StrictlyVC: January 13, 2014

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Top News in the A.M.

Taxi drivers, up in arms over the Uber car service, have grown violent in Paris, with Uber confirming at least a dozen incidents in Paris and Lyon this morning, including “flat tires, eggs, broken windows.” As Rude Baguette reports, one of the first victims today was Eventbrite CTO Renaud Visage, who was being driven from the Paris airport. The Uber in which he was riding was “attacked by multiple assailants, who allegedly, after smashing one window and slashing two tires[...]as well as defacing one side of the car with glue, attempted to enter the vehicle.” Visage’s companion in the car told the outlet that their Uber driver maneuvered the two out of the situation, then dropped them on the shoulder of the freeway.

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Why It’s ‘Eyes on the Enterprise’ at Index Ventures

In a sit-down with general partner Mike Volpi of Index Ventures late last week, Volpi shared how 18-year-old Index approaches venture marketing — and why it worries about competing with its founders for attention.

Volpi – long a top Cisco executive before joining Index – also explained why he’s confident that investors, who largely shifted their focus to enterprise deals in 2013, will keep it there this year. Our conversation has been lightly edited for length.

You’ve been investing more in enterprise deals as a percentage of your overall fund than you have historically. Why?

In part because we opened this U.S. office, and there’s more [related dealflow] in the U.S, and I think that’s an effect of more entrepreneurs getting into the space.

Getting into the space from where, the consumer side of things?

At the margin, there is some switching going on, like David Sacks, who [created] an enterprise company like Yammer. Or you might look at Dropbox [Index led its $250 million Series B round], which really started as a consumer company but is seeing bigger portions of its business in the enterprise. So you see a crossover effect.

You’re also seeing people who’ve been on the sidelines in recent years getting back in the game. We have an investment in Pure Storage, and if you look at that team, it’s a lot of the folks who were at [the data storage company] Veritas [acquired by security software giant Symantec for $13.5 billion in 2004]. There are people who’ve been going to work every day at these larger corporations, but now they’re coming out of them and restarting things.

How steep is the learning curve for those crossing over from consumer startups?

There is a learning curve. Like it or not, enterprises require sales, whereas with consumers, you can find a great service and, through virality, consumers discover it. So the business processes of selling — find the lead, nurture the lead, educate the customer on the value proposition of what you do, then close them – that along with the tools required and the people you hire are different. When Dropbox decided to launch its “Dropbox For Business” products, it had to learn about things like compliance and corporate directories, which aren’t natural vocabulary words for consumer entrepreneurs.

You say three trends will make 2014 another big year for enterprise. What are they?

First, enterprise budgets tend to be economic-cycle driven; when the economy is doing well [as now], they’re spending money.

A much newer theme is that the pocket of money that startups went after is distributed now, which is a really good thing. Historically, the one customer in the enterprise was the CIO, and he or she was a technical user who decided, “I’m going to use Microsoft for this, and Oracle for that and Cisco for this.” Now, because you don’t need to buy the hardware anymore – you can go to Saleforce or Workday or Zuora – the decision-maker for that technology is no longer the CIO. It’s the VP of sales, it’s the CMO, it’s the CFO; it’s 10 different people at the company. Imagine that you’re the head of public relations at Twitter and want to do sentiment analysis. You don’t call the CIO. You look up “sentiment analysis technology” on Google. Something comes up and you call the sale rep of the company and they say, “Just send us your link and we’ll have some analyses for you.” Well, you just spent money on technology. You’re an enterprise customer.

Last, enterprises have consumer envy. Consumers have cool devices. They have Evernote, with beautiful graphics. Meanwhile, [the enterprise folks] are sitting there looking at [Microsoft] SharePoint or Word. They want some of that cool stuff – including more storage and networking stuff and cooler middleware — so that’s where the money is being, and will continue to be, spent.

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New Fundings

Atara Biotherapeutics, a two-year-old, Thousand Oaks, Calif.-based company, has added $13.5 million to its Series B funding. Last month, the drug development company announced it has raised $38.5 million from the venture arm of Amgen, Celgene Corp., and the hedge fundEcoR1, along with earlier investors Alexandria Venture Investments, DAG Ventures, Domain Associates and Kleiner Perkins Caufield & Byers. Last week, the Baupost Group joined the round, bringing the company’s raise to $52 million. Altogether, Altara has raised $72 million. (You can learn more about the company here.)

