StrictlyVC: March 20, 2014

Good Thursday morning, everyone!


Top News in the A.M.

Airbnb is reportedly in “advanced talks” to raise more funding at a $10 billion valuation. (That’s major league. HomeAway, the now publicly traded vacation rental site, is valued at $3.9 billion.)

A month after Fitbit issued a recall of its fitness-tracking bracelet following complaints of blisters and rashes, the startup now faces its first class-action lawsuit, reports the WSJ. At the time of the recall, Fitbit reported to the Consumer Product Safety Commission that it was aware of about 9,900 cases of consumers having a skin reaction after wearing its product.


At Six Months, Syndicates is Maturing, Without Some Big Names

When AngelList launched its “syndicates” program last September, AllThingsD anointed one investor, Kevin Rose, as its “million dollar man.” The reason: within a week of AngelList making it possible for backers to put their money behind one individual, Rose collected more than $1.1 million in commitments.

Rose, a Google Ventures partner, told his 245 backers that he planned to participate in five seed investments per year on the platform. But six months later, he hasn’t invested in any. Both MG Siegler of Google Ventures and Path cofounder Dave Morin, who also quickly attracted hundreds of thousands of dollars to syndicate deals, haven’t pulled the trigger on anything, either.

Neither Google Ventures nor Morin responded to a request for comment. But AngelList cofounder Naval Ravikant has a theory based on his own investing experience. “I think some [investors] assembled syndicates but didn’t know what to do with them. I think some are scared because the platform is very transparent. [An investment] is going to be tracked. People will see the deal in detail. There’s no hiding anything, and it causes people to freeze up a bit.”

Some have painted another picture of why Rose may not be syndicating deals on the platform. One source cites a low volume of high-quality deals, while another says that if there’s enough demand for a startup’s seed round, there’s no reason to include a syndicate.

It seems entirely possible, too, that it’s harder for full-time VCs to justify their involvement with the platform until it’s better understood. Google Ventures, as a single LP fund, might also be struggling with whether to essentially create a separate management company around of its partners.

Perhaps unsurprisingly, Ravikant rejects each one of these ideas, noting that both venture firms and LPs are showing increased interest in syndicates, including Maiden Lane, a new fund backed institutional investors that will invest both directly in syndicates and in direct investment opportunities found elsewhere on AngelList’s platform.

Ravikant further insists the quality of the deals being syndicated is “actually quite good.” He points to AltSchool, a year-old, San Francisco-based company that’s creating a brand-new network of schools. On Tuesday, the company announced that it has raised $33 million in Series A funding led by Founders Fund and Andreessen Horowitz. Among AltSchool’s other, earlier investors is former Wikia CEO Gil Penchina, who syndicated the investment on AngelList.

Ravikant also notes that syndicate leads can choose whether information about a deal will be made available to the general AngelList investor community or to specific backers only, suggesting that some of the program’s best startups are being funded under the radar. He highlights Ben Davenport, whose mobile messaging startup, Beluga, was acquired by Facebook and turned into Facebook Messenger. Davenport recently syndicated an investment in NYBX, a New York-based company focused on cryptocurrencies. By design, his backers are serious Bitcoin investors only, and “unless you were one of Ben’s LPs,” says Ravikant, you didn’t see it.

I ask Hunter Walk of the venture firm Homebrew about his experience with the platform. Last September, his firm led a $2.1 million investment in the shipping startup Shyp, some of which came from a syndicate led by entrepreneur-author Tim Ferris. It created a lot of press at the time or Shyp, but in retrospect, was it worth it? Walk says it was. “Tim was able to assemble a great set of angels – some known, some new to investing – but we saw his participation as strategic.”

AngelList’s syndicates program is “still very much in beta, so going slow,” says Ravikant. “I don’t think [the program] will be hitting its stride until next year.”

In the meantime, he says, there’s “a lot more demand than we can run. Fundamentally, something is working.”


New Fundings

Base, a 4.5-year-old, Chicago-based company behind a CRM tool for sales teams, has raised $15 million in Series B funding led by RRE Ventures and earlier investors Index Ventures and OCA Ventures. Other participants in the round included earlier investors Social+CapitalHyde Park Venture PartnersI2A Fund and numerous angel investors. The company has raised roughly $23 million altogether, shows Crunchbase.

