StrictlyVC: March 6, 2014

Happy Thursday morning!

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Top News in the A.M.

Wow, Newsweek says it has tracked down the person behind Bitcoin, its investigation leading to a 64-year-old California man with a “penchant for collecting model trains and a career shrouded in secrecy, having done classified work for major corporations and the U.S. military.”

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DCM Reboots with a New Fund and Three Fewer GPs, Including Dixon Doll

case you haven’t noticed, the global, early-stage venture firm DCM has been killing it in recent years. Since 2009, 15 of its portfolio companies have exited, many through highly successful IPOs. For example, DCM owned 20 percent of the China-based online retailer VIPshop when it went public in 2012 with a market cap of $600 million. Today, the company is valued at $8.7 billion.

Eighteen-year-old DCM, which invests in the U.S, China, and Japan, doesn’t appear to be resting on its laurels. This morning, the firm is announcing its seventh, $330 million, venture fund. It’s also disclosing that longtime general partner Carl Amdahl and general partner and cofounder Dixon Doll will no longer be investing in new companies on behalf of the firm, a plan that has been in the works for several years, says general partner Jason Krikorian. (A third general partner, Gen Isayama, who opened DCM’s office in Tokyo in 2009, left last year to launch a new fund, which StrictlyVC wrote about in January.)

On Tuesday, I chatted with Krikorian about the latest developments at the firm. Here’s part of that conversation, edited lightly for length.

DCM clearly could have raised a bigger fund. Why didn’t it?

For a few reasons. First, it has to do with where we think the sweet spot is, meaning the amount of money that [early-stage] investors should manage, and we think it’s between $50 million and $60 million per GP. [Editors note: DCM now has six active GPs.]

This new fund also marks a bit of a transition for Dixon and Carl and it’s important for LP relations to have a long-planned out transition period; it’s part of the reason I was brought in [in 2010]. Also, it’s very tempting for funds to get bigger, but we think small teams operate better.

DCM invests in three geographies. Which of them attracts the most of the firm’s capital?

In the past, it’s really been balanced, with half in the U.S. and half in Asia, which is still dominated by China. Our returns in Japan have been good but there are far fewer startups to see; Japan still has a big company culture, so the best and brightest still go that route.

You raised your sixth fund in 2010, but you assembled a couple of other side vehicles around the same time, right?

Yes, we had raised [DCM VI] when I first joined, and we created two other funds simultaneously. One was an RMB (yuan) fund that primarily focused on later-stage China investments that we’d invested in [and wanted to back again]. We used that, for example, to invest more in both VIPshop and 58.com. It was a fund that we invested at basically $15 million a pop.

The other fund was an Android fund that was backed by Asian-based corporates in China, Japan and Korea that viewed Android as a significant global opportunity. Some of the key LPs of that fund are [the Chinese investment holding company] Tencent, KDDI [which is one of Japan’s largest mobile phone operators], and NHN [which owns one of the largest search engines in South Korea].

That fund has also been really great and given us a lot of flexibility to do deals where we put in a few million dollars at a valuation in the high, double-figure millions, including [South Korean messaging company] Kakoa, which now has something like 95 percent penetration of the [regional] population. [Editor's note: The WSJ recently reported that the company is talking with bankers about an IPO that would value it at $2 billion.]

Will we see you raise similar side funds this time around?

There’s interest [from LPs] as you might imagine, but we don’t have any definite plans to do [either]. We kind of view this new fund as a consolidation of those efforts.

You had a personal win this week with the wearable device maker Basis, the first deal you led for DCM. How has the wearables and hardware space changed in the three-plus years since you made that investment?

There’s a perception that this is a great time for hardware companies, and I think it’s true. There’s a more cooperative supply chain, [booming] capital markets, and a more favorable marketing environment with social media and blogs, so word gets out about great products.

But I still think VCs are primarily funding the aggressive growth of the guys who’ve really broken out, so Fitbit, Jawbone, Nest. I still think there’s a lack of comfort around funding early-stage hardware companies pre-launch…because [a device] isn’t a Web service that can be tweaked. For instance, we backed Whistle [a health monitor for dogs] and 20,000 units just moved onto the shelves at [pet retail giant] Petsmart, and they have to work.

