StrictlyVC: January 8, 2014

110611_2084620_176987_imageHi, happy Wednesday, everyone!


Top News in the A.M.

Uber CEO Travis Kalanick says, sorry folks, surge pricing is here to stay.


In Newest Digital Health Deal, Zephyr Lands $15 Million

As more doctors and health-related companies digitize their patient records, research, and data from clinical trials, venture-backed entrepreneurs have been rushing in to help them.

Now Zephyr Health, a 2.5-year-old, San Francisco-based startup is promising to bring that digitally formatted — but disconnected — data together in ways that help healthcare providers more easily and cost-effectively identify and target treatments.

Zephyr has already convinced investors of its merits. This morning, the company is announcing a $15 million Series B round from Kleiner Perkins Caufield & Byers and Jafco Ventures — funding that has drawn Kleiner’s Brook Byers and Jafco’s Joe Horowitz to its board. Now Zephyr, which has raised $16 million altogether, just has to get companies to sign up.

It already counts five of the world’s largest pharmaceuticals and device companies as customers, says founder and CEO William King, who spent much of his earlier career in sales development at Johnson & Johnson. We chatted yesterday afternoon. Our conversation has been edited for length.

Why start the company?

I’d spent a spent considerable amount of my career at Johnson & Johnson, focused entirely on life sciences, and what we saw there and still see is a huge amount of data that should be talking but isn’t. Consider an MRI image that could be talking with a blood pressure result, but instead those pieces of data are disconnected. We thought we could unify the data that isn’t talking and build a compelling visual front end for the analytics that’s specifically tailored for the life sciences environment.

Is the data you’re parsing public or private or both?

It’s data from the public domain — clinical trials, patient demographics, sales, interactions, medical publications — as well as proprietary data from our clients.

You have 40 employees. What are their roles?

We’re overwhelmingly an engineering [team, one that is focused on] data solutions and machine-based learning algorithms and ensuring that we can bring data together rapidly, accurately, and as inexpensively as possible. So we also have algorithm experts, data scientists, data researchers, and a few folks who are dedicated to client services and account management.

You mentioned a compelling visual front end for your software-as-a-service business. What are end users seeing when they use Zephyr?

We offer a platform as well as different data offerings and different applications on the front end. Just like on your smart phone, different users will purchase different apps for different reasons. Our Illuminate app, for example, is used by people who are looking at clinical trial information. Cocktail, an app that helps you mix the different data types together and strain them, might be used by a marketing director.

Our platform is designed for a broad spectrum of people, including people who aren’t accustomed to using analytical software.

What’s a recent example of how you’ve helped a customer?

Over the holiday, we heard from one customer who’d been trying to select a clinical trial site. Recruiting enough patients for a clinical trial is a big challenge for a whole variety of reasons. But we were able to take patient demographic information, [geographic] information, funding information and much more and combine it to create a refined view [that had helped the client make a decision]. As a result, this client’s recruiting was considerably ahead of schedule, which is meaningful because recruiting is a big cost and requires a lot of time and that has an impact on many other things.

What’s your biggest challenge?

Our biggest challenge centers on “big data” as a term. There’s a lot of big data competition, meaning lots use the phrase. One of the big challenges that we try and overcome is clearly defining what we mean by it and how it lends value to a person’s business.


New Fundings

Aquion Energy, a six-year-old, Pittsburgh, Pa.-based maker of batteries and energy storage systems, has added $20 million to the $35 million Series D financing it had announced last April, citing strong investor interest. The funding comes from new investors Bill Gates, Yung’s Enterprise, Nick and Joby Pritzker through their family’s firm Tao Invest, Bright Capital, and Gentry Venture Partners. Previous investors Kleiner Perkins Caufield & Byers, Foundation Capital, andAdvanced Technology Ventures also participated in the round, which brings the company’s total funding to $85 million.

Bellicum Pharmaceuticals, a 10-year-old, Houston-based company that’s developing cell therapies to treat cancers and other life-threatening diseases, has added $14.7 million to its Series B round. The additional financing, from investors that include AVG Ventures andRemeditex Ventures, brings the company’s Series B to $34.4 million.

