StrictlyVC: March 3, 2014

Good morning, everyone! How about those Oscar ceremonies? What a great night, including for Twitter and Samsung and pizza everywhere. (We think it’s fair to say they won the ghost Oscar for product placement this year, and we heartily congratulate them.)

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Top News in the A.M.

Billionaire activist investor Carl Icahn is not letting this eBay-Skype argument go. In a new, open letter to eBay shareholders this morning, he writes: “You may be able to duck and weave when it comes to the media, but in a few short weeks you will have no choice but to face your stockholders at the annual meeting. We all deserve to know the truth about what really happened with Skype.” Investor Marc Andreessen, the focus of much of Icahn’s ire, punches back with his own statement about Icahn’s “false and misleading accusations” against eBay and Andreessen’s role as a director with the company.

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VC Manu Kumar on Lone Wolves

When I first met Manu Kumar of K9 Ventures, nearly five years ago, he was a successful entrepreneur who was trying to break into micro VC and he was going it alone. As he said then, “I didn’t want to jump into partnering with someone just because it fulfills an LP criteria.”

He still doesn’t want to take the plunge. Though Kumar went from investing a $6.25 million fund that he closed in 2009, to a $40 million fund closed in the summer of 2012, he hasn’t brought anyone aboard and that doesn’t look to change any time soon.

Kumar – who writes initial checks of between $250,000 and $750,000 to very nascent startups with which he works closely — explained why over tea in San Francisco.

Jeff Clavier [of SoftTech VC] recently said he’d never be a solo GP again. Apparently, you feel differently.

Well, it’s true that K9 is one of the few solo GP funds without any associates. I don’t have a formal advisory network, either, though I do have people in my network who, when I’m looking at a deal, I’ll say, “Take a look at this and tell me what you think.”

What’s the hardest part about operating the way you do?

People say to me, “Your partner meetings must be really short.” But it’s more like they never end, because you’re constantly thinking about the companies and what they’re doing and what issues they have. I think the hardest part is just finding that balance between how engaged you want to get.

Also, there’s no fallback. If I decide that I’m going to go to Tahoe for three days, there’s no one else who’s going to take my spot. If the companies need something, I still need to be accessible and available.

So why not team up with someone?

I answered my LPs this way: The risk of me adding a partner and that blowing up is much higher than the risk of me getting hit by a bus. I need to have a high degree of conviction before I invest in a company; the level of conviction I’d have to have in a partner would have to be an order of magnitude higher than that.

Knowing what you know about being a solo operator, does it make you more or less inclined to fund single-founder startups?

I’m not opposed to and am comfortable with single founders; I’ve seen lots of companies do well with them. It definitely requires more work, though. Probably the single-most important thing there is helping them to ride that emotional rollercoaster. If you’re on your own, you have no one to talk to.

You’re investing a $40 million fund right now. Does that amount allow you to do seed, A deals, and Series B deals? I know the idea was to invest in roughly 30 companies.

I typically pass on Series B and C, and some would have been great investments, but I can’t do that with the amount of capital I’m managing. [Among K9's investments are the cloud communications company Twilio, the ride-sharing service Lyft, and the camera company Lytro, which have gone on to raise $104 million, $83 million, and $90 million, respectively.]

Are you able to get your pro rata share of Series A deals? It seems like that’s becoming harder to do with seed investors’ strongest companies.

It’s happened to me a couple of times where I haven’t gotten as much pro rata as I wanted in a deal. I’ve addressed that now by making it very clear to the founders, right at the time when I invest in them, that if I’m going to back them at the seed, they have to go to bat for me when it’s time [to raise more money]. They have to stand up to the next round investor, because the founders are the only ones who have the leverage in that situation.

I don’t suppose the bigger VCs are willing to negotiate?

In one case, I almost called up a firm and said, “Hey, you’ve invested in two of my companies. If you don’t give me my pro rata, you won’t get to get to see a third one.”

What happened?

In that case, I actually did get my pro rata [before resorting to that].

Look, I don’t have any leverage now, but if you want good karma in the future, you better give me my pro rata. [Laughs.]

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New Fundings

3Sun, a 6.5-year-old, U.K.-based company that sells hydraulic, control, and instrumentation products and services to the oil and gas sector, has raised $15.2 million from Business Growth Fund.

Bowman Power, a 10-year-old, U.K.-based company built around an energy recovery technology, has raised $5 million in funding from earlier investors Octopus InvestmentsFjord Capital and several angel investors. The company has raised $11.2 million altogether, according to Crunchbase.