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New Fundings

AppsFlyer, a three-year-old, New York-based based mobile app tracking and campaign measurement platform, has raised $7.1 million in Series A funding from Pitango Venture Capital and Magma Venture Partners.

Boxever, an 18-month-old, Dublin, Ireland-based big data and personalization platform for airlines and travel operators, has raised $6 million in funding led by Polaris Partners, with local Dublin firm Frontline Ventures also participating. According to Crunchbase, the company had previously raised $1 million in seed funding from Delta Partners and Bloom Equity.

Business Insider, the seven-year-old, New York-based online media company, has raised $12 million in new funding from investors including RRE VenturesInstitutional Venture Partners, Amazon CEO Jeff Bezos and publishing execs Jim Friedlich and Gordon Crovitz. The company will use some of the money to finance a launch into the U.K. Business Insider has raised $30 million altogether.

Canary, a two-year-old, New York-based home security company, has raised $10 million in Series A funding from Khosla Ventures and earlier investor Two Sigma Ventures. The company had previously raised an undisclosed amount of seed funding from Two Sigma and Brooklyn Bridge Ventures.

CloudBees, a 3.5-year-old, Woburn, Ma.-based SaaS company that accelerates the delivery of mobile and online applications, has raised $11.2 million in Series C financing led by Verizon VenturesMatrix PartnersLightSpeed Venture Partners and Blue Cloud Ventures also participated in the round, which has brought the company’s total funding to $27.7 million, shows Crunchbase.

GuideSpark, a 5.5-year-old, Menlo Park, Ca.-based employee communications software platform, has raised roughly $15 million in new funding led by New Enterprise Associates. Earlier investors Storm Ventures and IDG Ventures also participated in the round. The company has raised $20 million to date.

Health Outcomes Sciences, a four-year-old, Overland Park, Ka.-based healthcare IT company that uses peer-reviewed clinical research to create predictive analytics, has raised $5 million in Series A funding from Kansas Bioscience Authority and Grayhawk Capital. The company has raised $8 million so far.

Javelin, a four-year-old, New York-based whose enterprise software helps teams define, run, and track so-called “lean” experiments at big companies, has raised $1.5 million in funding led by Upfront Ventures, with participation from 500 Startups and more than a dozen individual investors, including “Lean Startup” author Eric Ries.

Lotame, a 7.5-year-old, New York-based data management platform, has raised $15 million in Series D funding led by Sozo Ventures andTrueBridge Capital Partners. Earlier investors Battery Ventures,Emergence Capital Partners and RJ Finlay & Co also participated in the round, which brings Lotame’s total funding to $44 million.

NephroPlus, a 4.5-year-old, Hyderabad, India-based company that operates a chain of dialysis centers, has raised $10 million in Series B funding from International Finance Corp (the private sector lending arm of the World Bank), and earlier investor Bessemer Venture Partners. The company has raised roughly $15 million to date.

NextGxDx, a three-year-old, Nashville, Tn.-based genetic testing marketplace, has raised an undisclosed amount of Series B funding led by Voyent Partners, which was joined by the Nashville Capital Network. Last year, the company raised $1 million in angel funding, including from JumpStart Foundry.

Omnidrone, an 18-month-old, Barcelona, Spain-based mobile gaming company, has raised $2 million in its first institutional funding from Nokia Growth PartnersLondon Venture Partners and Kibo Ventures.

OnDeck, the 6.5-year-old, New York-based tech-powered alternative lending company that provides working capital and loans to small businesses, has raised $77 million in fresh funding led by Tiger Global Management. Earlier investors Institutional Venture PartnersRRE VenturesSAP VenturesGoogle VenturesFirst Round Capital,Industry Ventures and Peter Thiel all participated in the financing, which brings OnDeck’s total funding to date to $180 million in equity and more than $300 million in debt financing.

Payoneer, an 8.5-year-old, New York-based payment-technology startup, has raised $25 million in Series D financing led by private equity firm Susquehanna Growth. Earlier backers Carmel VenturesGreylock Partners and Vintage Venture Partners also participated in the round. The company has raised roughly $40 million to date, according to Crunchbase.