Choozle, a two-year-old, Denver-based media platform for marketers, has raised $1.8 million in seed funding led by Great Oaks Venture Capital. The company has raised $2.3 million altogether.

Ezetap, a three-year-old, Bangalore-based mobile payment company focused on emerging markets (it makes a dongle that turns phones into point-of-sale terminals), has added an undisclosed amount of funding to its Series B round from American Express. Last month, the company announced it had raised $8 million for its Series B, from Helion Advisors,Social+Capital and Berggruen Holdings. That February funding had brought the company’s total funding to $11.5 million.

Invenias, an 8.5-year-old, U.K.-based company that sells cloud software for the executive search and recruitment industry, has raised $500,000 in expansion funding from MMC Ventures, which led the company’s $1.5 million Series A round last July.

Gem Pharmaceuticals, a 13-year-old, Birmingham, Al.-based clinical-stage biopharmaceutical company that develops proprietary anthracycline derivatives, has raised $4.5 million in funding. The investors were current board members Diane Hendricks and Karl Leo.

LeanData, a two-year-old, Sunnyvale, Ca.-based business data startup, has raised $5.1 million in Series A funding. Shasta Ventures led the round with participation from Felicis VenturesCorrelation Ventures and the Funders Club.

NinePoint Medical, a 4.5-year-old, Cambridge, Ma.-based medical device firm that aims to give doctors a better picture of patients’ organs, has raised $34 million in Series B funding led by Corning, along with founding investors Third Rock Ventures and Prospect Venture Partners. The company has raised $67.6 million altogether, according to Crunchbase.

Oculeve, a two-year-old, South San Francisco-based medical device company that spun out of Stanford University to treat dry-eye condition, has raised more than $16.6 million in funding, according to an SEC filing. Oculeve had raised $7.6 million in Series A funding in October 2012 fromKleiner Perkins Caufield & ByersVersant Ventures and New Enterprise Associates.

Verdasys, an 11-year-old, Waltham, Ma.-based advanced data protection company, has raised $12 million from earlier backers GE Pension Trustand Fairhaven Capital, with participation from Brookline Venture Partners.

What3words, a 10-month-old, U.K-based startup that makes it easier to pinpoint and share a location, has raised $1 million in seed funding from undisclosed investors, reports TechCrunch. The company had announced a separate, $500,000 in seed funding last November from angel investors.

Tango, a 4.5-year-old, Mountain View, Ca.-based social networking app, has raised $280 million in Series D funding led by Chinese e-commerce and Internet giant Alibaba Group, which contributed $215 million. The company has now raised a total of $367 million in venture funding, including from DFJQualcomm Ventures and former Yahoo CEO Jerry Yang.


New Funds

Accel Partners, the 31-year-old venture capital and growth equity firm, has raised two new funds totaling $1.475 billionAccel XII, a $475 million fund to concentrate primarily on early-stage investments, and Accel Growth III fund, a $1 billion pool for later-stage deals. The firm also announced that longtime managing director Jim Breyer would be scaling back his role, a process that appeared to begin around the May 2012 IPO of Facebook, which Accel famously backed early on. (I asked Breyer about it nearly two years ago, as it became clear that he was becoming more focused on his own personal investment vehicle, Breyer Capital.)

Top Tier Capital Partners, the three-year-old, San Francisco-based investment firm has raised roughly $445 million for its first venture capital funds of funds, according to regulatory filings and a source close to Dow JonesTop Tier Venture Capital VI and Top Tier Venture Capital VI-Bwere reportedly targeting $400 million. Top Tier spun out of Paul Capital, which is winding down its business after a planned sale fell through.



Alder BioPharmaceuticals, a 12-year-old, Bothell, Wa.-based biotech that develops antibodies to treat migraines and arthritis, filed yesterday with the SEC to raise up to $115 million in an IPO. Its biggest shareholders include Sevin Rosen, which owns 23.7 percent of the company; Novo A/S, which owns 12.1 percent; H.I.G. Venture Partners, which owns 11.8; Delphi Ventures, which owns 11.4 percent; and TPG Biotechnology Partners II, which also owns 11.4.

