StrictlyVC: March 25, 2014

Good morning! Slightly abbreviated issue today as StrictlyVC is running behind on all kinds of things. Hope you have a great Tuesday, though, and we’ll see you back here tomorrow.:)

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Top News in the A.M.

The Obama administration is reportedly preparing to unveil a new legislative proposal that would end the N.S.A.’s systematic collection of data about Americans’ calling habits and allow it to obtain specific records only with permission from a judge, using a new kind of court order.

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An Early Bet on Box Looks to Pay Big Dividends

A few weeks ago, I talked shop with DFJ managing director Josh Stein about everything from Bitcoin (he’s bearish on the digital currency) to which firms are doing the most “fringe” investing (Khosla Ventures, Founders Fund, Google).

Naturally, one of the topics we covered was Stein’s very early investment in the online storage company Box. It was a “very risky bet,” as he said at the time. Lucky for DFJ, as it turns out.

When yesterday afternoon Box publicly revealed its plans to raise up to $250 million in an IPO, many were surprised by the size of DFJ’s stake. Its 25.5 percent of the company is nearly twice the size stake of Box’s next-biggest shareholder, U.S. Venture Partners, which owns 13 percent. It also dwarfs the ownership positions of Box cofounders Aaron Levie and Dylan Smith, who respectively own 4.1 percent and 1.8 percent.

Altogether, Box has raised $414 million, including its most recent, $100 million, round, which closed in December at what Levie told reporters was a $2 billion valuation. None of the firms that led Box’s later rounds are listed on its S-1; meanwhile, DFJ, which invested a total of $30 million in the company, could clear roughly $500 million if Box maintains its current valuation.

When I’d asked Stein what he saw in Levie and Smith seven-plus years ago, he told me that DFJ always looks for two things: “Markets that have the potential to be big, and entrepreneurs who are passionate and driven and kind of unreasonable. They aren’t willing to accept the conventional wisdom. They’re doing things that by their nature are very hard, and most people will tell them they’re wrong, and they’re so committed in their vision that they bull through that.”

Even though Box had just thousands of users at the time, Stein saw a big market opportunity. It “struck us as a product that could be very horizontal – not just for salespeople or doctors but for everybody,” he said.

Also, Levie and Smith were appropriately unreasonable. They were “obviously sharp, bright, and hard-working,” Stein observed, noting that when presented with questions they couldn’t immediately answer, they’d often provide long, thoughtful responses within a few hours.

But Stein also based his investment thesis on something that firm cofounder Tim Draper told him when he first joined the firm. Draper had told Stein to “think why something could work, rather than why it couldn’t.”

Why not, indeed.

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New Fundings

Amplidata, a six-year-old, Lochristi, Belgium-based storage technology company, has raised $11 million in funding led by Intel Capital. Earlier investors including Endeavor VisionHummingbird VenturesQuantum Corp. and Swisscom Ventures also participated in the round. The company appears to have raised roughly $34 million to date.

Clever, a two-year-old, San Francisco-based startup that’s been developing a standardized API that makes it easy for K-12 schools to more effectively use their data and for developers to access and build applications on top of it, has raised $10.3 million in Series A funding led by Sequoia Capital. Y Combinator founder Paul Graham, Y Combinator president Sam Altman and investment banker Deborah Quazzo also participated in the round, which brings Clever’s total funding to $13.3 million.

Demandbase, a 7.5-year-old, San Francisco-based company that develops B2B marketing services, has raised $15 million in new funding led by Greenspring Associates, with participation from Scale Venture PartnersSigmaWestAltos VenturesCostanoa Ventures and Adobe Systems. The company has raised roughly $33 million to date, shows Crunchbase.

Hired, a nearly two-year-old, San Francisco-based startup aiming to make hiring employees and finding a job easier and more efficient, has raised $15 million in Series A funding led by Crosslink Capital and Sierra Ventures, with participation from SoftTech VC and Sherpa Ventures. The company, which recently changed its name from DeveloperAuction, has raised roughly $17.7 million altogether, including from New Enterprise AssociatesGoogle Ventures, and Haystack.

Hortonworks, a 2.5-year-old, Sunnyvale, Ca.-based Hadoop vendor, has raised a fresh round of $100 million, led by BlackRock and Passport Capital. Earlier investors DragoneerTenaya CapitalBenchmarkIndex Ventures and Yahoo also participated in round, which brings Hortonworks’ total venture funding to $198 million. (As GigaOm notes, the raise comes roughly one week after its largest competitor, Cloudera, announced a new, $160 million, round of its own.)

KinDex Pharmaceuticals, a 10-year-old, Seattle-based biotechnology company that’s developing drugs for people with diabetes, among other things, has raised $5 million in funding led by Polaris Partners, which was joined by numerous individuals. The company hopes to double the size of the round by year end, its CEO, Jeffrey Bland, tells Xconomy in this profile of the company.

Pley, a year-old, San Jose, Ca.-based company that provides subscription services to education toys, has raised $6.75 million in Series A funding led by Allegro Venture Partners, with participation from Floodgate,Correlation VenturesMaven Ventures and Western Technology Investments.