DueDil, a 3.5-year-old, London-based source of free private company information in the U.K. and Ireland, has raised $17 million in funding led by Oak Investment Partners. Earlier investors Notion Capital and Passion Capital also participated in the round, which brings the company’s total funding to $22 million.

Noesis Energy, a 4.5-year-old, Austin, Tx.-based company whose software helps commercial and industrial customers measure and compare energy consumption, has raised $6 million as part of its Series B funding round, according to an SEC filingBlack Coral Capital and Austin Ventures, which participated in an $8 million funding round in August, also provided equity for this second tranche, says the company. Noesis has raised roughly $20 million to date.

Njoy, a 7.5-year-old, Scottsdale, Az.-based electronic cigarette maker, has raised $70 million from a investor group that includes Brookside Capital and Morgan Stanley Investment Management. Among the company’s other investors are high-profile entrepreneur-investors Sean Parker andPeter Thiel. The New York Times has much more on the company and the industry it’s now operating in here. To date, Njoy has raised roughly $165 million. (It had raised another big slug of $75 million in June of last year.)

RainDance Technologies, a 10-year-old, Lexington, Ma.-based company that tries making molecular testing of complex diseases more standardized and readily available, has raised $16.5 million in additional Series E financing from new investors GE Ventures and Northgate Capital. All of the company’s earlier backers — including Mohr Davidow Ventures,Quaker BioVenturesAlloy VenturesAcadia Woods Partners,Sectoral Asset Management, and Capital Royalty Partners – also participated in the round, which brings the company’s total funding to more than $100 million.

Skillshare, a 4.5-year-old, New York-based online “community marketplace,” where anyone can ostensibly learn from anyone else, has raised $6.1 million in fresh funding, according to an SEC filing. The company has raised $10.8 million altogether, shows Crunchbase, including from Union Square VenturesSpark CapitalFounder CollectiveCollaborative FundSV Angel, and Vegas Tech Fund.

SwiftShift, a two-year-old, London-based startup whose online platform makes it easier for companies to account for and organize employee shifts, has raised an undisclosed amount of funding from the Indian Angel Network, Asia’s largest angel network, and Ankur Capital.

Top10 [dot] com, a three-year-old, London-based hotel metasearch site, has raised $8 million in Series B funding led by Balderton Capital. The company has now raised $12.5 million from investors, including Accel Partners. TechCrunch has much more on the company here.

YuppTV, a five-year-old, Alpharetta, Ga.-based online broadcasting service focused squarely on the Indian market (it features TVs, movies, and live events, among other things), has raised $2.5 million, according to an SEC filing that doesn’t disclose the company’s investors. It appears to be the company’s first major funding round.

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New Funds

Abingworth, a 41-year-old, London-based investment group that backs life sciences and healthcare deals across all stages of development, from early-stage deals to investment in public companies, has held a final close on a new, $375 million, fund called Abingworth Bioventures VI (ABV VI), which is the firm’s 10th life sciences fund. The firm, which invests in both Europe and the U.S., says it expects to invest the new pool of capital in 15 to 20 new companies.

DreamIt Ventures, a 6.5-year-old, Austin, Tx.-based venture capital firm specializing in incubation and seed investments, has raised $9.3 million for a second fund that looks to be targeting $50 million, according to an SEC filing. Its affiliated, Philadelphia-based business accelerator, DreamIt, invests $25,000 and takes a 6 percent common-stock stake in each startup to pass through its program; DreamIt also secures the right to invest in first funding rounds. Among the newest startups it has helped groom and back is Cheggin, a Boston-based messaging app that allows fans to interact in real-time.

Innovation Capital, an 18-year-old Paris, France-based venture firm that focuses on healthcare services and backs both early- and late-stage companies, has held a first close of roughly $67 million on its latest fund, which is targeting a reported €100m (or $168 million). The fund will be used to invest in European-based companies.

Tylt Lab Partners, a year-old, Santa Monica, Ca.-based seed-stage investment fund, has raised $2 million, according to an SEC filing. The company’s founders include serial entrepreneurs Rami Rostami and Gerald Casale.

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IPOs

GrubHub, the 10-year-old, Chicago-based online food ordering service, has filed for a $100 million IPO. Grubhub and Seamless merged last year; the companies had collectively raised at least $135 million from investors. Its biggest shareholders, according to the filing, are Spectrum Equity, which owns 12 percent of the company; GS Capital Partners, which owns 8.9 percent; Thomas H. Lee Partners, which owns 8.9 percent;Benchmark, which owns 8.3 percent; and Origin Ventures, which owns 6.2 percent. (Relatedly, Quartz pores over the filing to determine that a.) GrubHub takes a 13.5 percent cut of their average delivery order, and b.) restaurants pay more to appear higher in the service’s search results.)