Blueprint Medicines, a three-year-old, Cambridge, Ma.-based company that’s developing therapeutic compounds and combination therapies that target the molecular aberrations that cause cancer, has raised $25 million in Series B funding. Nextech Invest led the round, along with new investors Biotech Value Fund and Casdin Capital. Founding investors Third Rock Ventures and Fidelity Biosciences also participated, alongside other, undisclosed investors. The company has now raised $65 million altogether.

Digital Arbitrage, a two-year-old digital marketing platform that enables small and mid-size hotels to quickly build and manage an online presence, has raised $2 million, according to an SEC filing . The company, which lists offices in San Diego, Sao Paulo, and Kiev, had previously raised $600,000 in seed funding.

Ethical Electric, a two-year-old, Chevy Chase, Md.-based company whose mission is to make buying renewable energy easy, has raised $11 million in Series A funding. A syndicate of investors led by Matthew Palevsky led the round.

Ifbyphone, an eight-year-old, Chicago-based company whose software connects, measures and optimizes sales and service calls for businesses and organizations, has raised $9 million in new funding, shows an SEC filing. The company, whose investors include Origin Ventures and Apex Venture Partners, has raised roughly $32 million in equity funding to date, according to Crunchbase.

ImmuneXcite, a Lexington, Mass-based biopharmaceutical company, has secured $3.58 million in fresh funding from (unnamed) new and existing investors. The funding brings the total raised to date to $7 million, including a loan for $1 million from the Massachusetts Life Science Center. ImmuneXcite has created a platform technology to enhance the efficacy of therapeutic monoclonal antibodies for oncological and infectious disease targets.

Isarna Therapeutics, a 15-year-old, Munich-based company that’s developing inhibitors that stimulate the human immune system to fight cancer, has raised $17.8 million in funding from AT NewTec and existing investor MIG, a Munich-based venture firm.

MedHOK (Medical House of Knowledge), a three-year-old, Tampa-based platform for health plans, has raised $77.5 million from Bain Capital Ventures and the growth equity firm Spectrum Equity. MedHOK provides payers, pharmacy benefit managers, accountable care organizations, and integrated health networks with tools to view and act on patient information in real time.

Mediant Communications, an 11-year-old, New York-based provider of shareholder communications services to banks, brokerage firms, corporate issuers and investment companies, has raised $7 million in growth funding from Argentum Capital Partners, a recently formed private growth equity fund.

Oscar, a two-year-old, New York-based health insurer that came out of stealth mode last summer, has raised $30 million in new capital led by existing investor Founders Fund, reports the New York Times. Other previous investors, including Thrive Capital, Khosla Ventures andGeneral Catalyst Partners, also participated in the round. Oscar was cofounded by Joshua Kushner, who founded Thrive Capital in 2009; Kusher, who had previously raised a $35 million for Oscar, becomes the company’s chairman with its newest financing. His cofounders, Kevin Nazemi , who was Microsoft’s former director of health care, and Mario Schlosser, a former McKinsey & Company computer scientist, will run the firm day to day.

ThisCLICKS, a three-year-old, St. Paul, Mn.-based mobile technology startup that specializes in cloud labor management software, has raised $4 million in Series A funding from, Greycroft Partners andArthur Ventures.


New Funds

Stanford Alumni Angels East, an investor group that funds startups in mobile, big data, health 2.0, and e-commerce, is looking to raise a venture fund, according to an SEC filing that doesn’t list a target. Headquartered in New York, the group invests in East Coast and West Coast companies and is comprised of Stanford alumni angel investors, many of whom are current or former entrepreneurs. According to AngelList, its Investments are not limited to those run by Stanford-educated entrepreneurs.