Delivery Hero, a three-year-old, Berlin-based network of food ordering marketplaces, has raised $88 million from Insight Venture Partners, says Tech.eu. Delivery Hero raised $30 million fromPhenomen Ventures and prior investors Team Europe, Kite Ventures, Ru-net, Tengelmann Ventures, Holtzbrinck Venturesand Point Nine Capital just seven months ago. It has raised $222 million to date, according to Crunchbase.

Path, the three-year-old, San Francisco-based private social network, has raised $25 million in Series C financing, reports Re/code. Its backers include new investor Bakrie Global Group of Indonesia and existing investors Greylock Partners, Kleiner Perkins Caufield & Byers, Index Ventures, Insight Venture Partners, Redpoint Venture Partners and First Round Capital. Founder and CEO Dave Morin told Re/code the Series C was an up round. Path was valued at $250 million when it raised its B round in 2012.

Peak, a seven-year-old, Denver-based company that offers cloud computing to an ecosystem of value-added resellers, distributors, agents and service providers that white-label the service as their own, has raised $4 million in financing from previous investors Meritage Funds and Sweetwater Capital. The company has raised about $13 million in equity to date and another $3 million in debt, according to Crunchbase.

PlanSource, an 11-year-old, Orlando, Fla.-based cloud-based company that offers administration, insurance, and payroll services to employers, has raised $12 million in Series B funding from existing investors Lemhi Ventures and Timucuan Asset Management. It has raised roughly $24 million to date.

Rebellion Photonics, a four-year-old, Houston-based company whose main product is a hyperspectral imaging camera for the oil and gas industry, has raised $10.4 million in Series A funding from the New York investment firm Tinicum and private investment partnerships advised by Tinicum.

Suneva Medical, a four-year-old, San Diego-based company that’s developing aesthetic products for the dermatology, plastic and cosmetic surgery markets, has raised $35 million in debt and equity capital. Polaris Partners led the Series B round; HealthCare Royalty Partners participated in the financing, as well as provided a growth capital loan. Other, unnamed existing investors also participated in the funding.

Trustpilot, a six-year-old, Copenhagen-based company that powers a large and growing online consumer review platform, has raised $25 million led by DFJ Esprit. Previous investors SEED Capital, Index Ventures, and Northzone also participated in the round, which brings Trustpilot’s total funding to just north of $40 million.

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New Funds

Plymouth Ventures, an Ann Arbor, Mi.-based venture firm, is hoping to raise up to $80 million for its third fund, shows an SEC filing that states the firm has raised $31.6 million so far. Plymouth looks to back growth-stage companies, particularly in Michigan and Ohio, a niche that’s underserved according to the firm. Here’s a bit more about its criteria.

Technology Crossover Ventures has just closed on a bundle, according to numerous SEC filings processed on Friday. One shows the Palo Alto, Calif.-based firm has raised a $1.47 billion fund since it began fundraising in 2012. TCV has also raised a separate pool of$69.2 million, and a third pool of $328 million, for a total of $1.86 million. TCV makes late-stage investments in privately held Internet, financial services, infrastructure, communications and software companies, as well as public companies. The firm, which writes checks of up to $200 million, last raised $3 billion, in 2007. According to a 2012 Bloomberg report, TCV VIII was originally targeting $2.5 billion.

Top Tier Capital Partners, the San Francisco-based fund of funds, has raised roughly $400 million across two new funds, SEC filings show. One fund, which was first registered in May of 2012, has closed on $240 million. A second vehicle that the firm began raising in 2012 has raised $156 million; it shows a target of $200 million. Top Tier, founded in 2006, invests in mid market buyout funds and smaller venture capital funds, making both primary commitments and acquiring interests through the secondary market.

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People

Yesterday, a 21-year-old programmer tweeted that it’s “really, really difficult to find the real story of events in the past which involved winners and losers.” When he went on to reference the Mosaic browser and Marc Andreessen in particular, Andreessen gave him a history lesson.

Billionaire philanthropist Bill Gates is picking up the pace of his venture investments, says TechCrunch. It reports that Gates was involved in at least six new and follow-on investments in venture-backed companies last year, up from four new and follow-on commitments in 2012, and three in 2011.

