StrictlyVC: April 17, 2014

It’s Thursday! We love Thursdays almost as much as we love Fridays. (Almost.)

Speaking of Friday, please note that StrictlyVC won’t be publishing tomorrow, Good Friday. We’ll have some good stuff awaiting you next week, though, including a look at Trusted Insight, the social network for LPs, and a deep dive into Mithril Capital Management, the two-year-old, late-stage investment firm cofounded by Peter Thiel, which StrictlyVC visited this week.

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Top News in the A.M.

The market’s recent downturn—despite a modest rally this week—has changed the tone in Silicon Valley and has some company directors recalibrating their expectations, renowned venture capitalist Jim Breyer tells the WSJ.

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It’s Demo Day for AngelPad, the Anti Y Combinator

Today, AngelPad, the San Francisco-based incubator, is hosting an invitation-only “demo day” for 150 to 200 angels and VCs, and you can bet these investors are going to bring their checkbooks.

In four years’ time, AngelPad has become one of the most reliable hit machines in Silicon Valley. And it’s done it largely by operating as a kind of anti-Y Combinator, even while the famed incubator was its inspiration.

There’s the cosmetic difference, for starters. While Y Combinator is located in sunny Mountain View, Ca., AngelPad, which also has offices in New York, is situated on a gritty block of San Francisco’s Tenderloin neighborhood. (It’s a little too gritty for its demo day; AngelPad is hosting its event today at an upscale restaurant roughly a mile away.)

AngelPad isn’t as widely known as Y Combinator, and intentionally so. Founder Thomas Korte, who spent seven years as an international product manager at Google, likes to keep things intimate, stressing the importance of community to the startups that pass through AngelPad as well as the network of investors with which he works. (Even the press who can attend its demo day is tightly restricted.)

In another departure from Y Combinator’s mode, AngelPad tends to focus on enterprise companies, typically admitting just one or two consumer-facing startups into each of its “cohorts.” For Y Combinator, working with startups that cater to businesses is a much newer development.

Perhaps the biggest difference, though, is that while Y Combinator looks to grow even bigger, adding ever more partners to work with its startups, AngelPad is, in a sense, shrinking. Korte once relied heavily on former Google colleagues to help mentor startups at AngelPad. Today, he and his wife and AngelPad partner, Carine Magescas, coach all of the startups themselves.

(Korte does make one notable exception. He still arranges for each startup passing through the program to meet once with one of his trusted advisors — friends like Wesley Chan, currently an entrepreneur-in-residence at Google Ventures. It’s a kind of “reality check. You need outside input once in a while,” says Korte.)

Clearly, AngelPad’s approach is working. AngelPad startups in the news include Storefront ($7.3 million Series A led by Spark Capital), Crittercism ($30 million Series C), and Boxbee ($2.3 million seed round), and Korte tells me that another AngelPad company, the mobile advertising startup MoPub – acquired by Twitter for $350 million in stock last fall — will be worth roughly one billion dollars when Twitter’s lock-up expires in the next couple of weeks.

So how does the AngelPad process work? Twice a year, Korte and Magescas stage an open application process that usually attracts about 2,000 applicants who are asked to submit a two-minute video, along with an essay, about their company. The couple then whittles the list down to between 100 and 200 of the most promising teams, interviews each for 25 minutes over a two- to three-month period, then chooses a dozen of them to coach over the following 10 to 12 weeks.

Each team receives $60,000 in exchange for 6 to 7 percent of their company. (AngelPad uses capped convertible notes.) At the end of the program, a demo day is staged, and Korte and Magescas then spend the next six weeks or so working with the startups to secure seed funding.

Most of the money is coming from the couple’s bank account. (Korte was among the first couple of hundred of Google employees.) Korte says “several individuals also participate in each cohort,” and that AngelPad also raised a $7 million fund last year to help fund its startups.

As for what he’s looking for, he mentions numerous things, including “mobile-enhanced” businesses that do things in a way that we’ve always done them but in a more efficient way. (He points to the delivery service PostMates, another AngelPad startup that has gone on to raise significant funding.)

Korte says he doesn’t rule out applicants that are entering well-covered terrain, either, a lesson he learned at Google. “Apart from self-driving cars, Google has almost never been the first in anything, honestly,” he notes. “What they’ve done is be significantly better at every single one of those,” he adds.

Seemingly, the same could be said for AngelPad itself.

DOD

New Fundings

AppsBuilder, a four-year-old, Milan, Italy-based cross-platform tool to create, edit and distribute mobile apps that are compatible with all major mobile devices, has raised $1.5 million in seed funding from United Ventures. The investment brings the company’s funding total to $3.5 million. Previous investors included Annapurna Ventures and Zernike Meta Ventures.