Versartis, a 5.5-year-old, Redwood City, Ca.-based startup working on treatments for growth hormone deficiency, boosted the expected size of the IPO it’s planning for Friday by nearly 50 percent. Its biggest shareholders are New Leaf Venture Partners, which owns a 24.4 percent stake; Index Ventures, which owns 22.4 percent; Advent Life Sciences; which owns 16.3 percent; Aisling Capital, which owns 11.9 percent; and Sofinnova Ventures, which owns 6.8 percent.



GPS Global, a 6.5-year-old, Kfar Saba, Israel-based research, development, and services firm, has been acquired by SecureAlert, a Sandy, Ut.-based maker of digital monitoring software. No terms were disclosed.

Knotice, an 11-year-old, Akron, Oh.-based digital marketing company, has been acquired by IgnitionOne, a cloud-based digital marketing technology company. Terms of the deal were not disclosed. Knotice had raised $500,000 from the Cleveland-based venture development organization JumpStart.

TagMan, a six-year-old, London-based tag management and marketing data platform, has been acquired by Ensighten, a 4.5-year-old, Cupertino, Ca.-based rival. Terms were not disclosed. TagMan had raised $13.5 million from investors, including Greycroft PartnersiNovia Capital, and Cambridge Business Angels. Ensighten has raised $55.5 million from investors, including Insight Venture PartnersVolition CapitalLeadEdge Capital, the Halo Fund, and Floodgate.

Webedia, a 1.5-year-old Paris-based digital publishing company, has been acquired by Diwanee, a Dubai-based digital media company, for undisclosed terms. The outlet Wamda has much more.



Zulily CEO Darrell Cavens is officially a billionaire, observes Bloomberg. Shares of the retailer, which went public in November, closed at $62 in New York yesterday; Cavens’ 17 percent stake in the business is right now valued at roughly $1.4 billion.

Inside Philanthropy doesn’t like to name names, but it just published a list of the 12 most generous tech leaders, and 6 of the the least generous, based on the size of their charitable gifts relative to their fortune.

Andy Hunt has been promoted from principal to partner at Highland Capital Partners. Hunt cofounded Warby Parker; he also spent several years as an investment banker after graduating from Wharton.

Y Combinator alums Justin Kan and Aaron Harris are Y Combinator’s newest partners, according to TechCrunch. More here.

Yesterday, in conversation with interviewer Charlie Rose at the TED conference, Google‘s Larry Page reportedly said of the U.S. government, which hasn’t been very transparent with Google: “I don’t think we can have a democracy if we have to protect you and our users from stuff that we’ve never had a conversation about.” (Here’s more of the interview, if you’re interested.)

Billionaire Alisher Usmanov is dumping U.S. tech companies for China-based tech investments. “Chinese companies account for about 70 percent to 80 percent of the portfolio of our foreign Internet investments,” the head of Usmanov’s asset-management company tells Bloomberg. “Most of the investments are in “ and some other companies with great potential,” he says.


Job Listings

Lab IX, the months-old accelerator business of hardware giant Flextronics, is looking for an associate. The job is in San Jose, Ca.


Essential Reads

SecondMarket hopes to open up its private bitcoin investment fund to ordinary investors as soon as the fourth quarter, potentially beating a rival offering by the Winklevoss twins, who’ve applied to create an exchange-traded fund specializing in bitcoin. The WSJ has more here.

In November, news leaked that Twitter had started work on encrypting direct messages in order to prevent unauthorized snooping by hackers or the state. As The Verge now reports, that project was dropped earlier this year without explanation – not even to the employees who were working on it.



A floating coworking space that is rusty, drafty, encrusted with birds’ nests, and laden with fish carcasses is luring some of the brightest minds in the Bay Area, says 7×7.

A weatherman gets punked.

Spiderman’s Biggest. Battle. Yet. Is Coming. This Summer. (Here’s the trailer.)


Retail Therapy

Two words: banana holder.

Two more words: Body Dryer.

[Takes bow.]


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