Sonendo, a nearly eight-year-old, Laguna Hills, Ca.-based company developing a tool for use in root-canal procedures at the dentist’s office, has obtained $10 million in debt financing from the specialty financing firmOxford Finance. The money follows a $27 million venture round closed last summer from backers that include OrbiMed AdvisorsThemes Investment PartnersFjord Ventures and NeoMed Management.

Souq.com, the 8.5-year-old, Dubai-based company that is oft-characterized as the Arab world’s answer to Amazon, has raised $75 million in funding from South African media giant Naspers, at a valuation of more than $500 million. The deal is the biggest publicized in the Internet space in the Arab world since Yahoo bought the Arabic Web portal Maktoob in 2009 for $165 million, reports the WSJ. The company has raised $150 million altogether, it says.

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IPOs

Box, the eight-year-old, Los Altos, Ca.-based online storage company, has filed its long-anticipated S-1, but revelations that the company’s losses are outpacing its revenue has competitors feeling nervous. “While news of Box’s official filing for IPO brings a lot of excitement to our market, the public release of their financials raises a lot of concern,” says Egnyte CEO Vineet Jain to VentureBeat. “It is public knowledge now that Box has claimed over $360 million in deficits to date, with no solid roadmap to profitability. This seems to have become a trend lately where companies are being rewarded with huge valuations for simply having a large customer list.”

GrubHub, the 10-year-old, Chicago-based online delivery services company, said in an amended prospectus yesterday that it expects to price its IPO of roughly 7 million shares at $20 to $22 per share, valuing the company at up to $1.72 billion. Reuters has more.

Vice Media Group, a 20-year-old, New York-based media company known for melding online journalism with punk culture, is poised to double revenue to $1 billion by 2016 and may pursue an IPO, co-founder Shane Smith said yesterday in an interview with Bloomberg TV. “We’d be stupid not to test what the market would bear,” said Smith. “There’s a lot of money sloshing around in the system, obviously valuations are high.” The company raised $70 million last summer from Fox Interactive Media.

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Exits

Cyvera, a 2.5-year-old Tel Aviv, Israel-based security startup, has been acquired by the publicly traded network security firm Palo Alto Networks for roughly $200 million. Cyvera had raised $11 million in funding in August from Blumberg CapitalBattery Ventures, and individuals Ehud Weinstein and Ofir Shalvi.

It’s official, kind of. Maker Studios, a 4.5-year-old, Culver City, Ca.-based company that develops and publishes YouTube entertainment videos, is being acquired by media giant Disney for $500 million or more, a source tells Reuters, two weeks after Re/code sources suggested it would. The sale will be by far the biggest bet by a traditional media company in a company built on top of YouTube. Maker has raised around $70 million to date, including from Greycroft PartnersUpfront VenturesTime Warner Investments, and Northgate Capital.

StatSoft, a 30-year-old, Tulsa, Ok.-based company that specializes in analytics and data visualization software, is being acquired by Dell for undisclosed terms, in an ongoing effort to boost Dell’s software and services, reports ZDNet.

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People

A House of Representatives committee has launched an inquiry into whether former Vice President Al Gore attempted to “inappropriately influence” the use of federal grant dollars to acquire electric buses in Long Beach, Ca., in favor of a company in which Kleiner Perkins Caufield & Byers has an interest. (Gore became a partner at Kleiner in 2008.)

Rick Levin, who served as the president of Yale University, has just joined the Mountain View, Ca.-based online course company Coursera as CEO, reports Re/code. It’s a huge coup for the company and seemingly a perfect fit for Levin, a Stanford grad who received his PhD from Yale and went on to become the longest-serving president in the Ivy League. (He served from 1993 through the end of the 2012 academic school year.) With Levin’s appointment, Coursera, co-CEOs Andrew Ng and Daphne Koller, both professors on leave from Stanford, will take different operational roles.

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Job Listings

Union Square Ventures is looking for an analyst, a two-year stint that managing director Fred Wilson likens to a “USV MBA.” The deadline toapply is April. (H/T: Mattermark)

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Essential Reads

Google has tied up with talian eyewear maker Luxottica SpA, owner of the Ray-Ban and Oakley sunglass brands, which will design, develop and distribute new versions of Google Glass, reports the WSJ.

On the heels of the news that secondaries specialist Paul Capital is winding down operations after failing to find a buyer for its business, Fortune’s Dan Primack criticized the firm — which has laid off most of its staff — for continuing to collect management fees. Paul Capital didn’t respond to Primack’s requests for comment, but it’s now defending itself in an interview with peHUB editor Chris Witkowsky, arguing that “some of [its stakes] don’t require a lot of attention, but some do.”

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Detours

Truly amazing tree houses.

A little girl and her dog: A photo series.

“Homeland” actor James Rebhorn, who passed away last week after an extended battle with skin cancer, wrote his own obituary before passing and it’s beautiful.

A recent study has shown that if American parents read one more long-form think piece about parenting they will go ape ___.

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Retail Therapy

An update on the piggy bank.

Cassette tape tables.

Channel your inner eight-year-old; buy yourself a slingshot!

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