Campaign Monitor, a 10-year-old, Sydney, Australia-based company that makes software for email-marketing pitches, has raised a whopping $250 million in funding from Insight Venture Partners in the first outside funding that Campaign Monitor has raised. The WSJ has more here.

Citymapper, a three-year-old, London-based urban transportation app, has raised $10 million in Series A funding led by Balderton Capital. Other participants in the round included Connect VenturesIndex Ventures, and Greylock Partners, along with numerous unnamed angels.

Consumer United, a 6.5-year-old, Boston-based startup whose online tools allow consumers to compare rates on auto and home insurance, has raised $14 million in new funding co-led by Spark Capital and Thayer Street Partners. Other participants in the round included Village Ventures and Five Elms. The company has raised roughly $70 million to date, shows Crunchbase.

Convergent Dental, a three-year-old, Natick, Ma.-based dental device and technology company that makes a computer-aided, FDA-cleared laser system for both hard and soft tissue indications, has raised $8 million in funding led by Long River Ventures, which was joined by individual investors. Convergent has raised $23 million to date, according to Crunchbase.

Epirus Biopharmaceuticals, a two-year-old, Boston-based company that aims to develop follow-on versions of drugs that are facing patent expiration, has merged with Zalicus, a publicly traded company. It has also raised $36 million in Series B funding to fuel its development of these “biosimilars.” The round was led by the China-based company Livzon Mabpharm. Other participants in this round included Adage Capital,Greenwoods InvestmentGibralt USMonashee Capital Partners, and Mousse Partners, along with earlier investors TPG BiotechMontreux Equity Partners, and 5AM Ventures.

FireHost, a 4.5-year-old Richardson, Tx.-based secure cloud hosting service, has raised $25 million in funding from The Stephens Group, a family office that has provided earlier funding to the company. FireHost has now raised $60 million to date.

ForSight Vision5, three-year-old, Menlo Park, Ca.-based company that’s developing non-invasive products to replace eye drops and provide sustained therapy for major anterior segment eye diseases including glaucoma and dry eye, has raised $15 million in Series C funding led by H.I.G. BioVentures of Miami, Fla. Earlier investors Morgenthaler VenturesVersant VenturesTechnology Partners, and Delphi Ventures also participated in the round.

Kinetic Social, a four-year-old, New York-based social data and marketing technology company, has raised $18 million in Series B funding led by earlier investor Blue Chip Venture Company. The company has raised $26 million across its A and B rounds, shows Crunchbase.

Miret Surgical, a four-year-old, Chicago-based medical device startup focused on non-invasive laparoscopy surgery, has raised $644,750 in Series A funding from 17 (undisclosed) angels and VCs. Miret spun out of Stanford Biodesign.

Nexvet, a four-year-old, Melbourne, Australia-based company developing biologic drugs for cats, dogs and horses, has raised $31.5 million in Series B funding from Farallon Capital ManagementAdage Capital Partners,Foresite Capital, and Boxer Capital, along with existing shareholders. The company has raised $40 million to date, shows Crunchbase.

OxThera, an 8.5-year-old, Stockholm-based biopharmaceutical company that develops products for metabolic disorders, has raised $10.6 million in new funding led by Kurma Partners. Other participants in the round included IdInvest Partners and Mayo Clinic. The company has raised roughly $53 million to date, shows Crunchbase.

Provista Diagnostics, a 6.5-year-old, Scottsdale, Az.-based molecular diagnostics company developing and commercializing blood-based diagnostic, prognostic and predictive tests for cancers affecting women, has raised a $6 million Series B financing from existing (undisclosed) investors. The company has raised $19.5 million to date.

ReadyPulse, a 3.5-year-old, San Carlos, CA-based enterprise content commerce company, has raised $2 million in Series A funding from Divergent VenturesHarmony CapitalMoxie Software, and angel investors. ReadyPulse has raised $3 million altogether.

RealtyShares, a year-old, Mountain View, Ca.-based online real estate platform that enables accredited investors to pool money and buy shares of investment properties, has raised $1.9 million in funding led by General Catalyst Partners. (This space is white-hot; last month, two other startups making it easy for accredited investors to acquire stakes in commercial buildings also raised venture capital: RealtyMogul and RealCrowd.)

Talkwheel, a 3.5-year-old, San Francisco-based unifies for its customers what’s being said about them on social media, as well as allows them to engage with fans, has raised $1.2 million in funding. About.com CEO Peter Horan participated in the round. So did former Yahoo vice presidentRandy Haykin, Informix founder Roger Sippl and others, says TechCrunch.

Wilson Therapeutics, a two-year-old, Stockholm, Sweden-based biopharmaceutical company that’s developing a de-coppering agent as a new treatment for a rare genetic disorder that prevents the body from regulating copper (which can lead to serious liver and brain damage), has raised $40 million in Series B financing co-led by new investors, Abingworth and MVM Life Science Partners. The company’s founding investor, HealthCap, also participated in the round.

