StrictlyVC: January 21, 2014

110611_2084620_176987_imageGood morning!

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Top News in the A.M.

The World Economic Forum in Davos, which begins tomorrow, is as notable for its attendees as for its absentees, observes Andrew Ross Sorkin.

Google employees were reportedly given talking points to use during a hearing being held today by the San Francisco Municipal Transportation Agency; the hearing will feature discussion about the search giant’s commuter buses, which have illegally been using the city’s bus stops.


Polaris Co-founder Terry McGuire on the Faddish Nature of Healthcare Investing

Terry McGuire, the cofounder of the venerable venture firm Polaris Partners, was recently in San Francisco from Boston. As we caught up over coffee at a bustling cafe, the longtime healthcare investor — whose firm divides its resources between healthcare and IT deals and writes checks from $50,000 to $60 million — shared where he’s finding the best deals right now and why he doubts VCs’ sudden interest in healthcare will last long. Our chat has been edited for length.

Healthcare is hot again, with even consumer VCs like Bill Gurley taking an interest. How do you feel about that?

It’s wonderful that healthcare is hot again, and as consumers of healthcare, we should be thrilled. Technology is going to allow us to live longer, happier lives. The opportunities are changing and at a speed that’s accelerating, which has an impact on drugs and devices; bringing them to market is improving.

I sense a “but” coming.

On the life sciences side, billion-dollar exits aren’t as common as on the tech side, where speed to market is fast, things are more capital efficient, and the virality of markets are much more interesting. So you go through these wonderful moments as now, when everyone is again a healthcare investor, but in three years, they won’t be.

To me, the biggest question mark is how does pressure on health care spend impact healthcare investing. I think in some cases it’s going to be a liability and in some cases an opportunity. There’s only so much money to go around.

So where do you see the best opportunities right now?

I’m following the whole biologics space — antibodies, peptides, the genetics space more broadly. It’s become exciting. We just funded a company in the business of editing the genome, so finding ways to knock down something that the body is producing too much of, for example.

We’re also interested in the delivery of biologics. Most drugs are taken orally, and if a pill is chemical-based, it can probably withstand your stomach acids. With biologics, our stomachs do a good job of chomping up everything that [passes through them]. If you can improve delivery – most [biologics today, like insulin] are delivered intravenously or through injections – that’s interesting.

What about medical devices?

They’re out of favor, so I personally think the next five or six years will be marked by interesting medical device plays. When a sector is out of favor, entrepreneurs tend to be incredibly disciplined and efficient and clever. They know capital isn’t free and that if they need to go out for capital, it’s going to be expensive because the prices are low.

And medical devices will always be a part of our healthcare system, and they’re only going to become more intelligent and more functional. In five years, people will be saying, “I wish I had been in this and that device deal.”

Four of Polaris’s life sciences companies were acquired last year and another four went public. But the market cooled toward biotechs toward year end. Do you have any concerns about 2014?

I’m delighted that public buyers had a reawakening when it came to biotechnology. People clearly thought there was a lot of good stuff going on last year. I’d just want people to pace themselves. If things went wrong, it would be because expectations were high.

Mood is a strange thing. People get negative, then something breaks open – a drug gets approved or earnings come out that are better than expected – and people say, “Why was I sitting on the sidelines?” and they race over. That kind of funny dynamic concerns me more than the companies themselves.


New Fundings

BuildDirect, a 14-year-old, Vancouver-based manufacturer and wholesaler of building materials that it sells online to everyone from building professionals to amateurs, has raised $30 million in Series B funding led by Mohr Davidow Ventures. Other investors to participate in the round included earlier backer BDC Venture Capital. The company has raised about $63 million to date, including from OMERS Ventures and Difference Capital.

CommonFloor, a six-year-old, Bangalore-based online service that combines property search, apartment management and vendor management, has raised $10.4 million in Series D funding from existing investors Accel India and Tiger Global. The two firms have twice invested in CommonFloor before, providing the company with an undisclosed amount of funding in 2012 and with $7.5 million in funding last year.