HubSpot, the nearly eight-year-old, Cambridge, Ma.-based online marketing software company, is working with Morgan Stanley to launch an IPO in 2014, reports the WSJ. HubSpot has raised roughly $100 million from investors, including Scale Venture PartnersMatrix Partners,General Catalyst PartnersSequoia CapitalGoogle Ventures, andSalesforce.

Ignyta, a three-year-old, San Diego-based biotechnology company focused on autoimmune diseases, has registered paperwork with the SECto raise up to $46 million in IPO. Ignyta has raised roughly $60 million from investors, including City Hill VenturesColt Ventures, and Silicon Valley Bank. (According to the filing, City Hill — run by Ignyta’s CEO and cofounder, Jonathan Lim – owns more than 5 percent of the company’s shares; Colt Ventures isn’t named.)

Varonis, an eight-year-old, New York-based data security firm that went public on Friday, pricing 4.8 million shares at $22 per share, saw its shares close at $44. The company’s now billion dollar valuation (roughly) puts it in league with numerous high-tech firms with Israeli connections that have been similarly valued over the last 12 months, notes Haaretz, including Ra’anana-based Waze, the mobile navigation application developer acquired by Google last year for $1 billion, and Viber, the Cyprus-based, Israeli-run mobile communications app developer. Japan’s Rakuten acquired the company last month for $900 million.

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Exits

FreeWheel, a 6.5-year-old, San Mateo, Ca.- based video ad-serving platform for many TV networks that stream their content online, is on the cusp of being acquired by Comcast for $320 million, reports TechCrunch. FreeWheel has raised $37 million over the years, including fromFoundation CapitalBattery VenturesSteamboat Ventures, and Turner Broadcasting.

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People

Tony Bates, Microsoft’s EVP of business development and evangelism, and Tami Reller, the company’s EVP of marketing, are leaving the company, sources tell Re/code. No word yet on where either is headed.

Rohit Khanna, an IP attorney with Wilson Sonsini, is hoping to unseat Congressman Mike Honda, whose district is located in the heart of Silicon Valley. Khanna has a long list of Silicon Valley bigs in his corner, too, including Facebook COO Sheryl Sandberg, Zynga founder Mark Pincus, and famed VC John Doerr. PandoDaily doesn’t think much of him, though, calling him an “owned” man who doesn’t know what he stands for aside from tax breaks for corporate giants.

Alex Stamos, CTO of the domain hosting firm Artemis Internet and a primary organizer of the annual one-day security conference TrustyCon, is joining Yahoo as its chief information security office, reports Re/code.

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Happenings

Microsoft’s three-day Sharepoint conference kicks off in Las Vegas this week, featuring a keynote with President Bill Clinton. Details are here.

Morgan Stanley’s Technology, Media & Telecom Conference also gets underway today, at San Francisco’s Palace Hotel. If you aren’t going, you can register for its Webcast here.

It’s almost time for South by Southwest. Do you have your ticket? (Event details here.)

Dent the Future has boondoggle written all over it, but you need one of those every now and then. March 22nd through the 26th.

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Data

Speaking of Israel (see the Varonis snippet above), it netted more from VC-backed exits last year than New York, says CB Insights.

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Job Listings

CalPERS is looking to hire three investment officers, ranging from a junior employee to two more senior positions.

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Essential Reads

Homes in San Francisco are selling for 60 percent to 80 percent over asking price, most within 16 days of being listed. “We’re in an absolute housing crisis right now,” Scott Wiener, a San Francisco supervisor, tells the New York Times.

Tesla has big plans to produce lithium ion batteries at a huge scale. If it succeeds, observes Wired, “Tesla could be a company that powers just about everything, from the phone in your pocket to the electrical grid itself.”

Web developers and engineers on the spammy economics of tech recruitment emails.

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Detours

Uber cab confessions.

The high-risk world of Instagram storm chasers.

Steven Brill on how an unlikely group of high-tech wizards – including Mike Abbott, a general partner at Kleiner Perkins – revived the deeply troubled HealthCare.gov site.

A creative dad illustrates some of the things he finds himself telling his young children.

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Retail Therapy

AeroBull, a speaker for a very specific aesthetic.

A new “life tech jacket” with a tri-layered waterproof and windproof system and a wearable first-aid and survival kit. Perfect, depressingly, for everyone living in the Northeastern United States right now.

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  1. […] software, clean technology, digital health and entertainment startups. (Note: StrictlyVC reported last Monday that the firm had raised $2 million, based on its SEC filing, which wasn’t the complete […]

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