Persimmon Technologies, a 3.5-year-old, Zurich-based hybrid-field motor technology company, has raised an undisclosed amount of funding from ABB Technology Ventures. Persimmon had raised an earlier, $6 million round, from Intel Capital and other investors.

SocietyOne, an 18-month-old, Syndey, Australia-based peer-to-peer lending company, has raised $8.5 million in a Series A funding from the newly launched Australian venture fund Reinventure, Munich-basedGlobal Founders Capital and a private investment from Justin Reizes, the head of KKR Australia.

Surveying And Mapping (SAM, Inc.), a 20-year-old, Austin, Tx.-based company that provides geospatial data services to oil companies, cities needing to survey streets, and many other types of customers, has raised an undisclosed round of funding from Austin Ventures.

TreSensa, a three-year-old, New York-based mobile game distribution company, has raised a $2 million Series A round led by Caribou Asset Management, with participation from angel investors, including Tremor Video co-founders Jason Glickman and Andrew Reis, American Media CEO David Pecker, and AdMeld founder Ben Barokas. TreSensa has raised roughly $3.5 million to date.

TripleLift, a two-year-old, New York-based ad tech startup that helps companies turn their brand images on the Web into ads, has raised $4 million in Series A funding led by True Ventures. Earlier investors iNovia CapitalNextView VenturesMESA+Liberty City VenturesSocial StartsLaconia Ventures, the Social Internet Fund and several individual investors also participated in the round, which brings the company’s total funding to just more than $6 million.

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New Funds

CrossCoin Ventures, a new outfit led by serial entrepreneur Gary Kremen, has launched a digital currency accelerator that will be based in San Francisco. GigaOm has much more here.

Founders Fund, the nine-year-old, San Francisco-based venture capital firm cofounded by early Facebook investor Peter Thiel, has raised $1 billion for its fifth fund, a huge jump from the firm’s $50 million debut fund and even from its $250 million third fund, closed in 2010. “We want to find companies across all sectors and stages that are passionate about developing technologies to address the world’s most critical problems,” Founders Fund partner Luke Nosek said in a statement. Founders Fund has become known for seeking out ambitious ideas around robotics, space, and personalized healthcare, among other things, and counts SpaceX and Palantir Technologies among its sundry portfolio companies.

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IPOs

Adamas Pharmaceuticals, a 14-year-old, Emeryville, Ca.-based specialty pharmaceutical company focused on chronic disorders of the central nervous system, has filed paperwork with the SEC to raise roughly $70 million in an IPO. The company’s biggest shareholders include Mohr Davidow Ventures, which owns 32.4 percent of the company; Aeris Capital Equity Investments, which owns 16.9 percent; DAG Ventures, which owns 12.7 percent; and NCD Investors, which owns 6.6 percent.

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Exits

Glad to Have You, a three-year-old, Santa Rosa Beach, Fla.-based maker of hospitality management software for vacation rental professionals, has been acquired by HomeAway, the publicly traded online marketplace for vacation rentals. No financial terms were disclosed. Glad to Have You appears to have raised less than a million dollars in seed funding.

LeisureLink, a 12-year-old, Pasadena, Ca.-based vacation rental booking platform, has been acquired by VacationRoost Group for undisclosed terms. LeisureLink had raised roughly $17 million from Clearstone Venture PartnersMission Ventures, and Wyndham Worldwide. VacationRoost Group, a vacation rental platform, is owned by the private equity group Kinderhook Industries.

Vizify, a three-year-old, Portland, Or.-based startup that turns social media chatter into visualizations, has been acquired by Yahoo, which is shutting down the service. “As for what’s next, we can’t talk specifics just yet, but we’re excited to bring a more visual approach to data at Yahoo,” the company said in a statement. Terms of the acquisition haven’t been disclosed. Vizify had raised roughly $1.5 million in seed funding, including from Portland Seed Fund and TechStars.