Fon, a eight-year-old, Madrid-based crowdsourced Wi-Fi network, has raised $14 million, including from Qualcomm, which reportedly plans to integrate Fon functionality into its Atheros wireless chipsets. Other investors in the round included Deutsche TelekomGoogleIndex PartnersCoral, and Atomico. Fon has raised north of $70 million to date.

Hailo, a three-year-old, London-based company behind a popular cab-hailing app that brings taxis to customers, has raised $28.8 million in new funding, according to the company. It didn’t disclose who invested in the round, but the company, which reportedly has 13,000 cab drivers using the service in 13 cities, has now raised $77 million, shows Crunchbase. Earlier investors include AtomicoWellington PartnersFelicis VenturesAccel and Red Swan.

LineKong, a six-year-old, Beijing-based mobile game developer, has raised $80 million in Series C funding from Orchid AsiaSAIF Partners,Starwish Global, and Profitable Century International. LineKong has now raised $115 million altogether, including earlier funding from IDG,New Enterprise Associates, and Northern Light Venture Capital.

Resource Guru, a London-based company that produces a team scheduling app, has raised $870,000 in funding led by Index Ventures. Resource Guru has now raised a total of $1.14 million.



Michael Brosse, a partner at Kirkland & Ellis since 2000, has left the firm to focus on the private equity and M&A practice at Lowenstein Sandler, a firm with about 300 attorneys in New York, New Jersey and California.

Tim Draper‘s Draper University has restored some luster to a dingy block in downtown San Mateo, Calif., but despite an outlay of $20 million, some city officials are complaining that he hasn’t gone far enough.

The Canadian venture firm iNovia Capital has promoted two principals to partner roles. Karam Nijjar joined the firm in 2010; directly prior, he’d worked as a technical systems analyst at the Royal Bank of Canada.Kevin Swan, who also joined iNovia in 2010, was previously a managing director at Cardinal Venture Partners, a seed-stage fund.


Job Listings

Frost Venture Partners, a venture firm and incubator based in San Juan Capistrano, Calif., is looking for a “director of incubation.” Learn more here.



India-based venture investment fell 18 percent last year from 2012, according to new analysis by Venture Intelligence. Investors poured $805 million into 206 deals in 2013, down from $898 million invested in 252 deals the previous year.

Nordic VC firm Creandum says it has built the world’s largest database of businesses dealing in Bitcoins — more than 300 of them — in an effort to shed light on the currency and give entrepreneurs and investors an overview of companies with a significant role in the Bitcoin system. Reuters has more here.


Essential Reads

As the number of electric cars begins to far outnumber the number of chargers available in Silicon Valley, drivers are developing — wait for it – charge rage.

Last Thursday night, Congress passed a budget that will make about half of taxpayer-funded research available to the public. The rule will apply to certain federal agencies with research budgets of $100 million or more; they’ll have to provide the public with online access within 12 months of publication in a peer-reviewed journal. The Washington Post has much more on the story here.

From American Lawyer: “Doug Van Gessel, a [land use attorney] who has represented Google, Hewlett-Packard and Microsoft in the leasing of office space, said city officials in Silicon Valley have become more sophisticated. ‘I think the city government used to be ecstatic to have a Google or a Facebook come to town, and now they’re looking at the cases more carefully,’ he said.” Said another land use attorney to the outlet: “When you’re talking about how you’re going to play in a community, that’s not an issue that’s going to open and shut with one building. These companies are growing.”



Could this 43-year-old Russian émigré who “looks like a geeked-out Gen Xer,” hold the key to human regeneration?

Detroit is erecting a 10-foot bronze Robocop statue. Just what the city needs.

Car porn: 15 vintage Porsches.


Retail Therapy

Neat, a panoramic camera that films 360 degrees around you.

Talk or tweet from the bathroom without compunction, thanks to this clamshell charger that sanitizes a variety of phones in just four minutes. (We were sold at “UV-C lamps,” though we also like that you can charge your phone while it’s being zapped.)


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