Yatra, an eight-year-old, Gurgaon, India-based company that provides an airline reservation booking service online, has raised $23 million led by IDG Ventures and Vertex Venture Management, the VC investment arm of Singapore’s sovereign wealth fund Temasek. Existing investors including seed investor Norwest Venture Partners also participated in the round, which brings Yatra’s total funding $45 million altogether.

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New Funds

GSV Capital Corp., a three-year-old, publicly traded fund that invests half of its money in startups directly and the other half through private shares it buys on the secondary market, is raising a new, $20 million fund, according to an SEC filing. As of April 11, the first official sale had yet to occur.

MHS Capital, the San Francisco-based, early-stage venture firm, is nearing a $75 million final close on its second fund, says Fortune. MHS is led by Mark Sugarman, a longtime angel investor who previously held roles at Nutrisystem, VerticalNet and Internet Capital Group. The young firm closed its first fund with $34 million. Two of its better-known portfolio companies include the teaching marketplace Udemy and the crowdsourcing platform Indiegogo.

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Moelis & Co., the boutique investment bank, saw its shares close yesterday at 4.6 percent above their slightly reduced offer priced. (The bank opted to price its shares at $25, a dollar lower than expectations, on Tuesday night.) Dealbook has more here.

Vital Therapies, a biotherapeutic company, announced the pricing of its initial public offering 4.5 million common shares of stock at $12 per share, well below initial estimates. It begins trading on Nasdaq today.

Weibo Corp will be valued at a lower-than-expected $3.46 billion when it goes public today on Nasdaq amid concerns about the China-based microblogging service’s slowing user growth, as well as the country’s highly censored media environment. Reuters has more here.

Zoosk, the 6.5-year-old, San Francisco-based online dating platform, filed plans yesterday to raise up to $100 million in an IPO. Zoosk, which was launched in 2007, has more than 26 million members, including about 650,000 subscribers in 80 countries, according to the filing. The company has raised roughly $62 million to date; its biggest shareholders are Canaan Partners, which owns 32.4 percent of the company; ATA Ventures, which owns 17 percent; and Bessemer Venture Partners, which owns 16.3.

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People

While Moore’s Law has been holding true since 1965 — accurately describing the ever-growing capabilities of microchips — it won’t last forever, renowned venture capitalist John Doerr tells Forbes. “It will run out at some point . . .I give it about six years, and then we will hit the limit.”

Carter’s Grove, a historic plantation near Williamsburg that CNet cofounderHalsey Minor purchased in 2007 for $15.3 million, is going on the auction block on May 21, reports the Washington Post. The 400-acre plantation was once a Colonial Williamsburg attraction; it fell into a state of disrepair after Minor stopped making payments in the summer of 2010. The foundation says it is still owed nearly $8 million.

Facebook CEO Mark Zuckerberg talks about ephemeral apps and anonymity with the New York Times: “I do think more private communication is a bigger space than people realize. . .Anonymity is different. I’m not going to say it can’t work, because I think that is too extreme. But I tend to think some of these interactions are better rooted in some sense of building relationships. There are different forms of identity you can use to form a relationship. You can use your real identity, or you can use phone numbers for something like WhatsApp, and pseudonyms for something like Instagram. But in any of those you’re not just sharing and consuming content, you are also building relationships with people and building an understanding of people. That’s core to how we think about the world. So anonymity is not the first thing that we’ll go do.”

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Job Postings

IAC is still looking for a new associate director/director who will be responsible for “leading all or part of the assessment and the execution of potential transactions.” The job is in New York.

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Happenings

Yesterday, the WSJ announced that its first post-Kara-Swisher-era technology conference, WSJDLive, will be held October 27-29 at the Montage in Laguna Beach, Calif. The speaker line-up includes Alibaba’s Jack Ma, Snapchat’s Evan Spiegel, and Palantir Technologies’s Alex Karp, among others. You can apply for an invite here.

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Essential Reads

The founders guide to pitching Sequoia Capital (part two).

YouTube stars are about to get their own promotional TV spots and premium-priced ad rates as part of an effort to package online video stars like they’re traditional TV celebrities.

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Detours

Babies may not be crying at night for the reasons we assume. In a new study published in the journal Evolution, Medicine and Public Health, Harvard evolutionary biologist David Haig suggests babies cry to delay the birth of another sibling.

What’s considered moral depends on where you live.

Remove your shirt with one hand.

Can’t we allow cows a modicum of dignity?

reply-allpocalypse at Condé Nast.

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Retail Therapy

Map necklaces.

What could be the best Easter gag gift ever.

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One comment on “StrictlyVC: April 17, 2014
  1. Thanks for the link to my store– this is about as close as I get to being a SV operative (even though I live here).

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