Benchmark’s Bill Gurley is on the hunt for interesting healthcare startups. As he tweeted on Friday: “Spending time studying where the Internet intersects with healthcare. If you have ideas and want to chat, contact me: health@benchmark.com.” He added: “100% convinced US healthcare market is really messed up & that means opportunity, 17% of GDP.”

Business Insider gives Uber CEO Travis Kalanick, ”Silicon Valley’s newest star,” the long-form treatment, saying of those interviewed for the story: “Acquaintances seem to be of two minds about him: On the one hand, many agreed he is a phenomenon. ‘Travis is smart,’ says Kalanick’s former investor Mark Cuban. “Busts his ass and is a true entrepreneur. Can’t be much more complimentary than that.’ Equally common was the view of Kalanick as — in a word that came up again and again in interviews, ‘an #%&hole.’”

Xue Manzi, a well-known Chinese-American venture capitalist, appears to be living in a Beijing detention center, reports the South China Morning Post. Manzi — an outspoken liberal who has criticized the Chinese government on the microblogging platform Weibo, where Manzi has more than 12 million followers — was detained by police in mid-September for allegedly hiring prostitutes. Soon after, Manzi, confessed on Chinese state television that his “irresponsibility in spreading information online was a way of venting my bad mood, and neglectful of the social mainstream.” It was Manzi’s last public appearance. The SCMP reports that Chinese police “shall not hold a suspect for more than two months without pressing charges, according to Chinese laws. But they are allowed to apply for an extension of up to two months in ‘complicated’ cases that may take longer to investigate.”

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Exits

PeopleAnswers, a 13-year-old, Dallas-based maker of “assessment software” to help companies more effectively select and retain employees, has been acquired by Infor, an enterprise software firm based in New York. Terms of the deal were not disclosed.

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Happenings

J.P. Morgan‘s 32nd annual healthcare conference kicks off today in San Francisco. Click here for more information about the invitation-only, three-day-long event.

The National Retail Federation‘s two-day Big Show conference in New York is also underway right now. For scheduling information (including when you can catch a keynote by Square’s Jack Dorsey), click here.

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Jobs Listings

eBay is in the market for a director of business development who will help decide on potential investments and acquisitions and build strong industry and venture capital relationships to make it easier for eBay to find M&A and investment opportunities. Applicants need an MBA and more than 10 years of experience, including at a top strategy consulting firm, investment bank, or tech-focused investment firm.

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Data

Last year, more venture firms closed on new funds than in 2012, with 205 versus 185 the year before, reports the Wall Street Journal. Notably, the increase came at the early-stage level, with 151 firms closing on capital, compared with 118 in 2012. They didn’t collect all that much, though, not by at least one measure. While roughly as many early-stage funds closed in 2013 as in 2001, when 199 early-stage funds were raised, last year’s firms raised a collective $9.37 billion; in 2001, they raised $22.47 billion.

Noting that corporate venture arms have been investing in more seed stage deals than ever before, CB Insights observes that 34 different corporate venture arms participated in at least one U.S. seed VC round last year, and that the number of corporate VCs now participating at the seed stage is up 240 percent from 2010. CB Insights also reports that Google Ventures has been “far and away the most prolific” investor of the bunch. For more information, including on the most active corporate VCs, click here.

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Essential Reads

“Envision that every one of your professional endeavors was meticulously tracked and measured in points, that there were levels to complete and you were given prizes for excellence. That every workplace action provided a tangible sensation of winning or losing as part of a system engineered to keep you addicted, thrilled to come back every morning.” It’s here, it’s spreading, and that’s worrisome, writes Farhad Manjoo of the WSJ.

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Detours

Friends come and go, but the number of close friends you have may remain surprisingly constant.

Ninety-two-year-old diamond cutter Max Fuchs “works quietly at a cutting bench cluttered with blocky metal tools, his hands worn from years of shaping rough stones into modern cuts….’You can take a diamond that’s, let’s say, a broken diamond, and you bring it back into shape. … It’s a masterpiece—like Picasso.’”

The Flying Tomato would prefer you not call him that anymore. Writes Elizabeth Weil of snowboarder Shaun White, he “approaches his entrepreneurialism the way he does his snowboarding. ‘The whole strategizing thing is what does it for me,’ he says. ‘That’s what I do on the hill. I’m always thinking: Well, if this could happen, then that could happen. It’ll leave me in this position, it’ll create these opportunities.’”

Retail Therapy

Well. This is the last thing you need.

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