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People

Investor-entrepreneur Reid Hoffman, who served on the founding board ofPayPalpublishes a pointed message aimed at activist investor Carl Icahn, who has been flaming eBay‘s board over its stewardship of PayPal: “Sometimes, activist investors can help spur constructive action against CEOs and boards who have been mis-managing a company’s long-term innovation efforts. That isn’t the case with PayPal.”

Beth Jacob, who has overseen everything from Target‘s web site to its internal computer systems as its CIO since 2008, has resigned. Target tells the Associated Press the resignation was Jacob’s idea, but industry observers think someone had to go to restore shoppers’ faith in the company after a massive data breach.

The Winklevoss twins have purchased two tickets from Virgin Galactic to travel to space. In a post about their plans, Tyler Winklevoss likens the brothers to famous explorers throughout time, writing, “Humans have a long tradition of exploring and forging new frontiers, both physically and metaphorically. In the Middle Ages, Marco Polo’s writings—which recounted his 24 years of travel and trade on the Silk Road—built a new and lasting level of economic and cultural awareness between Europe and Asia. 200 years later, they would inspire 15th century explorer Christopher Columbus to search for a shorter route to the Far East by sea.” (There’ smuch more, alas.)

A new Web show called “Zero to IPO” is launching soon and the production, which sounds like a less sensational “Shark Tank,” is looking for high-profile types to appear as mentors on upcoming episodes. Among those already signed up to appear: Ken Chenault, the longtime CEO and chairman of American Express, and Jody Allen, CEO of Vulcan and sister, of course, to billionaire Microsoft cofounder Paul Allen, whose business and charitable endeavors are managed by Vulcan. The site for the show apparently goes live next week. (Thanks to reader Jason for pointing this one out to StrictlyVC.)

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Happenings

Box is hosting a developers conference in San Francisco on Wednesday, March 26, an event that will feature informational sessions with Andreessen Horowitz cofounder Ben Horowitz, Palantir cofounder Joe Lonsdale, and Evernote CEO Phil Libin, among others. Click here to register, and use the promo code nextgendev.

Also coming up in a couple of weeks: CoinSummit San Francisco, a two-day event connecting virtual currency entrepreneurs, investors, and others in industry who want to learn and network. Among those speaking at the event: Andreessen Horowitz cofounder Marc AndreessenDavid Lee of SV Angel, and AngelList cofounder Naval RavikantMore information here.

Meanwhile, if you’re in New York, or will be two weeks from now, you might want to catch the Gigaom Structure Data 2014 event March 19th and 20th. Details are here.

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Job Listings

Lemnos Labs, the San Francisco-based hardware incubator, is looking for a “utility player” to do, well, pretty much everything the partners can’t do. Worth noting: the position could grow into an investing role but isn’t a tracked position from the get-go.

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Essential Reads

The NASDAQ Private Market announced its official launch yesterday, with promises to give companies more control over how their pre-IPO shares are bought and sold. VentureBeat has more on the venture here.

Apple has shifted an estimated $8.9 billion in untaxed profits from its Australian operations to a tax haven structure in Ireland in the last decade, an investigation by The Australian Financial Review has found.

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Detours

Sixteen billionaires who started with bupkis.

The U.S. economy’s big baby problem.

The Dating Ring, a Y Combinator-backed startup, is looking to raise more money to bring a group of “datable” New York women to mingle with a hand-picked set of San Francisco men. You can donate to this questionable cause here.

Sometimes, you just need a “basic, no frills, in-and-out place to cry.” Luckily, there are plenty of places to choose from in New York.

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Retail Therapy

Lifestraw — a cheap drinking tube that removes almost all the disease-causing bacteria, viruses, and parasites in untreated water and has long been distributed by aid groups in sub-Saharan Africa, Asia, and Latin America — has now been incorporated into an expensive sports bottle. (Unexpected but smart.)

Do not, whatever you do, buy several of these Cinnabon Air Fresheners as an office gag. Per a damning Amazon review: “I didn’t need to freshen the office, but since we get cinnamon rolls pretty regularly I was hoping to fake the office out and just make it smell like we had them. This wasn’t going to fool anyone. The general thought of those in the office was that someone had forgotten to flush the toilet after eating a stack of Ginger snaps.”

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