler to help with respiratory diseases, disclosed yesterday that it has raised an undisclosed amount of funding from Sun Mountain Capital and Cottonwood Technology Fund.
Rheonix, a six-year-old, Ithaca, N.Y.-based developer of an automated molecular testing technology, has raised $14 million in combination of debt and equity to finish a manufacturing build-out and launch its first commercial product. The round was led by existing investors Cayuga Venture Fund and Rand Capital SBIC, a subsidiary of Rand Capital Corp.
Telly, a four-year-old, San Francisco-based company whose on-demand film and video content service has socially discovery elements, has raised $8 million in Series B funding from new investors Cinemagicand Lumia Capital, along with early investors Azure Capital, Draper Fisher Jurvetson, Felicis Ventures, and Georges Harik. The company, formerly known as Twitvid, is also announcing that it has acquired the Dubai-based company Sha-Sha Entertainment to bring Hollywood and Arabic movies and TV shows to 22 countries in the Arab world. Terms of the acquisition aren’t being disclosed. Telly has raised $21 million to date.
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People
It’s been a lucrative week for venture capitalist John Doerr, who sold 2,889 shares of Google on Monday at an average price of $1,071.44 for a total haul of $4.16 million. Doerr is left with just 275 shares of the company’s stock, valued at approximately $295,000.
Aileen Lee, the founding partner of Cowboy Ventures, shares what she sees as the venture industry’s biggest challenge in 2014: “The industry has to show it can deliver better returns than the public markets. There’s been good liquidity recently, and a nice pipeline of private tech companies should have liquidity for the next few years. But when you look at the number of startups being created each year, you realize the probability of success is not great.”
This week, newly public shares of the jacket brand Moncler turned Remo Ruffini into a billionaire. The Telegraph talks with the man who built the brand to find out how he pulled it off.
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IPOs
Acucela, an 11-year-old, Seattle-based company that develops treatments to fight eye diseases, is looking to raise as much as $125 million in IPO. In a surprise twist, the company plans to go public on the Tokyo Stock Exchange. (Its founder and CEO, Ryo Kubota, is a native of Japan.) Xconomy has more on the company here.
Facebook and Mark Zuckerberg have to face a lawsuit they were hoping to avoid. In a decision made public yesterday, a federal judge said investors could pursue claims that, prior to Facebook’s IPO last year, the company should have disclosed internal projections on how increased mobile usage and product decisions might reduce future revenue. “Plaintiffs have sufficiently pleaded material misrepresentation(s) that could have and did mislead investors regarding the company’s future and current revenues,” wrote the judge in his 83-page decision.
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Exits
Elance and oDesk, both venture-backed freelance marketplaces for online work, have opted to stop competing and instead join forces, they announced yesterday. The merged entity won’t appear much different to outsiders, as both brands will continue to be operated independently. But combining gives the new company more numbers to boast of, including 10 million workers around the world, and $750 million in billings in 2013. AllThingsD has much more here.
Sofort, an eight-year-old, Gauting, Germany-based mobile payments company, has been acquired by its eight-year-old, Stockholm-based rival Klarna, strengthening Klarna’s position relative to PayPal. Terms of the deal weren’t publicly disclosed, but sources tell Dealbook that Klarna paid around $150 million in cash and stock.
Travelatus, a nascent, Moscow-based travel company, has been acquired by its Munich-based rival, Excursiopedia, for undisclosed terms that sources tell VentureBeat was sub $1 million. Together, the companies hope to become a leader in helping travelers find local activities.
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Job Listings
Silas Capital, a venture capital and early-stage private equity firm in New York City, is looking for a plucky intern or two to assist with deal flow. The job can be done remotely, though it requires at least 15 hours a week for a minimum of 8 weeks. To apply, email info (at) silascapital.com, with the word “Resume” in the subject heading. Do not (says the firm) use words like “paradigm”, “synergy”, or “disruption,” not that you were planning to do that. (By the way, StrictlyVC doesn’t know if this is paid or unpaid. Sorry!)
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Data
Pitchbook has run one of its fun where-are-they now features. Today, the research firm has taken a look back at 2005 vintage U.S. venture funds to see how they’ve been performing. It lists nine funds, and their median IRR is a really underwhelming 1.8 percent. The top three performers based on net IRR are Austin Ventures IX, Clarus Life Sciences I, and Columbia Capital Equity Partners IV. You can learn more here.
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Essential Reads
Rolling Stone does a deep dive into cyberwar and meets with the geeks who are serving on the frontlines.
Quartz expresses just a wee bit of skepticism that Uber’s surge pricing owes entirely to genuine supply issues.
“There’s a big, wide, increasingly poor world out there, and it doesn’t need 99% of what Silicon Valley is selling.”
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Detours
Computer science researchers say that if a laptop — including your MacBook Pro — has a built-in camera, it’s possible for someone to spy on you at any time (without a light to alert you).
There’s a whole world behind that ordinary T-shirt you’re wearing. Take a look; it’s fascinating.
Where did the third season of “Homeland” go wrong? Bill Wyman counts the ways.
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You can look marvelous in sweatpants.
If you’re going to buy these shoes, you’d better have a yacht docked somewhere.
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