Adrian Cockcroft, a former Netflix cloud architect who helped lead the company’s shift to an all-cloud computing infrastructure, has joinedBattery Ventures as a technology fellow. In his new role, Cockcroft will advise Battery and its portfolio companies on various technology trends and issues; assist with deal sourcing and due diligence; and speak at tech events. Cockcroft is Battery’s first technology fellow; Battery says the position is designed to be a “long-term engagement.”

Yesterday, Fab CEO Jason Goldberg published a 3,500-word blog post about what went so wrong last year. “I freely admit, when you grow revenue 500% year over year and become a media darling overnight, it’s hard to keep perspective.”

Twitter co-founder Biz Stone finally took the wraps off his stealth-mode startup yesterday. Called Jelly, the company’s app allows users to snap photos and ask related questions of their Facebook and Twitter networks, such as, “What kind of plant is this?” (One Jelly user has already snapped a photo of Facebook CEO Mark Zuckerberg texting while driving, a photo he posted to Jelly’s platform, asking his network how he should respond to such a thing.)

Kamran Zaki has left Netflix, where he was head of global payments, to become the president of Adyen, an eight-year-old, San Francisco-based software company focused on online, mobile, and face-to-face payments. Before Netflix, Zaki was the head of global core payments at PayPal.



T. Rowe Price Group‘s New Horizons Fund bought 4.6 million Twitter shares for $2.66 apiece before its November IPO. Assuming that position hasn’t changed, those shares were worth $305 million on Monday, reflecting a 25-fold gain. Reuters has more here. I had profiled Henry Ellenbogen, the influential manager of New Horizons, in 2012. The fund first bought into Twitter in 2009.



Aviate, a three-year-old, Palo Alto, Calif.-based company whose software organizes the information on your smartphone and “surfaces it at the perfect moment,” has been acquired by Yahoo. Aviate had raised $1.8 million from Highland Capital Partners, Andreessen Horowitz,Freestyle Capital and Draper Associates, as well as individual investors. Yahoo isn’t disclosing the purchase price.

Little Eye Labs, an 18-month-old, Bangalore-based company whose software analyzes the performance of Android apps, has been acquired by Facebook for an amount “in the range of $10 million to $15 million,”reports TechCrunch. Little Eye Labs had raised $300,000 in funding from Ventureast and GSF Accelerator, which is a 10-week program that runs in four major Indian cities simultaneously twice a year. (Little Eye’s founders, who’d worked together previously at IBM, were part of a GSF program in 2012.)


Job Listings

SanDisk Ventures, the corporate venture arm of the flash memory storage giant, is looking for a director who will be responsible for all aspects of venture capital deal-making. “Critical requirements” include previous experience in new business development or product line management, and experience across the storage and enterprise infrastructure industry. The “ideal” background includes an MBA and knowledge of additional languages.



500 Startups sewed up the greatest number of global deals in 2013, according to PitchBook, but in Silicon Valley, Andreessen Horowitz led its peers, with nearly three quarters of its 97 deals centered locally. Silicon Valley Business Journal has more here.


Essential Reads

Gartner is predicting that 45 percent of all new devices this year will run Google’s Android software, up from 38 percent last year.

Just as Bay Area high-tech firms such as Google have been using private shuttle buses to transport their workers to their jobs, Google is taking it to another level with its own ferry service on San Francisco Bay.

Groupon is trying out a new business, sources tell Re/code. The idea is to help small mom-and-pop retail shops sell off items they can’t unload at full-price; Groupon customers would be notified when a nearby business is having a sale.



A growing body of evidence suggests that the open office undermines the very things that it was designed to achieve.

Joel Cohen, the former federal prosecutor who led the criminal investigation of Jordan Belfort, critiques the “Wolf of Wall Street,” saying that “there are consequences for blurring the lines too much.”


Retail Therapy

StrictlyVC is getting drunk on all of the cool things streaming out of CES this week(!). Among other favorites so far are these acrylic glass stereo speakers, and this photovoltaic bracelet that knows when you’ve had too much sun.  (We don’t really need a bracelet to alert us to our sun exposure, but it was designed with Louis Vuitton and it’s definitely a fun reminder of how far wearables have come.)


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